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SHALE NOV/DEC 2015

OIL & GAS BUSINESS MAGAZINE

AN UPDATE IN THE INTERIM SENATOR URESTI ON COPYRIGHT IN THE DIGITAL AGE STATE OF ENERGY CORPUS CHRISTI INAUGURAL LUNCHEON A HUGE SUCCESS

LET’S TALK TURKEY AND SET THE RECORD STRAIGHT CENTURY-OLD ST. ANTHONY HOTEL REIMAGINED

A TRUE LEADER RAILROAD COMMISSION OF TEXAS

DAVID PORTER

»

CHAIRMAN

HALLIBURTON’S NEW ACTIVATESM REFRACTURING SERVICE

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AEP Texas: Your Business Partner in Shale Oil & Gas Extensive shale oil/gas reserves are located in and around geographic areas that align with the AEP Texas electric delivery service territory. Let the AEP Texas service team assist you with timely information regarding the location, capacity and availability of AEP Texas facilities. To request electrical service or gain access to a certificated planning map, please complete the information request form located at www.AEPTexas.com/shaleoilgas Contact: Bradley Lenz 361-881-5455 bhlenz@aep.com

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John Longoria 361-881-5867 jflongoria@aep.com

SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015

www.AEPTexas.com/shaleoilgas @AEPTexasEconDev


Specializing in oilfield supplies and service throughout the Eagle Ford Shale  Oilfield Experts specializes in machine parts and machine work (wireline, coiled tubing, fracturing and gun loading departments).  Providing a full line of automotive and truck parts and accessories (OEM and after-market parts).  We offer a full line of gauges, butterfly valves, complete line of tools (Proto Tools), filters, chemicals, gear oil and synthetic gear oil, silicones, hydraulic hoses and hydraulic fittings, starters, alternators (12 and 24 volt), serpentine and V belts, hydraulic motors, pumps.  We are open and provide hot shot services 7 days a week and 24 hours a day. 

Free delivery service with a quick turn around time.

 Oilfield Experts offers great service with affordable prices for all your oilfield, automotive, and mechanical needs.

Exclusive Dealer for the Eagle Ford Shale Territory PYRICOAT: is an all-natural soil treatment application designed to inhibit the oxidation process of soil with harmful metals and minerals. By coating the soil with Pyricoat, minerals will be encapsulated, which will stop any liquids from further contamination such as coal mining runoff. This application has increased acidic waters PH levels from 3.4 to 6.5 for over three years now in alpha test in coal mining areas. FECONTROL: is an all natural product used to binds, encapsulates and creates a carrier for iron sulfites and other damaging microscopic particles from crude oil. When applied to crude oil directly it reduces iron, sulfides and other corrosives by up to 93% when separated. Using this product will save downtime by reducing maintenance days by eliminating the corrosive iron sulfides from the crude before being introduced into the refineries. This application will also augment the existing downstream process of removing iron from crude oil. RELOAD: is an all natural product use for treating frac and produced water. This product creates a top layer of hydro Cardons in Frac or produced water. This application is perfect for recovering oil from the formation fracturing process in the flow back and produced water will help in the recycling of the

water for reuse in the formation fracturing process. ReLoad is most effective when introduce into holding tanks or holding ponds with a circulating pump. ReLoad will also help keep out moisture when needed. ReLoad is used on water for the separation of water and hydro carbons PREMIUM RELOAD: is an all natural product use for treating frac and produced water. This product binds and encapsulates the heavy metals including the damaging iron sulfites and keeps them from the oxidation process. The method reduces iron sulfates by 90% and makes the separation of solids from water more efficient. This product pushes the hydrocarbons to the surface while creating a layer of encapsulated metals. This application is perfect for recovering oil from the formation fracturing process in the flow back and produced water will help in the recycling of the water for reuse in the formation fracturing process. Premium ReLoad is most effective when introduce into holding tanks or holding ponds with a high turbulence application. Premium ReLoad also binds heavy metals in acidic water and helps eliminate corrosive effects. Premium ReLoad is use on water for inert effect on heavy metals.

Clint Schweers / oilfieldexperts@gmail.com 13611 U.S. Hwy 181 S., San Antonio, Texas 78223 / (210) 471-1923

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CONTENTS

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FEATURE

16 Halliburton’s New ACTIVATESM

Refracturing Service

COVER STORY DAVID PORTER 18 Texas Railroad Commission

Chairman David Porter faces challenges head-on and has the experience to continue getting the job done

INDUSTRY

26 STEER: A Guide to the Oil and

Natural Gas Industry

Holiday Season

Energy Reform

Became a U

28 Let’s Talk Turkey About Energy This 30 Challenges Remain for Mexico 32 Women Who Lunch 34 Partnering Up 36 Why the V-Shaped Recovery

POLICY

38 In the Interim 42 Is America SpOILed?

BUSINESS

44 Copyright in the Digital Age 46 The Future of O&G: It’s a

Generational Thing

48 Constructive vs. Destructive

Management 50 Measuring National Content in the Mexican Hydrocarbon Sector

LIFESTYLE

52 Massage Therapy 360 Awareness 54 A Texas Star: The Bryan Museum 56 Learning Is Fun at the Doseum in

San Antonio

The St. Anthony Unveils its True Colors

58 With a Nod to the Past,

SCENE

60 State of Energy Corpus Christi 62 Halliburton San Antonio

Golf Tournament

Golf Tournament

64 ConocoPhillips Scholarship 64 The COMMIT Foundation COVER AND TABLE OF CONTENTS PHOTOGRAPHY BY: MICHAEL GIORDANO

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ADVISORY BOARD

OMAR GARCIA - SENIOR ADVISOR

JAMES M. SUMMERS

BRADLEY H. LENZ

JEFFREY A. WEBB

THOMAS TUNSTALL, PH.D.

PAULA WAGGONER-AGUILAR

As President and CEO of the South Texas Energy & Economic Roundtable (STEER), Omar Garcia is an expert on business opportunities associated with the Eagle Ford Shale. He works with the oil and gas industry, local officials, community members, regional stakeholders, educational institutions and economic development organizations to ensure that the oil and natural gas industry in South Texas is advancing in a positive way that is beneficial to both the community and the industry. Garcia has more than 12 years of economic development experience, and he spent two years working for Bank of America as Vice President of Business Development for the bank’s treasury management division. He is a certified economic development finance professional through the National Development Council, and he graduated from St. Edward’s University with a major in international business and Spanish. In 2010, Gov. Rick Perry appointed Garcia to the Texas Economic Development Corporation.

Jeffrey A. Webb is a Senior Associate in the San Antonio office of Norton Rose Fulbright, a global legal practice providing the world’s preeminent corporations and financial institutions with a full business law service. Recognized for its industry focus, Norton Rose Fulbright is strong across all of the key industry sectors: financial institutions, energy, infrastructure, mining and commodities, transport, technology and innovation, and life sciences and healthcare.

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James M. Summers joined the San Antonio office of Norton Rose Fulbright in 1976 and became a Partner in 1985. He received his undergraduate degree from Southern Methodist University and his law degree from the University of Texas School of Law, and he has six professional honors. Summers’ legal practice focuses on real estate and oil and gas matters, which involve the representation of an array of clients who deal with complex and sophisticated financial transactions and situations. Summers represents many financial institutions and private equity groups in the securitization, commercial mortgage-backed securities and other related loan markets. He counsels clients and is involved in major workout and reorganization matters relating to all areas of real estate. His practice focuses on energy and oil and gas transactions with matters in the Eagle Ford Shale industry, representing everything from acquisitions and dispositions to refineries and solar-power facilities.

Thomas Tunstall, Ph.D., is the Research Director for the Institute for Economic Development at the University of Texas at San Antonio. Previously, he was a Management Consultant for SME and the Component 1 Team Leader for the Azerbaijan Competitiveness and Trade project. Tunstall also served as an Advisor Relations Executive at ACS and was the founding Co-chair for the Texas chapter of the International Association of Outsourcing Professionals (IAOP). He has published a business book titled “Outsourcing and Management” (Palgrave, 2007) and was the technical editor for “Outsourcing for Dummies” (Wiley, 2008). Tunstall has consulted in both the public and private sectors. In 2005, he completed a long-term assignment in Afghanistan, where he was Deputy Chief of Party for a central bank modernization project. In 2006, he taught Ph.D. candidates in a business and government seminar at the University of Texas at Dallas.

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Bradley H. Lenz is the Director of Economic and Business Development at AEP Texas. As Director, he oversees the company’s economic and business development operations, including oil and gas operations. This activity extends throughout the AEP Texas service territory. Previously, he was the Operations Support Manager of the Electric Distribution System of AEP Texas. His responsibilities included resource planning and managing the electric distribution budget, back-office functions and annual storm restoration drill to prepare for hurricanes and other major natural disasters. Prior to operations support, Lenz held several management positions with AEP Texas and the former West Texas Utilities Company. Lenz began his career in 1991 with West Texas Utilities in Abilene as an Engineer in marketing, focusing on commercial customers. Prior to that, Lenz was a cooperative student with TXU Electric. Lenz earned a bachelor of science degree in electrical engineering from Texas A&M University in College Station and has completed the Ohio State University Leadership Development program.

Paula Waggoner-Aguilar is a Chief Financial Officer and the Owner and President of The Energy CFO, LLC, a niche entrepreneurial energy finance firm providing CFO leadership to energy and technology entrepreneurs and start-ups. She started her career in the 1990s working her way up the accounting ranks in Latin America, beginning in oilfield services and highly engineered equipment. Over the past 20 years, Waggoner-Aguilar has built a successful track record working in senior leadership roles alongside hard-driving independents, notable industry executives and engineers. In 2014, the San Antonio Business Journal awarded Waggoner-Aguilar BEST CFO for Private Medium Companies. Likewise, she has also been recognized as a trailblazer for her various efforts in recruiting and helping promote women in the industry. Originally from Dallas, she is a graduate of The University of North Texas (MS, taxation) and The University of Texas at Arlington (BBA, accounting), a Texas CPA and a member of the Association of International Petroleum Negotiators.


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CONTRIBUTORS

Thomas Tunstall, Ph.D.

David Blackmon has 36 years

Gloria Leal is an Attorney and

is the Research Director for the Institute for Economic Development at the University of Texas at San Antonio. Previously, he was a Management Consultant for SME and the Component 1 Team Leader for the Azerbaijan Competitiveness and Trade project. Tunstall also served as an Advisor Relations Executive at ACS and was the founding Co-chair for the Texas chapter of the International Association of Outsourcing Professionals (IAOP). He has published a business book titled “Outsourcing and Management” (Palgrave, 2007) and was the technical editor for “Outsourcing for Dummies” (Wiley, 2008). Tunstall has consulted in both the public and private sectors. In 2005, he completed a long-term assignment in Afghanistan, where he was Deputy Chief of Party for a central bank modernization project. In 2006, he taught Ph.D. candidates in a business and government seminar at the University of Texas at Dallas.

experience in the oil and natural gas industry. He currently works as a government affairs and communications professional for a large independent producer. Throughout his career in the oil and gas industry, Blackmon has led industry-wide efforts to develop and implement strategies to address key issues at the local, state and federal level. Blackmon has more than 15 years of experience working legislative and regulatory issues in Washington, D.C., Texas and other states. He is a recognized subject-matter expert on a variety of oil and natural gas issues, and regularly offers testimony at legislative hearings. Blackmon is currently a contributing columnist for Forbes.com, focusing on public policy issues affecting the oil and gas industry. He also writes regular commentary for World Oil magazine.

Government Affairs Consultant in Austin, Texas. Leal has a solo practice primarily relating to energy, environmental and healthcare/insurance matters. She represents the Texas Alliance of Energy Producers, a national association of independent producers and service providers, and other clients. Leal is former General Counsel and International Counsel of the Texas Department of Insurance and represented the department in international financial services negotiations with Mexico. She was also an Assistant Attorney General in the Energy and Transportation divisions. Leal is a graduate of the University of Texas School of Law.

Omar Garcia, President and CEO

of the South Texas Energy & Economic Roundtable (STEER), is an expert on business opportunities associated with the Eagle Ford Shale. He works with the oil and gas industry, local officials, community members, regional stakeholders, educational institutions and economic development organizations to ensure that the oil and natural gas industry in South Texas is advancing in a positive way that is beneficial to both the community and the industry. Garcia has more than 12 years of economic development experience, and he spent two years working for Bank of America as Vice President of Business Development for the bank’s treasury management division. He is a Certified Economic Development Finance Professional through the National Development Council, and he graduated from St. Edward’s University with a degree in international business and Spanish. In 2010, Gov. Rick Perry appointed Garcia to the Texas Economic Development Corporation.

Paula Waggoner-Aguilar is

Katie Carmichael is an AustinRogelio Cuevas is a Co-Managing

Partner at Cuevas & Cuevas LLP. He is an expert on developing business opportunities across the border with Mexico. He works directly with the Mexican oil and gas industry at the federal, state and local government levels, developing and forming business legal entities for corporations and suppliers both in the U.S. and Mexico. He also works directly with mineral rights owners in Texas, serving the role as a Landman providing oil and gas accounting and management services for them. He graduated from St. Edward’s University in Austin with a BBA in economics, and he holds an MBA in accounting/finance from Our Lady of the Lake University in San Antonio. His co-managing partner oversees the International Tax Department at both their offices located in San Antonio and Ciudad Acuña, Coahuila, Mexico.

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based communications specialist. She is the founder and owner of Carmichael Communications and Consulting, which provides a wide range of communication services, including public affairs, government relations, consulting and writing, primarily within the energy industry. Carmichael is a consultant for the Texas Alliance of Energy Producers and Railroad Commissioner Chairman David Porter’s reelection campaign. Most recently, Katie was the Director of Public Affairs for Commissioner Porter. Prior to the RRC, she worked in the Texas House of Representatives. Carmichael received a bachelor’s degree in journalism from Texas State University.

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a Chief Financial Officer and the Owner and President of The Energy CFO LLC a niche entrepreneurial energy finance firm providing CFO leadership to energy and technology entrepreneurs and start-ups. She started her career in the 1990s, working her way up the accounting ranks in Latin America, beginning in oilfield services and highly engineered equipment. Over the past 20 years, Waggoner-Aguilar has built a successful track record working in senior leadership roles alongside hard-driving independents, notable industry executives and engineers. Waggoner-Aguilar is an expert in her field and is passionate about starting up, fixing, and growing strong companies. In 2014, the San Antonio Business Journal awarded Waggoner-Aguilar Best CFO for Private Medium Companies. Likewise, she has also been recognized as a trailblazer for her various efforts in recruiting and helping promote women in the industry. Originally from Dallas, she is a graduate of The University of North Texas (MS, taxation) and The University of Texas at Arlington (BBA, accounting), a Texas CPA and a member of the Association of International Petroleum Negotiators.

David Porter was elected statewide

to serve a six-year term as Railroad Commissioner in November 2010. Commissioner Porter has been appointed to the Interstate Oil and Gas Compact Commission as the Official Representative of Texas, and in 2015, he will serve as the second Vice President. He has also been appointed as the Official Representative on the Interstate Mining Compact Commission and currently serves as an Advisory Board Member for the Texas Journal of Oil, Gas, and Energy Law.

CONTINUED ON PAGE 12


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CONTRIBUTORS (CONTD) & GAS BUSINESS MAGAZINE OIL OIL & GAS BUSINESS MAGAZINE VOLUME 2 ISSUE 6 • NOVEMBER/DECEMBER 2015

KYM BOLADO CEO / PUBLISHER

CHIEF FINANCIAL OFFICER Bill Keffer has practiced law for 30 years as In-House

Counsel at a major oil and gas company and in private practice. He currently teaches at the Texas Tech University School of Law and continues to consult. He served in the Texas legislature from 2003 to 2007 representing the 107th District in Dallas.

Deana Acosta

EDITOR IN CHIEF Lauren Guerra

ART DIRECTOR Elisa Giordano

ASSOCIATE EDITOR Katie Carmichael

COPY EDITORS

Katie Buniak, Maegan Sheppard

VICE PRESIDENT OF SALES Liz Massey Kimmel

ACCOUNT MANAGERS Alex Charfen is co-founder and CEO of CHARFEN,

a training, education and consulting organization for entrepreneurs and small businesses. Charfen has dedicated his life to answering the question, “How do you make business grow?”, which evolved into a larger calling to understand, “How do you help people grow?” It was this transition that led Charfen, quite unexpectedly, to uncover a previously mislabeled and misunderstood population among us: the Entrepreneurial Personality Type (EPT). For the past two decades, he has created and curated proven business philosophies, models and strategies geared specifically to entrepreneurs and small-business owners. An expert in business growth, Charfen has been invited to share his strategies with business owners across the country and around the world. He is regularly called upon by major media outlets, including MSNBC, CNBC, Fox News, The Wall Street Journal, USA Today and The Huffington Post, to provide his unique views and insights.

Anna Ramos, Salome Stevens

ASSISTANT ACCOUNT MANAGERS Joe Borjas Laura Martinez

SENIOR BUSINESS ANALYST Fernando Guerra

CONTRIBUTING WRITERS

David Blackmon, Katie Carmichael, Alex Charfen, Rogelio Cuevas, Omar Garcia, Lauren Guerra, Bill Keffer, Ben Lamm, Gloria Leal, Thomas Tunstall, Sen. Carlos I. Uresti, Paula Waggoner-Aguilar

STAFF PHOTOGRAPHER Malcolm Perez

CONTRIBUTING PHOTOGRAPHERS Michael Giordano Christy Landriault

www.shalemag.com Sen. Carlos I. Uresti is a prominent San Antonio

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practicing attorney with over 23 years of experience. He represents Senate District 19, which covers more than 35,000 square miles and contains all or part of 17 counties, two international ports of entry, 11 state parks, 52 school districts, 2,700 miles of highways and more than 23,000 producing oil and gas wells in both the Eagle Ford Shale and Permian Basin. The district is larger than 12 states and 82 nations, and contains over one-third of the Texas-Mexico border. Sen. Uresti is proud to serve on the Finance, Natural Resources & Economic Development, Health & Human Services, and Administration Texas State Senate Committees. SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015

For advertising information, please call 210.240.7188 or email kym@shalemag.com. For editorial comments and suggestions, please email lauren@shalemag.com. SHALE MAGAZINE OFFICES: 5600 Broadway Ave., San Antonio, Texas 78209 18756 Stone Oak Pkwy, Ste. 301, San Antonio, Texas 78258 For general inquiries, call: 210.854.3361 Copyright © 2015 Shale Magazine. All rights reserved. Reproduction without the expressed written permission of the publisher is prohibited.


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PUBLISHER’S NOTE

ANOTHER GREAT YEAR IS COMING TO AN END.

At the end of each year, I like to reflect on our experiences and assess the wins and losses that have occurred. Speaking for SHALE, 2015 has been a big year with many wins and not too many losses, thankfully. A win for us all, as I see it, was the vote that recently took place in the U.S. House of Representatives on the crude oil export ban. I applaud the members of Congress who recognized the importance of this legislation and voted in favor of lifting the ban. We still have a ways to go before the ban is actually removed, but I can see that the first step has been taken to lift the outdated restriction on oil exportation. Our inaugural State of Energy luncheon events are half over. The Corpus Christi conference sold out of tickets and had no open seats. Our keynote speaker, Matthew Most from Encana, gave an eloquent and engaging speech, followed by a panel discussion featuring Omar Garcia with STEER as moderator and our panelists: Matthew Barr with Cheniere Energy, Barbara Canales with the Port of Corpus Christi, Iain Vasey with the Corpus Christi Regional Economic Development Corporation, and Paula Waggoner-Aguilar with The Energy CFO LLC. We are so very proud of the event, and look forward to partnering with the Corpus Christi Chamber of Commerce again next year. In December, we will be bringing this event to the San Antonio community. Based off the success of the Corpus Christi event we are very excited to see the outcome of the next luncheon. If you have been a supporter of SHALE throughout 2015, I’m sure you’ve witnessed the growth we’ve seen throughout this year. Our readership has grown as a result of our expansion into new market areas throughout Texas. To all of our supporters and readers, I personally want to thank you for your interest in SHALE, and I hope you see us as your trusted source for business and oil and gas news. Lastly, 2015 has been a great year for our radio show, In the Oil Patch. Started in 2015, In the Oil Patch has exceeded all our expectations in many aspects. The show has gotten an unforeseen amount of attention in its first year, and as a result was picked up by two additional stations. In addition to the original show on KTSA in the San Antonio and Corpus Christi areas, you can hear In the Oil Patch on iHeartRadio’s KTRH in Houston and KWEL in Midland. We are only as great as our guests, and we have been truly fortunate to get some fantastic experts on the air to speak with us, including U.S. Rep. Brian Babin, state Rep. Jason Isaac, Railroad Commision of Texas Chairman David Porter, RRC Commissioner Ryan Sitton, Sen. Carlos I. Uresti, Dan Eberhart of Canary LLC, Omar Garcia, David Blackmon, and so many more. The willingness of these experts to share their knowledge with us is crucial to informing the community on current oil and gas topics. Without them, In the Oil Patch would not be fulfilling its purpose. All in all, this year has been very good to us at SHALE and we look forward to a prosperous 2016. To all of our readers, listeners, supporters, advisors, advertisers and employees, I wish each of you a happy holiday season filled with joy and peace. Please enjoy this final 2015 issue of SHALE. We look forward to seeing you in 2016!

KYM BOLADO

CEO/Publisher of SHALE Oil & Gas Business Magazine kym@shalemag.com

SHALE OIL & GAS BUSINESS MAGAZINE MISSION STATEMENT:

SHALE Oil & Gas Business Magazine is a statewide publication that showcases the dynamic impact of the Texas energy industry. The mission of SHALE is to promote economic growth and business opportunities and to further the general understanding of how the energy industry contributes to the economic well-being of Texas and the United States as a whole. SHALE’s distribution includes industry leaders and businesses, service workers, entrepreneurs and the public at large.

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SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015


O I L & G A S P L AY E R S

|

BUSINESS

|

TECHNOLOGY

|

POLICY

AUSTIN CORPUS CHRISTI HOUSTON MIDLAND ODESSA SAN ANTONIO

RADIO SHOW

KTSA 550 AM/107.1 FM Saturdays 10 p.m. (San Antonio, Corpus Christi)

iHeartRadio KTRH 740 AM Sundays 8-9 p.m.

KWEL 1070 AM/ 107.1 FM Saturdays 1-2 p.m.

(In Houston)

(In Midland)

Now aired throughout the Eagle Ford and Permian Basin

Where industry comes to speak

Pantone - Red 032c

sponsored by:

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FEATURE

HALLIBURTON’S NEW ACTIVATE REFRACTURING SERVICE SM

BY: LAUREN GUERRA

profit. But there is more to refracing than simply going back to previously drilled sites and doing the process again. A process should be followed to have optimal results. The refracturing process begins with finding a good candidate for the refrac. What constitutes a good candidate? Well, a good candidate is a site with good rock quality and bypassed reserves that can be tapped into. Once a good candidate is chosen, a degradable diverting agent is used to plug the previous fractures that were opened in the first frac and then new fractures are made to tap into the bypassed reserves.

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SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015

A degradable diverting agent is a general term for the product used in the refrac process. Each company has its own preferred material. Halliburton’s breakthrough diversion technology is a high-performing alternative to traditional diverting agents.

THE ECONOMIC ADVANTAGE

Why are refracs an economically advantageous option? Well, to put it in a purely financial perspective, refracturing can help provide a lower cost per barrel of oil equivalent (BOE) than drilling a brand-new site. The process of creating a new drilling pad can get quite costly. It’s pretty easy to see why going back into a previously drilled well and getting oil and natural gas from that same site can be more cost-effective. Essentially, the operator is able to skip the cost associated with starting a new drill site. You may be wondering why the oil and natural gas was not acquired in the first frac. There are many reasons a well could be under-stimulated, such as loss of conductivity, low cluster efficiency and uneven fracs. Whether new or old, many drill sites have the potential for a second life because there are bypassed reserves. In basins where Halliburton has delivered the ACTIVATESM Refracturing Service, operators have seen up to an 80 percent estimated ultimate recovery (EUR) increase per well, as much as a 25 percent increase in oil recovery factor with a balanced portfolio and up to 66 percent reduced cost per BOE compared to new drills. Because of the economic advantages and consistent rate of return, Evans foresees that refracs will continue to become more popular in operators’ completion schedules. “We’ve gotten to the point where we’ve done enough trials that everyone is pretty confident that [this technology] works. I think the next step is going to be once the commodity prices go up, [operators] are going to be building ... refracs into their current completion strategy. “Before, refracs were sort of a solution to a problem, if you had an issue on the first stimulation. But now it will become a more standard practice.”

A NEW SERVICE

Halliburton is using the traditional process of refracturing and the new diversion technology to provide new, more predictable refracturing services to their customers. ACTIVATE Refracturing Service is a complete workflow that can help secure bypassed reserves, lower the overall BOE and increase the return on investment (ROI). The ACTIVATE Refracturing Service leverages multiple Halliburton products, such as its AccessFrac® Stimulation

PHOTOS COURTESY OF HALLIBURTON

T

echnology is ever-changing in all industries, oil and gas especially. The ability to adapt and change practices on and off the oilfield can have a dramatic effect on the output of oil and natural gas a company secures. Innovative technological advancements are helping companies, like Halliburton, tap into new potential in a down market. Refracturing is one method Halliburton is employing to do just that. So, then, what is refracturing exactly and how is it done? “It’s basically going back and fracing a well that has previously been fraced and produced,” says Shea Evans, a technical support professional with Halliburton’s Production Enhancement team in the Eagle Ford. “If you have a well that was under-stimulated the first go-around, you can come back in and restimulate that well.” Refracturing is not a new term or process. Tapping into previously drilled well sites has been done for ages. Understimulated wells hold potential for undiscovered resources and


wells, thereby maximizing the recovery rate of the entire pad. The well sites on the pad are then ranked, with the highest ranking serving as the pilot from which knowledge can be taken to improve the process for the other well sites on the specific pad.

Service, FiberCoil™ Tubing Service, FracInsight® Service, Pressure Sink Mitigation Solution (PSM TM) and Pinnacle’s integrated sensor diagnostics (ISD) to obtain subsurface insight and bring together the needed expertise to make refracs more reliable and predictable. “Our customers can be confident that Halliburton’s ACTIVATE Refracturing Service has shown that it can help deliver their projects at a lower cost per BOE, and that we are helping reduce the unpredictability that has surrounded refracturing projects in the past,” says Jim Brown, Halliburton’s President of the Western Hemisphere. “Given today’s commodity prices, adding more refracs to their unconventional portfolios just makes sense and can help increase the profitability of the operators’ assets.” The complete service has four components: screen, design, execute and diagnose.  Screen: The screening process requires that a good candidate is chosen. Reservoir quality, completion quality, well spacing impact analysis and refrac potential analysis are all factors in the choosing of the ideal refrac option. The ultimate goal in the refrac selection process is not to have one high producing refrac well that negatively impacts the surrounding wells, it is to have one good refrac pad with multiple refrac

 Design: Once the candidates are chosen and ranked, a tailored and specific design is created. Each well is designed separately. First, the team must perform a stimulated reservoir characterization, which calculates how much of the reservoir was stimulated in the first frac and how much can be stimulated in a refrac. It is then decided if new perforations need to be made, and, if so, using FracInsight service technology, the team looks at the rock quality across the entire lateral. With this information, the new perforations are placed in the most strategic locations. Finally, it is decided where the team will have the proppant land. This is crucial to the AccessFrac service technology, which will come into play in the execution of the refrac. The AccessFrac service design has two goals: maximize the lateral coverage in the second life of the well and maximize the total stimulated reservoir area.  Execute: The AccessFrac service technology is crucial in the execution of the refracs in a more repeatable and predictable manner to help achieve the lowest cost per BOE. The first step in the execution of the refrac is called wellbore preparation. This preparation includes determining how much of the wellbore has been pressure-depleted. The pressure-depleted areas must be plugged up, so that the refrac fluid doesn’t just go to those areas. The pressure sink mitigation (PSM) process closes off those pressure-depleted areas so the wellbore is prepared and the proppant goes where it is supposed to go. In a case study conducted by Halliburton, the PSM process increased production by 71 percent due to reaching new rock formations and maximizing lateral coverage. Once the pressure-depleted areas are closed off, the refrac begins with a few diversion cycles to repair conductivity between the wellbore and the old fracs. Once the old fracs have been reconnected, the next few diversion cycles start creating pressure in the wellbore, creating new fracs. Proppant volumes are increased at this point to allow the new fracs to go as far as they can into the reservoir. The connection of the reconnected and newly created fracs comprises the EUR. Over the last one and a half years, Halliburton has seen a 300 percent incremental increase in EUR in refracs due to the improvement in the AccessFrac service process controls.  Diagnose: Multiple diagnostic tests are done to measure the performance of the refrac, including microseismic monitoring, fiber optic DTS (distributed temperature sensing) and fiber optic DAS (distributed acoustic sensing). The testing normally will be done on only the pilot well, but the information gives great insight into the production of the pad as a whole. Monitoring happens in three steps: real time, post-frac and production. In real time, Halliburton uses microseismic monitoring to see if the diversion cycles are moving the fluid down the lateral. With this monitoring, the team can see if fluid is not moving and can make adjustments to alleviate the blockage. Post-frac monitoring evaluates how much of the reservoir has been stimulated. Using FiberCoil tubing technology, Halliburton is able to calculate how many clusters were stimulated, and how many were not. In production monitoring, FiberCoil is once again used to fill in a qualitative contribution log after about three months of flowback. The log will tell if the refrac has contacted new rock formations and initiated new perforations and if those new sections are truly producing. The new ACTIVATE Refracturing Service offered by Halliburton is helping operators save money and tap into profits they may have otherwise never gained. As technological advancements in process controls, degradable diversion agents and monitoring become available, the service will also advance to further help operators to lower the BOE and increase the ROI. Learn how Halliburton can help support your goal of confidently recovering bypassed reserves and maximizing the profitability of your unconventional asset at the lowest cost per BOE by visiting www.halliburton.com. NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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COVER STORY

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DAVID PORTER: GETTING THE JOB DONE

BY: KATIE CARMICHAEL  PHOTO BY: MICHAEL GIORDANO

Sitting down with the RAILROAD COMMISSION OF TEXAS CHAIRMAN DAVID PORTER could be an intimidating experience, that is, if you are not already well-acquainted with Porter himself. The Chairman’s window-lined corner office sits on the top floor of the William B. Travis Building and clearly overlooks the Texas Capitol, just two blocks up the road. Porter slowly reclines in his leather wingback chair as he carefully formulates and thoughtfully delivers intelligent, direct responses.

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T

he state official has sometimes been described as shy, although those that know him on a personal level would laugh at such a mischaracterization. He is reserved by nature, but what some may perceive as timidity is more likely evidence of the intense thought process and weighty balancing act constantly occurring in his mind. As the senior regulator of the Texas oil and gas industry, Porter has been tasked with the dual responsibility of protecting the health and safety of Texans while simultaneously promoting and facilitating the efficient and economic production of the state’s natural resources — a duty he does not take lightly. Throughout his nearly six years as Railroad Commissioner, Porter has proven to be a pragmatic, astute decision-maker and an effective leader. He may not always deliver the best 30-second sound bite and seldom seizes an opportunity to grandstand. But he does deliver consistent results and steady, fact-based regulation. Porter arrived on the Austin political scene in 2010 as somewhat of an unknown. The conservative Republican had lived a low-key life in Midland where he owned a small accounting business, primarily catering to independent oil and gas and oilfield service companies, and raised a daughter with his wife, Cheryl. He had long been active in politics, having served as a precinct Chairman for the Republican Party and a stint on the local hospital board, in addition to being involved with dozens of campaigns in some capacity. His bid for a spot on the Railroad Commission of Texas (RRC), however, was his first personal foray into the public arena. The newcomer successfully unseated a longtime incumbent — something that is not easy to accomplish — and had many wondering, “Who is David Porter?” Those who have followed his career on the Commission closely have witnessed the subtle transformation of this seemingly quiet accountant from West Texas into a dignified, well-respected statesman. With that said, Porter is still far from being a big-city bureaucrat or entrenched Austin insider. “I’m proud that I never had a government office or paid position before I ran for Railroad Commissioner,” he says. “I really still don’t consider myself a politician.” Politician or not, Porter has certainly come into his own. Yet even as he has fully grown into his leadership role, now serving as Chairman of the RRC, he hasn’t lost the genuine traits that make him a welcome anomaly in the state’s highly politicized capital. “I’ve always believed the old adage that it’s amazing how much you can get done as long as you don’t care who gets credit for it, which is a little unusual in this city,” he says. Porter’s ability to get things done and bring people together in an efficient and productive manner is truly the hallmark of his tenure at the Railroad Commission, a legacy he hopes to continue for another six-year term. The Chairman has officially announced his bid for reelection to the three-member Commission in 2016. While some candidates on the campaign trail make overstretched and sometimes unrealistic promises, the no-fuss incumbent must only point to his history at the Commission as proof of his ability to lead the historic agency and regulate one of the most robust, essential industries in Texas.

SOMETIMES YOU HAVE TO DO THE WORK BEHIND THE SCENES; OTHER TIMES YOU HAVE TO GET OUT IN FRONT AND LEAD THE BAND. I CAN DO, AND HAVE DONE, BOTH. WHATEVER IT TAKES TO GET THE JOB DONE.”

[ FIGHTING FOR SURVIVAL ] One of the biggest testaments to his leadership came within days of being sworn in as Commissioner. Porter was immediately thrown into the deep end — forced to fight to maintain the structure and existence of the 124-year-old Railroad Commission. In Texas, nearly all state agencies and government entities undergo a Sunset review about every 12 years to ensure it is still necessary and functioning efficiently. Texas Sunset Advisory Commission staff essentially conducts an audit of the agency under review and issues a detailed report, including recommendations to the Legislature, which then holds hearings and accepts public comment. Lawmakers proceed to file legislation determining the future of the agency based on the recommendations and input. In 2011, the Railroad Commission was up for Sunset review, and sentiments toward the regulatory body were less than favorable. “I got over here and quickly realized that unless something was done to argue for the benefits of the Commission, there was a good chance it was going to be basically destroyed, if not gone,

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by the end of the legislative session,” Porter recalls. One of the most contentious items on Sunset’s list of recommendations was the proposal to completely restructure the agency’s leadership, going from three elected Commissioners instead to five appointees. Based on this suggestion, the Legislature also contemplated the notion of having only one elected Commissioner. Either way, Porter and his colleagues would essentially be out of a job. “The actual result of [this] recommendation would be to vacate the votes of millions of Texans cast over the last three election cycles,” the new Commissioner said at the time. “I was recently elected to this office with nearly 60 percent of the vote — votes that should count — and intend to serve the people of Texas in the job they elected me to do.” From day one, Porter has been an outspoken advocate of maintaining the current structure of the Commission as originally intended in the Texas Constitution. “Limited government and balance of power within different sections of government are two of the most important fundamental principles on which our system of democracy was built,” Porter says. “Fast-forward a couple hundred years, and the same thinking is still valid.” “You get more continuity, wisdom and judgment longterm by having the collective knowledge and experience of three people instead of one person,” he adds. Other Sunset recommendations included transferring the Commission’s enforcement hearings and contested gas utility cases to the State Office of Administrative Hearings and moving gas utility regulation from the RRC to the Public Utility Commission of Texas. For the first five or six months of his term, Porter basically camped out at the Texas Capitol, testifying before legislative panels and doing whatever he could to advocate for the continued well-being of the Commission. Fortunately for the agency, the industry and Texas voters, Porter was successful in his attempt to defend the RRC from major disruptions, although the issue was not fully put to rest. Instead, the Railroad Commission would undergo another Sunset review the following session. In 2013, Sunset recommendations again focused on the Commissioners, however, this time addressing the appearance of conflicts of interest. The suggested provisions included limiting when Commissioners could solicit and receive campaign contributions, adoption of a recusal policy and automatic resignation of a Commissioner who announces candidacy for another office. Railroad Commissioners have historically received criticism that the post is used as a stepping stone to run for higher office. While this may not apply to the current Commissioners, it is still an issue that they have been repeatedly prompted to address. “I answer it this way: I haven’t run for any other offices and I have no intention of running for any other offices at the current point in time,” Porter asserts. Moreover, the Chairman is actively campaigning to keep his position on the Commission. “If you look at the lack of success Railroad Commissioners have had running for other offices, I don’t know that that’s really a valid objection anymore,” he adds. At the heart of the Commissioners’ defense over these issues is the fact that all executive branch elected officials

are held to the same standards in the Texas Constitution; to unnecessarily target Railroad Commissioners and create a separate, higher standard would seem arbitrary at best. In 2013, the discussions took an even more disconcerting turn when the idea of abolishing the agency entirely came into play. Some suggested the RRC was no longer necessary and should be essentially dismembered and parceled out to other state agencies. Again, the Chairman went to bat for the agency and was successful in maintaining its continuation, although this means that the Railroad Commission will again be up for Sunset review in 2017. Porter admits that the process can be arduous and puts a serious strain on the Commission’s staff and resources. Being a well-balanced leader, however, he points out that not all of the recommendations have been negative or overly critical. Throughout the process, the RRC has voluntarily implemented some suggestions by Sunset staff in order to improve the agency. The Commission has increased transparency in its enforcement process, now publishing this information online; formally adopted penalty guidelines; and created a pipeline permit fee to help support its Pipeline Safety program. Yet with a third Sunset review staring down the agency, it would be advantageous to have a strong advocate who has gone through the process not just once but twice. “It’s important for somebody to be here who has a history with Sunset and extensive experience defending the agency, someone who is familiar with the issues and can talk about these issues knowledgeably, someone who has helped make a lot of the recommended changes and has seen their positive impact firsthand,” Porter says.

[ OPENING THE LINES OF COMMUNICATION] While Porter may have fought diligently to stave off certain changes to the historic Railroad Commission, he has worked equally as hard to make some positive reforms of his own, especially in terms of public outreach and communication. Shortly after taking office, Porter realized the Eagle Ford Shale in South Texas was poised to become not just one of the biggest discoveries of oil and gas reserves, but also one of the most significant economic discoveries in our state’s history. As such, the new leader knew he needed to take proactive steps to ensure development of the region was handled properly. “One of the main reasons I decided to run for Railroad Commissioner in 2009 was because of what had occurred in the Barnett Shale,” he begins. In the early 2000s, oil and gas drilling activity in the Barnett Shale skyrocketed, as it was the first shale play to be commercially produced by the combination of hydraulic fracturing and horizontal drilling. It was also the first major play in Texas to be situated directly in a highly populated urban area, often putting petroleum production and residential communities at odds. “The perception in the media and a lot of the general public, largely caused by radical environmentalists, was that the Railroad Commission was doing nothing — that oil and gas companies were not regulated and basically free to do whatever they wanted to do,” the state official explains. “Which is, of course, a misperception.” In order to avoid some of those issues, Porter created the Eagle Ford Shale Task Force, the first of its kind at the agency. The diverse 24-member task force is comprised of local community leaders, elected officials, oil and gas producers, water representatives, pipeline companies, oilfield service companies, and environmental and landowner interests. The group has held numerous meetings throughout the South Texas region beginning in July 2011, and it tackled pressing issues such as workforce development; infrastructure; water quality and quantity; RRC regulations; economic benefits; flaring and air emissions; health, education and social services; and landowner, mineral owner and royalty owner issues. “The task force really got people talking and working together,” the group’s founder says. “While not everything was perfect, development in the Eagle Ford — especially in terms of community relations — certainly went much smoother than in the Barnett Shale. The task force was a vital factor in that improvement and outcome,” In March 2013, in the midst of the 83rd Legislative Session, Porter issued the Eagle Ford Shale Task Force Report. The 155-page compilation of information regarding development of the shale, as discussed by the task force, was the first comprehensive report written about an oil and gas shale play. “The report gave a lot of members of the Legislature and Texas communities a solid knowledge base about what was going on in the Eagle Ford,” he explains, adding it

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intentionally lacks outright policy recommendations, especially given a majority of the topics discussed are tangential to oil and gas production but not necessarily within the RRC’s purview. “We left it to the Legislature and local policy makers to use the information to determine what course of action they thought they should pursue.” Not only was the report beneficial in the early stages of development, it continues to be a valuable educational resource. “A lot of people since then have used parts of it,” Porter says. “It still has a lot of validity if someone wants to read through and get a general primer on what is going on in a big play.” Porter’s proactive leadership and visionary approach toward development in the Eagle Ford quickly earned him attention and accolades, although he certainly won’t tell you that himself. “Commissioner Porter showed exemplary leadership and great initiative when he created the Task Force in 2011,” former Texas Comptroller Susan Combs said in a press release issued at the time. “I applaud Commissioner Porter’s efforts to take proactive measures [toward] ensuring the responsible development of the Eagle Ford Shale,” State Rep. Jim Keffer also said, who was at the time Chairman of the House Energy Resources Committee. South Texas State Rep. Richard Peña Raymond even donned Porter “the new pope of the Eagle Ford” at a press conference announcing the release of the report. (The announcement of a new pope had also come earlier that day from the Vatican.) In 2013, Porter was named “Man of the Year” by The Oil & Gas Year, Eagle Ford, Texas, as well as being recognized by SHALE Oil & Gas Business Magazine and Unconventional Oil & Gas Magazine for his foresight and guidance.

[ FUELING THE ECONOMY] Porter’s Eagle Ford Shale Task Force was a hit, but he didn’t stop there. In October 2013, the Chairman launched his Texas Natural Gas Initiative in an effort to promote and increase the use of natural gas in Texas, focusing largely on expanding utilization by the transportation and exploration and production sectors. “I realized, at that point in time, there was a huge dichotomy between how well the oil side of the industry was doing versus natural gas,” Porter recalls. Oil was averaging around $100 a barrel and heading higher, while natural gas was hovering around $3 to $4 per McF. “I thought if we really want to get the economy cracking, it would be good if gas was doing as well as oil.” Porter goes on to explain the benefits of using clean-burning natural gas as a transportation fuel. The homegrown resource is abundant, with Texas accounting for nearly 30 percent of total U.S. natural gas production. Plus, natural gas production within our state directly bolsters the Texas economy, providing valuable jobs and significant tax revenue as well as encouraging capital investment in Texas businesses. The Chairman has traveled the state hosting a series of events that bring stakeholders together to discuss business opportunities and challenges, as well as regulatory barriers and solutions for natural gas conversion and infrastructure. The forums have been highly attended and have included pertinent lawmakers such as Commissioner Toby Baker of the Texas Commission on Environmental Quality and State Rep. Jason Isaac, member of the House Environmental Regulation Committee. Other notable attendees include State Sens. Carlos Uresti and Judith Zaffirini, plus State Reps. Drew Darby, Jim Keffer, Phil King, Geanie Morrison, Chris Paddie and David Simpson. The 2014 series culminated with the first-ever Texas Natural Gas Summit & Job Fair in Austin last October. Many important ideas and issues have been discussed, and real change has already come about as a direct result of Porter’s efforts. The Texas Department of Transportation began posting signage along

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I’M PROUD THAT I NEVER HAD A GOVERNMENT OFFICE OR PAID POSITION BEFORE I RAN FOR RAILROAD COMMISSIONER. I REALLY STILL DON’T CONSIDER MYSELF A POLITICIAN.”

highways indicating locations of natural gas refueling stations, which has helped natural gas vehicle owners and increased overall awareness of such alternative options. Since launching his initiative, sales of natural gas as a transportation fuel in Texas have doubled, and the number of natural gas fueling stations has increased by an astounding 88 percent. The Chairman has also worked to highlight other uses of natural gas, for example, as on-site generation for drilling rigs and related equipment. In December 2013, Porter hosted an on-site generation workshop at the Commission in Austin and discussed the use of natural gas to power equipment on-site at multiple workshops. As of July, 15 percent of drilling engines in the U.S. now use natural gas fuel. The former accountant acknowledges that the rapid decline in oil prices has narrowed the differential between oil and natural gas significantly, which has somewhat slowed its adoption. But he maintains that long term, the benefits of using natural gas hold true and believes that natural gas will continue to provide a desirable alternative fuel source. Porter’s Texas Natural Gas Initiative not only motivated many to convert to natural gas, it inspired others to carry on his mission a step further. “[Rep.] Jason Isaac and Dr. Ken Morgan, of Texas Christian University, who were both very instrumental in helping with the workshops, very much believe in the direction that we were going and they decided to start a foundation to advance this goal from the nonprofit side,” he explains. In August, an esteemed group of industry, government and academic leaders established the Texas Natural Gas Foundation, a nonprofit educational organization working to further increase public awareness, support and knowledge of the benefits of using Texas’ natural gas.

[ WORKING TOGETHER ON OVERSIGHT] Porter is continuing the theme of public outreach and stakeholder involvement by directing Commission staff to hold another set of statewide workshops aimed at opening the lines of communication with local officials and regulatory bodies. The Railroad Commission’s municipal workshops were created in light of one of the biggest hotbutton issues facing the oil and gas industry today: local control. In November 2014, Denton voters approved a citywide ban on hydraulic fracturing after mounting tensions and miscommunications between the city, residents, oil and gas producers, and the Railroad Commission. Lawsuits were immediately filed questioning the constitutionality of the ban, arguing this authority fell under the purview of state regulators. Before the courts could weigh in, the Texas Legislature passed legislation on the matter. House Bill 40 set out to clarify and reinforce state law by enumerating the jurisdiction of the state and that of


municipalities over oil and gas regulation in Texas. Consequently, the Denton hydraulic fracturing ban was eventually overturned and the suits dropped. In an effort to work together with cities toward avoiding any further ambiguity or misunderstandings, Porter has taken the lead on initiating a series of working sessions involving RRC senior and district staff, mayors, city managers, inspectors and others who deal directly with oil and gas activity on the local levels. “What we really want to do is sit down with the cities and have a conversation so they can fully understand the policies, procedures and capabilities of the Railroad Commission; see if there are any areas where they feel there are gaps that we should look at; and let them know who they can call to talk to if they have questions or need something inspected,” the Chairman explains. The first meetings were held in October and the remainder are scheduled to take place over the following several months.

[ OVERSEEING HISTORIC RULE-MAKINGS] Porter has certainly devoted significant time and energy on public and stakeholder involvement outside the Commission, but these efforts have in no way precluded him from being actively engaged in the daily activities and his important responsibilities within the agency’s walls. In fact, since taking office the Chairman has overseen a near-record amount of rule revisions in order to keep the Railroad Commission’s regulations current and up-to-date. “Because of the rapid technical changes, particularly hydraulic fracturing with horizontal drilling and the changes that have arisen from that technology, the whole drilling paradigm has basically shifted from a vertical world to a horizontal world and there’s been a significant increase in activity,” he explains. For example, the Commission revamped its outdated water recycling regulations in March 2013 to reflect advancements in the field. “We found that, with the changes in technology, some of our rules were actually inhibiting water recycling rather than encouraging it,” Porter recalls. Amendments to the rules clarified recycling permit requirements and eliminated operators’ need for a permit to recycle water on their lease or to transfer fluid to another operator’s lease to be recycled. In May 2013, the Railroad Commission also adopted amendments to Statewide Rule 13 regarding well casing, cementing and integrity standards. Commission staff worked closely with stakeholders and interested parties for over a year to carefully craft a workable rule, which contains some of the most stringent requirements on well casing and integrity in the country. “By going above and beyond any federal requirements and exceeding almost every other state’s standards, we’re sending a strong message to the federal government that we in Texas are best able to regulate the oil and gas industry in our state,” the Chairman says. In October 2014, the Commission adopted changes to its rules governing disposal and injection in response to a string of seemingly unexplained seismic events in areas of North Texas beginning in late 2013. Media and environmentalists were quick to blame the tremors on oil and gas activity. While there has been some speculative correlation between disposing large amounts of fluid into certain formations and seismicity, the science is still inconclusive. Even so, Porter took what many would call a political risk, and in January 2014 he hosted a packed town hall meeting in the heart of the activity — Azle, Texas. Roughly 800 attendees showed up for the emotionally charged session that lasted well into the evening. “Although I was troubled to hear what these residents have been and are experiencing, I believe it is important to listen to their accounts firsthand to better understand their concerns,” Porter said at the time. “My goal was to reassure residents that their concerns are not falling on deaf ears and that the Railroad Commission is engaged and involved in gathering more evidence and data.” Following the meeting, Porter relayed the experiences and concerns

of residents to his fellow Commissioners and instructed the RRC Executive Director to begin a nationwide search for a qualified in-house Seismologist. Dr. Craig Pearson was hired as the RRC’s Seismologist shortly after and has assisted the Commission in analyzing and understanding relevant scientific data, as well as collaborating with outside academic and research institutions. Correspondingly, the Commission adopted amendments to Statewide Rules 9 and 46, which now take into account any prior or potential existence of seismic events in a given area. Disposal applicants must conduct a search of the U.S. Geological Survey’s seismic database for historic seismic activity within a 100-mile radius of the proposed well. The rules also reinforce the Commission’s authority to shut-in a well, revoke a permit or require any additional information deemed necessary at any given time. Additionally, the state agency has been extremely active and diligent in inspecting all wells in the vicinity of any seismic occurrence to ensure no loss in well integrity and protections. While the RRC continues to study and monitor these events and review all data and information, the Commissioners, especially Porter, must be commended for their quick yet measured and effective response.

[ FIGHTING THE FEDS] While Porter’s ability to get things done and bring people together may be the trademark of his tenure, the secondary pillar supporting his success on the Commission is his unwavering defense of state primacy of regulation over the oil and gas industry. “The other major reason I decided to run for Railroad Commissioner was my concern over the increasing overreach of the federal government,” Porter says. “It became apparent the feds wanted to take over state regulation, specifically of the oil

and gas industry, which I knew would be a huge negative for the state of Texas, the industry itself and, indeed, the economy of the nation.” During his nearly six years in office, the state regulator has adamantly fought repeated attempts by the federal government to control energy production in Texas. He begins to rattle off a laundry list of power grabs, primarily spearheaded by the Environmental Protection Agency (EPA), starting with what he calls its “failed witch-hunt” involving Texas-based Range Resources. In December 2010, the EPA made headlines when it issued an emergency order against Range Resources in response to a claim of water well contamination in Parker County, Texas. The environmental agency claimed there was “an imminent and substantial risk of explosion or fire” and contended there were “two people whose houses could explode.” The RRC quickly responded to the claims as well, launching a full-scale investigation. After thorough review and examination of all the evidence, the Commission definitively concluded that the presence of natural gas in the water well was not caused by Range Resources’ drilling activity. Instead, the gas was naturally occurring and actually came from the much more shallow Strawn field. More importantly, there was no risk of fire or explosion. More than a year later, in March 2012, the EPA quietly backpedaled and withdrew the Imminent and Substantial Endangerment Order. Regardless, Porter says the federal agency still managed to create quite a firestorm of controversy around the situation and points out that this is just one example in a pattern of similar events. “This case and others like it in Pennsylvania and Wyoming prove that the EPA has no problem using extreme and frankly irresponsible tactics to further its political agenda, with no regard for science or fact,” the Texas regulator says. “Sensationalism and propaganda have no place in sound public policy.”

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The EPA more recently made headlines when it issued the Clean Power Plan in August, requiring a roughly 30 percent decrease in carbon emissions from power plants by 2030. But the numbers and science back up the power industry’s claims that it was voluntarily making strides in this area without the need for costly government regulations. From 2005 to 2013, carbon emissions from the sector had already been on the decline, falling nearly 15 percent. To Porter, the federal mandate represents a significant and unnecessary burden to Texas, saying he’s especially concerned with the detrimental impact on the already-strained power grid and the tremendous economic implications. “As much as Texas has grown and continues to grow, we need electricity from every source possible,” the Chairman says. “If we lose a lot of coal plants and electrical generating capacity, I am gravely concerned about what that will mean for the day-to-day well-being of all Texans.” The Electric Reliability Council of Texas, which is responsible for 90 percent of Texas’ power load, has said it could be forced to retire between 3.3 and 8.7 gigawatts of coal-fired capacity, resulting in widespread reliability issues and increased costs to consumers. One outside estimate shows electricity costs in Texas could increase by more than $30 billion, with individual households’ electricity and gas bills rising more than 50 percent by 2020. Porter sees through the seemingly arbitrary, onerous guidelines and points to a relatively strong correlation between states that did not vote in favor of our current president and those targeted in the plan. “I think it’s largely political payback rather than reasonable policy,” he stipulates. But, Porter continues, the EPA didn’t stop there. Shortly after, it issued new rules targeting ambitious and equally arduous reductions of methane and volatile organic compounds (VOCs) by the oil and gas

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industry, as part of the federal administration’s overall goal of a 40 percent decrease in methane emissions by 2025. Porter says these regulations will also carry a significant economic cost, potentially crippling energy production in Texas. The EPA may be the most prominent adversary in the fight over oil and gas regulation, but the Chairman says he credits the Obama administration for getting more creative and finding other agencies to carry out its agenda. The EPA recently partnered with the U.S. Army Corps of Engineers to dramatically expand jurisdiction over oil and gas activity under what Porter calls the guise of water regulation with the Waters of the U.S. rule, which makes substantial changes to definitions used in the Clean Water Act. The Bureau of Land Management is also chiming in, as it has been working on rules governing hydraulic fracturing on public lands, which many view as a precursor to the federal government regulating private leases. The U.S. Fish and Wildlife Service has become increasingly concerned with the protection of obscure species that happen to reside in some of Texas’ most prolific oil and gas producing regions — whether it be the earless spot-tailed lizard in the Eagle Ford or the lesser prairie chicken in West Texas. “A whole slew of things just keep coming down the track,” Porter concludes. “You deflect one, you defend from one, and there’s three more behind it that are trying to run you over.” As the Chairman of the Railroad Commission, Porter is active in defending Texas from potentially harmful federal regulations. Most recently, he led the RRC in joining in a multiagency, multistate lawsuit to combat against the EPA’s expansion of the Waters of the U.S. rule. The Chairman spends a lot of time on the defense, but he recently took a proactive stance in advocating for the repeal of the crude oil export ban. In July, he testified before the U.S. Agriculture Committee in


DAVID PORTER IS A LEADER WHO HAS THE EXPERIENCE AND PROVEN TRACK RECORD OF STANDING UP AND DOING WHAT’S BEST FOR THE INDUSTRY AND FOR TEXANS, AND ONE WHO IS EAGER TO KEEP FIGHTING THE GOOD FIGHT ” favor of removing the antiquated restrictions. In early October, the U.S. House approved a measure overturning the ban.

[ CONTINUING TO DO THE JOB] There is certainly no shortage of issues facing the oil and gas industry. At times, it appears as if another obstacle arises at nearly every turn and on every level — from local communities banning drilling and seismic phenomena, to environmental groups’ anti-industry campaigns and encroachment by the federal government; all the way up to volatility in the global commodities market and foreign countries’ stronghold over pricing and supply.

It would seem more important now than ever to have a leader on the RRC as selfless and humble, yet stalwart and steady, as David Porter. He’s a leader who has the experience and proven track record of standing up and doing what’s best for the industry and for Texans, and one who is eager to keep fighting the good fight. “I intend to continue accomplishing whatever we need to accomplish, regardless of what comes our way,” Porter says, as he looks forward to a potential second term. “Sometimes you have to do the work behind the scenes; other times you have to get out in front and lead the band. I can do, and have done, both. Whatever it takes to get the job done.”

To learn more about Chairman Porter and the Railroad Commission, visit www.rrc.state.tx.us.

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INDUST RY

STEER: A GUIDE TO THE OIL AND NATURAL GAS INDUSTRY BY: OMAR GARCIA

AS THE CONDUIT between the community and the oil and gas industry in the Eagle Ford Shale region, the South Texas Energy & Economic Roundtable (STEER) is focused on educating the public about the industry and developing a skilled and educated workforce. To educate our younger generations about the oil and gas industry, STEER offers an oil and gas program to middle school and high school students. With this program, students have the opportunity to hear directly from people who work in the industry about the various career options available for students with education ranging from a high school diploma or GED to a master’s degree.

THE PRESENTATION CONSISTS OF FOUR KEY DISCUSSION POINTS: 1. Oil and gas is important to our everyday lives. Students walk away with a new understanding of how the oil and gas industry is vital to our everyday lives, from household items to transportation, the oil and gas industry provides us with life’s essentials. 2. The opportunities available to the Eagle Ford Shale area communities and residents. Many students in the area are exposed to the industry, but are not familiar with the ways that the industry has impacted their communities. With this new educational program, we fill in the gaps by providing students with information on the economic impact in the region, which includes jobs and the building of new schools, restaurants and grocery stores.

TO THIS POINT, STEER HAS REACHED MORE THAN 900 MIDDLE SCHOOL AND HIGH SCHOOL STUDENTS IN THE EAGLE FORD SHALE AREA 26

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3. Safety is the top priority of the oil and gas industry. The safety of those living and working in the Eagle Ford Shale area is a top priority for STEER and its members. At each presentation, students learn what safety protocols and procedures the industry deploys and have the opportunity to try on some of the safety gear that is used in the field each day. 4. Where might you fit into the industry? Students are encouraged to consider various career options in the oil and gas industry. From working in operations on the oil field to marketing, sales and information technology, there are opportunities in the industry that fit all interests and skills. STEER informs students of the multiple career and educational opportunities that are available. We encourage students to focus on science, technology, engineering and math, and also give students other options as the oil and gas industry employs many fields beyond STEM-related careers. To this point, STEER has reached more than 900 middle school and high school students in the Eagle Ford Shale area.

If you are interested in an oil and gas presentation for your school, please contact STEER at info@steer.com.


NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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INDUST RY

LET’S TALK TURKEY ABOUT ENERGY THIS HOLIDAY SEASON SPECIAL TO SHALE

THE HOLIDAYS ARE RIGHT AROUND THE CORNER. Just about all of us will be visiting with family, friends and neighbors at parties and around the dinner table. ItÕs a great chance to talk turkey about energy Ñ and you can prepare yourself with the information and online training from the American Petroleum InstituteÕs industry advocacy organization, Energy Nation.

The U.S. is now the No. 1 producer of oil and natural gas worldwide. Texas alone is one of the world’s leading producers. We are long past the days of gas lines and energy scarcity.

Increased production of natural gas, made possible by hydraulic fracturing, is helping our environment by improving air quality. Because of the increased use of natural gas to generate electricity, greenhouse gas emissions have been lowered to levels not seen since the 1990s. We should be sharing this information — and correcting misinformation — whenever we get the chance. Resources, talking points and training are available when you participate in Energy Nation.

SERVE UP THE FACTS

on energy development this year. energynation

OIL AND NATURAL GAS DEVELOPMENT SUPPORTS ABOUT 9.8 MILLION AMERICAN JOBS, INCLUDING ABOUT

1.9 MILLION JOBS IN TEXAS

While Energy Nation — as the name implies — is a national organization, it has a highly active membership in Texas. Over 30,000 Texans whose livelihoods are connected to the oil and gas industry participate — and their participation makes a difference. If you or a family member’s job or business is connected to the oil and gas industry, Energy Nation is a great resource for learning about important issues and becoming active in a community of industry supporters. As you’re probably well aware, oil and gas are under attack across America — even in Texas. The way to fight back is one conversation at a time. We can set the record straight and win new supporters (around the dinner table and elsewhere) by sharing facts about energy production and talking about what we do and how we do it. We all know that oil and gas are central to the American way of life. Energy heats our homes, powers American businesses, supports our nation’s security and even enables us to enjoy a delicious roasted turkey for Thanksgiving dinner. But here are some other facts you can share about American energy:

Oil and natural gas development supports about 9.8 million American jobs, including about 1.9 million jobs in Texas.

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When industry members talk with other people about energy, they shouldn’t just play defense. These conversations can be used to highlight the potential of what our industry can do for America — if we’re given a chance. Currently, many government policies and regulations create barriers to our industry’s success and ability to create more jobs. For example, our industry could create hundreds of thousands of new jobs and add billions of dollars to the American economy if Congress would lift the obsolete, 1970s-era ban on crude oil exports. If Iran can now export its oil, why can’t the U.S.? Similarly, government has the power to expand access to oil and natural gas resources in the Gulf of Mexico and other offshore areas. Only about 13 percent of available offshore areas are open to energy development. This needs to change. Offshore development is safer than ever, and every energy sector member can help deliver this message. Congress, regulators, and the White House are more likely to take positive steps when they hear voices of support — and Energy Nation helps organize this support. Energy Nation makes it easy for anyone to be a strong advocate. The organization provides training, information and online tools so that you can learn and engage in advocacy action without a huge time commitment. Right now, Energy Nation is running an enrollment campaign. It’s free to join and participate. With the elections coming up next year and more regulatory and policy battles expected, now is a great time to sign up.

For more information on Energy Nation and how to register, visit www.energynation.org.

KRISROBIN/BIGSTOCK.COM

SUPPORTING POSITIVE PUBLIC POLICIES


NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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INDUST RY

T

CHALLENGES REMAIN FOR MEXICO ENERGY REFORM BY: THOMAS TUNSTALL, PH.D.

his past July, I was privileged to testify before the U.S. House Committee on Foreign Affairs Subcommittee on the Western Hemisphere on the topic “Pursuing North American Energy Independence: Mexico’s Energy Reforms.” It was a humbling experience to share the podium with such highly regarded panelists, which included Carlos Pascual, Senior Vice President for IHS and former U.S. Ambassador to Mexico; Tony Payan, Director for the Mexico Center at the Baker Institute for Public Policy at Rice University; and Eric Farnsworth, Vice President for the Council of the Americas and Americas Society. We were asked to provide statements on the current progress of energy reform in Mexico, which has seen some interesting developments over the last few weeks. The preliminaries got underway last year when PEMEX was awarded 83 percent of the country’s proven reserves and 21 percent of its prospective reserves. Subsequent rounds of bids that are now open to private investors have or will include shallow-water, deepwater, conventional and unconventional (shale) onshore blocks. Round one will consist of five phases, the first of which was completed shortly before the congressional hearing. The bid results were announced on July 15 and were clearly disappointing. Of the 14 shallow-water blocks that were offered for tender, only half of them received bids. Of those, only two of the bids were accepted by the Comisiόn Nacional de Hidrocarburos (CNH), the Mexican hydrocarbon commission, which is similar to the Railroad Commission here in Texas. The five bids that were rejected contained terms that were below the minimum thresholds set by the Mexican government. The two winning bids came from a consortium consisting of a recently formed Mexican company named Sierra Oil and Gas, Talos Energy based in Houston and Premier Oil. According to Payan, the early, poor performance of the bidding process made it clear that reform of the energy industry in Mexico was as much a function of necessity as anything else. Declining oil and gas production combined with a lack of technology has essentially forced reform upon the Mexican government, which had few, if any, other viable options. Case in point: The country’s oil production peaked in 2004 and has been declining in the decade-plus since. In response to the poor showing from private investors, the CNH held an extraordinary meeting on August 4 to modify the bidding rules for the second tender in round one, which will consist of additional shallow-water blocks. Operators may now submit bids both individually and as part of a consortium. The arbitration authority has been changed from the President of the International Court of Justice (ICJ) to the Secretary General of the Permanent Arbitration Tribunal of the Hague. This should be an improvement, as evidence suggests that ICJ judges tend to favor the states that appoint them. Other changes relaxed the financial requirements for bidding firms. Rules for other future tenders may undergo modification as well in order to make terms more favorable to private investors. The upcoming phases will no doubt be watched closely. Five blocks of shallow-water fields were scheduled to go out for bid at the end of September 2015. Onshore conventional opportunities that include 26 fields will open for bid on December 15. Deepwater and unconventional shale, as well as other blocks are expected to go out for bid in 2016. Hopefully the next series of tenders will stimulate greater interest from the private sector. While enacting constitutional changes and passing secondary laws were significant achievements for Mexico, the implementation phase, which has now begun, will clearly prove equally or even more difficult. For the moment at least, the important business of energy reform remains very much a work in progress.

THE EARLY, POOR PERFORMANCE OF THE BIDDING PROCESS MADE IT CLEAR THAT REFORM OF THE ENERGY INDUSTRY IN MEXICO WAS AS MUCH A FUNCTION OF NECESSITY AS ANYTHING ELSE

About the Author: Thomas Tunstall, Ph.D., is the Research Director at the Institute for Economic Development at the University of Texas at San Antonio. He was the principal investigator for the Economic Impact of the Eagle Ford Shale studies released in May 2012, March 2013 and September 2014, as well as the West Texas Energy Consortium Shale Study. He has published peer-reviewed articles on shale oil and gas, and has written op-ed articles for The Wall Street Journal. Dr. Tunstall has spent a significant portion of his career on overseas workforce and economic development assignments in such locations as Azerbaijan, Afghanistan, Kenya and Zambia. He holds a Ph.D. in economics and public policy and an M.B.A. from the University of Texas at Dallas, as well as a B.B.A. from the University of Texas at Austin.

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SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015


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NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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INDUST RY

WOMEN WHO LUNCH SPECIAL TO SHALE

T

he Women’s Energy Network (WEN) is a premier industry organization whose mission is to educate, retain and develop professional women working across the energy industry. WEN’s development programs foster career and leadership growth, while mentoring and connecting women across the energy value chain by providing philanthropic STEM opportunities, educational luncheons, expert speaker programs, mentoring circles and executive events, as well as a biennial national conference and charity luncheon. In WEN’s 21 years of existence, one of its professional development goals was to increase the technical learning experience among its programming and provide innovative opportunities to

Generation Changes the Game for Global Cities & Industry.” At another luncheon, Water Standard CEO Amanda Brock provided thoughtful insight on “Water Treatment’s Significant Impact on the Upstream Industry.” The feedback from the audiences of both luncheons was overwhelmingly well-received and positive. “I feel that I learn so much when I attend a WEN luncheon. I leave knowing enough to be dangerous on the topic,” says a recent attendee. Overall attendance at the WEN monthly luncheons is the highest the organization has ever seen. In addition to programming, WEN looks for unique opportunities to partner with organizations and sponsors to bring innovative networking and learning opportunities to its members. For the second year in a row, WEN partnered

WEN OFFERS MONTHLY LUNCHEONS THAT BRING THE BEST AND THE BRIGHTEST IN THE ENERGY INDUSTRY TO ADDRESS ITS MEMBERS AND PRESENT ON BOTH TECHNICAL AND NONTECHNICAL TOPICS engage its members. WEN offers monthly luncheons that bring the best and the brightest in the energy industry to address its members and present on both technical and nontechnical topics. This year, WEN was very fortunate to host a wide variety of technical topics and speakers at each of its luncheon locations. For example, WEN members and guests heard from Ana Amicarella, Managing Director of Americas Power Projects at Aggreko. Amicarella delivered an engaging discussion on “Powering Up: How Temporary Power

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SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015

with GE to offer WEN members an opportunity to connect with one of its premier sponsors who’s known in the industry for its innovation and commitment to women. During the 2014 Offshore Technology Conference (OTC), one of the largest energy trade shows in the U.S., Susan Peters, Senior Vice President of Human Resources at GE, shared her journey and leadership experience firsthand to a soldout crowd of WEN members and student leaders from Rice University, the University of St. Thomas and the University of Houston student chapters.

In May 2015, WEN welcomed the opportunity to partner with GE again, and its members and student chapter leaders welcomed Lorenzo Simonelli, President and CEO of GE Oil & Gas, as well as a panel of executive female leaders to discuss GE’s innovative approach to women in leadership. Attendees left the event inspired and excited to know that there is hope and opportunity in a downturned economy, and women are top of mind! Also this year, attendees were treated to a one-day free pass to attend the OTC, which was definitely a treat to all who were in attendance. “I am so elated about the direction WEN continues to grow. This year has been a record-breaking year with the expansion of new chapters, increase in membership and technical-focused partnerships and programming, the successful execution of the national conference, launch of our STEM Charity Luncheon, and much more,” says WEN President Dannetta English Bland. WEN currently has approximately 4,000 members across 10 chapters in Appalachia, Chicago, Greater Atlanta, Greater Oklahoma, Houston, North Texas, the Permian Basin, South Texas, Washington, DC and South Louisiana to satisfy women’s networking and career development needs. WEN has expanded rapidly — domestically and soon-to-be abroad — and continues to be a one-stop shop for women, ranging in experience from the C-suite to the first-year professional in the energy industry!    For more information on WEN or to attend a WEN event, visit its newly launched website at www. womensenergynetwork.org. 


TAP INTO YOUR POTENTIAL

SHALE IS BOOMING AND THE COMPETITION IS GROWING. Don’t let your business get left in the dust—we’ll steer your marketing to a new level of success. Services may include but are not limited to:

VISIT SHALEMAG.COM/MARKETING OR CALL 210.240.7188 FOR ADDITIONAL INFORMATION.

NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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INDUST RY

BY: PAULA WAGGONER-AGUILAR

» A brilliant explorer and his

P

artnering strategy is a topic that is critical to the success of energy technology start-ups and other entrepreneurial-type ventures. Yet too often, a thoughtful evaluation of the wants and needs of the firm and its partners are overlooked in the haste of trying to accomplish something under deadlines. For the purposes of this article, the use of the term “partnering” is intended to relate to any form of combining of efforts and collaboration — irrespective of the formal structure. So that can include informal collaborations, a more formal uniting of efforts, partnerships, joint ventures, strategic alliances, you name it.   In my experience as an advisor and financial executive, I have seen my share of good and bad partnership experiences. Here are a few examples that illustrate the importance of partnering strategy:

» A young energy technology entrepreneur turns down the lure of fast

riches from large venture capital groups in favor of a smaller offer from a local high net worth investor. The investor is a successful hometown guy with a passionate desire to see talented local entrepreneurs flourish, grow local companies and create more jobs for the community. The entrepreneur appreciated what the investor was trying to do and was willing to bet on him. So far, that investor has mentored and opened amazing doors for the entrepreneur. Likewise, he inspired professionals in the community to join in support of the local vision.

» An experienced boomer

technologist leaps into entrepreneurship and builds a digital oilfield company addressing the needs of independents operating in remote U.S. shale plays. Customer feedback indicates the technology is easier to work with and is more reliable in communication-challenged areas than comparable technology on the market. In order to achieve his growth objectives, the entrepreneur recognizes he needs a partner with deep pockets and an established industry brand. The entrepreneur narrows down a list of potential partners and begins approaching companies with an offer to consign complementary equipment in markets where he

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SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015

team seek funding from private equity to explore for oil in an area of the world with vast potential thanks to significant changes in the political landscape. The team raises a record amount of money for a start-up venture. Yet, three years later the team voluntarily terminates the partnership because the investor relationship has soured. The team starts all over again. The second time around, the most important factor to the team’s success is picking an investor who they like, one who understands the risks and shares a longer-term investment horizon, and who is known as one of the best and most trustworthy firms in the business. Their bet pays off — but not without overcoming amazing serial business odds, twice the work and double the time.   So how do you plan for successful partnerships? It is really quite simple. When you consider the exponential value of what could be at stake, the time invested is well worth the effort. Here are a few basic questions to get you started in your assessment:   » Who are you partnering with? What is their reputation?  What do their current or former partners say about them? 

» What are the expectations

for the partnership? What are the motivating factors for the partnership proposal? For example, access to capital, revenue and profits, sharing talent or other resources, intellectual property or knowledge, industry collaboration, risk sharing, technology, research and development, brand credibility, relationships, access to new markets or distribution channels, capabilities and execution, etc.

» Are the growth potential and

the perceived strategic value of the relationship for both parties reciprocal? What are they? How do you measure them?

» What are the risks or the negatives?

» Are there any situations that

might cause the partner to put his or her business (profits) ahead of the partnership? Have you talked to the partner about these concerns and developed a solution to ensure success?

» What resources will you and your partner contribute? How will these be valued?  

» How will you operate? Who will

lead? How do you want decisions made? What happens if you disagree — how will you resolve disagreements? Does one of the partners have a controlling vote?

» Under what conditions will you

exit? How will that occur? Who gets what?   This is by no means a comprehensive list. It is intended to get you started.  There are several examples of successful long-term partnerships in our industry. They are best described as being mostly equitable and providing mechanisms for changes in circumstances. The partners value the relationships, and they work at maintaining them. They also recognize these partnerships will not last forever, and they strive to end them amicably.

About the author: Paula Waggoner-Aguilar is with The Energy CFO LLC, a niche entrepreneurial energy finance firm providing CFO leadership to energy and technology entrepreneurs and start-ups. To learn more about services available at The Energy CFO LLC, visit www. theenergyCFO. com.

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PARTNERING UP

is leading. Eight months later, the entrepreneur has completed record sales of both technologies and receives an unsolicited offer to buy his technology and an executive operating position from the partner.


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NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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INDUST RY

WHY THE V-SHAPED RECOVERY BECAME A U BY: DAVID BLACKMON

EARLY THIS YEAR, many observers, including yours truly, expressed optimism that the ongoing downturn in oil prices might well result in what analysts refer to as a V-shaped recovery rather than a longer Ushaped one. The V shape refers to what a quick recovery would look like on a line graph, with a steeply slanted downward jaunt followed immediately by a similarly steep line back up. A U shape would have a long period of low prices before the upward movement began. In March and April, it looked as if the optimists might be right, as the oil price ticked up rapidly from the low $40s to the low and even mid $60s range. Upstream companies became very excited at that time at the prospect of at least being in a $60 price environment — a price level at which many, if not most, shale wells become economic to drill. So companies went about adjusting their mid-year budgets, planning increased capital spending and entering into new contracts for drilling rigs and ancillary services. As a result of this newfound optimism, a national rig count that had necessarily been in a steep decline from October 2014 through March 2015 began to tick slowly back upward. In order for this to have been a quick recovery, U.S. oil production would have had to show a significant decline in the first half of 2015. Prior to April, the rig count was well on its way to the level at which additional drilling would not be able to make up for the steep initial decline rates that are characteristic of shale wells. But what one might call the irrational exuberance created in the industry by $60 oil prices ended all of that and has been a major factor in extending the downturn. But it isn’t the only factor — far from it. There are many other reasons, both international and domestic, why our current situation has become a U-shaped recovery. The other big domestic factor has come in the form

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SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015

of re-fracing shale wells. This concept has been framed as something entirely new in most of the news media, but, in reality, producers have been “re-fracing” (i.e., going back into an existing shale well and performing a second frac job in order to stimulate production and enhance the ultimate recovery from the well) since the very early years of this century. Of course, the technology employed has improved over time; and many shale producers looking for ways to maintain overall production rates on dramatically reduced capital budgets early this year landed on the re-fracing of existing wells as a very cost-effective means of accomplishing this goal. Thus, due to all of the added production coming from already-drilled holes, the 50 percent reduction in the overall rig count failed to produce the supply response that had been anticipated. Internationally, several big factors have also played a role in extending this downturn. The first and most obvious has been the continuing ramping up of production by Saudi Arabia, in its ongoing stated effort to increase and protect global market

share. Late last year, Saudi oil ministers made it clear they planned to flood the market with as much oil as they could in an effort to harm the U.S. shale industry and take market share away from U.S. producers. The ministers made it clear that Saudi Arabia is willing to incur significant financial harm in order to achieve this goal. The Saudis have been partly successful with this strategy, and they may become completely successful with it if they are willing to endure mounting financial pain for another year or so. Saudi Arabia’s partial success has involved gaining a larger share of the global oil market. When the Saudis embarked on this strategy last November, their production for that month was approximately 9.7 million barrels of oil per day (BOPD). By June 2015, their production had increased to approximately 10.6 million BOPD, about an 8 percent rise. So, the Saudis obviously have a larger share of the overall market today than they did a year ago. However, this limited bit of success has not come at the expense of U.S. shale producers, as shale oil production in the U.S. is as high today as it was a year ago. Rather, it has come mainly out of the hides of other OPEC member countries, like Venezuela and Libya. This increase in Saudi market share has also come at great financial cost, as the country has been forced to draw down its sovereign wealth funds by more than $70 billion in order to maintain its commitments to social

THERE ARE MANY OTHER REASONS, BOTH INTERNATIONAL AND DOMESTIC, WHY OUR CURRENT SITUATION HAS BECOME A U-SHAPED RECOVERY


spending during 2015. The Saudis also made the mid-year decision to borrow money on the financial markets, the first time they have done so since 2007. Given that Saudi Arabia admits it needs an oil price north of $90 in order to meet its social obligations, there is a legitimate question regarding how much financial pain they are willing to endure to continue this exercise. The other influential international factor that has served to extend the downturn in oil prices was the decision by the Obama administration to enter into its executive agreement with Iran that will allow that country to begin exporting more of its crude oil in the first or second quarter of 2016. The announcement of this agreement had an immediate and major impact on the price of oil within a few days, thanks mainly to an incredible amount of misinformation put out by the U.S. news media. As soon as the agreement was announced, the media was filled with wild stories claiming that Iran would immediately be allowed to put as much as 3 million additional barrels of oil onto the international crude oil market. The market very predictably reacted to this wealth of bad reporting; and the price rapidly collapsed, going from more than $60 per barrel to around $40 per barrel in a matter of a few weeks. The truth is that Iran’s total producing capacity is in the 3 million BOPD range. The country already exports quite a bit of this total under existing arrangements and uses much of the remainder for its own internal needs. Once sanctions are lifted in the first half of 2016, Iran will likely be able to export something in the range of 500,000 BOPD above their current export levels. That is a long way from 3 million. All of these factors have conspired to create our U-shaped downturn. But the ramp back up could begin more quickly than some currently anticipate. The U.S. rig count has begun to decline again, and capital budgets are going to be sliced to the bone for 2016. The Saudis have basically exhausted their ability to ramp up production, and the U.S. shale production began to show a significant downward supply response in July. As the U.S. rig count decline accelerates, domestic producers will be increasingly unable to offset the steep decline rate of shale production with new and re-fraced wells. This means we will very likely see a dramatic decline in U.S. production over the next six to nine months. This decline, combined with an ongoing decline in Russian production and increasing global demand, is likely to eat up the current oversupply situation fairly rapidly. So help is on the way. It can’t get here soon enough. About the author: David Blackmon has spent 35 years in the oil and natural gas industry, in a variety of roles. He has spent the last 20 years engaged in public policy issues at the state and national levels. Contact David Blackmon at david. blackmon@shalemag.com.

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NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE


POLIC Y

IN THE INTERIM BY: GLORIA LEAL

L

ast month, Lt. Governor Dan Patrick announced interim charges for the Natural Resources & Economic Development Committee; the Agriculture, Water & Rural Affairs Committee; and the State Affairs Committee. Interim charges are directives from the Lieutenant Governor to Senate committees requesting additional study in order to make recommendations for the next legislative session. According to Patrick, the interim charges reflect the concerns and priorities of Texans across the state and include input from every senator.  According to a press release from the Lieutenant Governor’s office, The Natural Resources & Economic Development Committee “will study the federal mandates being implemented by the Environmental Protection Agency (EPA) and the impact they will have on the Texas economy.” The same committee will also review the competitiveness of Texas’ permitting process and make recommendations on how to maintain Texas’ friendly business climate. Also mentioned in the press release, the Senate Agriculture, Water & Rural Affairs Committee “will continue their critical focus on protecting and increasing the water resources of our state while preserving the water rights of all Texans.”  Some of the specific charges to the above committees are set out below — additional charges to other committees were also released.

Natural Resources & Economic Development

Implementation of Federal Regulations: Study the impact and identify challenges Texas faces implementing proposed federal Environmental Protection Agency regulations, including, but not limited to, the Clean Power Plan, reduction of methane and volatile organic compounds (VOCs) from oil and gas facilities, ozone standards, regional haze, and Waters of the U.S. Make recommendations for legislative or constitutional action the committee considers necessary.     Texas Emission Reduction Plan (TERP): Study and make recommendations regarding the use of Texas Emission Reduction Plan (TERP) funds, including reducing air emissions from mobile sources in response to changes in ozone standards.    Economic Development: Evaluate the effectiveness and necessity of programs and resources currently used to support economic development in Texas. Make recommendations regarding continuation of effective strategies, modification of existing administrative or regulatory barriers, and the reduction or elimination of ineffective programs.     Expedited Permitting: Evaluate the permitting process in Texas and neighboring states and make recommendations for eliminating unnecessary barriers and expediting the process to ensure that the regulatory process is consistent and predictable.     Electric Reliability Council of Texas/Public Utility Commission of Texas (ERCOT/PUC) Electricity Issues: Conduct legislative oversight and monitoring of agencies and programs under the committee’s jurisdiction. In this oversight and monitoring, the committee should: 1) identify and recommend opportunities to streamline programs or services and enhance grid safety while maintaining the mission of ERCOT and PUC and their programs; and 2) identify

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SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015

barriers ERCOT or PUC may have in their governance that may be appropriate to improve or eliminate.     Oilfield Theft: Study and make recommendations for solving the oilfield theft problems facing Texas, including identifying the proper mechanisms for increasing enforcement effectiveness.     Monitoring Charge: Monitor the implementation of legislation addressed by the Senate Committee on Natural Resources & Economic Development during the 84th legislative regular session, and make recommendations for any legislation needed to improve, enhance, and/or complete implementation. Specifically, monitor the following: 1) legislation relating to Texas aerospace incentives; 2) expedited permitting; and 3) electric utility rate adjustments.  

Agriculture, Water & Rural Affairs

Surface Water/ Groundwater: Study and make recommendations regarding the ownership, production, and transfer of surface water and groundwater in the state of Texas.     State Water Plan: Study and make recommendations on improving the process of developing and executing the State Water Plan.     Agricultural Liens: Study and make recommendations on improving the law in this state regarding

agricultural liens under Chapter 70, Agricultural Code. The study should include whether sufficient safeguards exist to protect the financial interest agricultural producers have in their product.  Water Litter: Study and make recommendations on the effects of windblown and waterborne litter. The study should include an analysis of the economic effects of litter, any necessary methods to prevent and remediate litter, and an assessment of state and local programs to reduce litter.     Game & Agriculture Product Safety: Study and make recommendations on improving the laws regarding the management of game animals, production of domestic fowl, and development of agricultural products in the state to reduce the occurrence and spread of disease and harmful pests.     Promotion of Texas Agriculture: Study the economic benefits the Texas Department of Agriculture’s Market Development Services provide to the state through promoting Texas agricultural products. Review the current marketing services and strategies available to Texas producers and determine additional resources necessary to increase the Market Development Services capabilities. Make recommendations for legislative action, if needed.    Monitoring Charge: Monitor the implementation of legislation addressed by the


Senate Committee on Agriculture, Water & Rural Affairs during the 84th legislative regular session, and make recommendations for any legislation needed to improve, enhance, and/or complete implementation. Specifically monitor the Texas Water Development Board’s process in the identification and designation of brackish groundwater zones.  

ANDREYPOPOV/BIGSTOCK.COM

State Affairs

Judicial Matters: Examine the need to adjust Texas judicial salaries to attract, maintain, and support a qualified judiciary capable of meeting the current and future needs of Texas and its citizens. Study and recommend whether Texas should delink legislators’ standard service retirement annuities from district judge salaries. Examine the effect of eliminating straight-party voting for candidates for judicial office and make recommendations to ensure candidates are given individual consideration by voters.     Eminent Domain: Gather and review data on the compensation provided to private property owners for property purchased or taken by entities with eminent domain authority. Examine the variance, if any, between the offers and the fair market values of properties taken through eminent domain. Make

recommendations to ensure property owners are fairly compensated.     Ethics: Review current ethics laws governing public officials and employees and recommend changes necessary to inspire the public’s confidence in a transparent and ethically principled government. Review public officials’ reporting requirements to the Texas Ethics Commission. Examine the categorization of ethics reporting violations and make recommendations to encourage accurate reporting and timely correction to inadvertent clerical errors.     Monitoring Charge: Monitor the implementation of legislation addressed by the Senate Committee on State Affairs during the 84th legislative regular session, and make recommendations for any legislation needed to improve, enhance, and/or complete implementation. Specifically, monitor the following: 1) implementation of open and campus carry legislation and determine if the current laws regulating the places that handguns can be carried are easily understood or if clarification is needed to ensure the average citizen understands when, where, and under what circumstances it is lawful to carry a weapon, versus when it is a criminal offense for which there may be a defense; 2) requirements

for guardianships; 3) the electronic voting program for certain military members serving overseas; 4) changes made to the employment retirement system. Railroad Commission of Texas: Regulatory Update During the period between legislative sessions referred to as the “interim” in legislative jargon, state agencies deal with a myriad of regulatory issues including governance, enforcement, rulemaking, hearings, legislative implementation and, if applicable, the Sunset Advisory Commission review process. The current oilprice slide weighs on state growth, employment and other sectors of the economy; and the reduction of revenues for state government may weigh on the regulatory functions of state agencies. On a more direct level, the continued downturn in the price of oil and the reduction in drilling

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activity raise concerns about the impact on the budget of the Railroad Commission of Texas (RCC) and, in turn, possible impact on agency operations and the assessment of fees and surcharges. Whereas lower oil prices are a boon and a bane for oil-producing economies and adjusting mechanisms are in place, concerns are that a sustained dip will have consequences. Whatever the fallout, the business of regulating continues as agencies are charged with specific responsibilities. Some activities are highlighted below:

Approval for disposal waste facility delayed Applications for permits are routinely approved or denied by the three-member commission after due deliberation; however, on occasion, additional consideration may be the result. An application filed by Pyote Reclamations Systems for an oilfield waste facility to be located near Nordheim in DeWitt County was the subject of a contentious hearing at the Railroad Commission in September. Even though the proposed project was classified as a nonhazardous facility and the nearest comparable waste facility was 75 miles away, the project faced considerable local opposition. Citizenry from the city of Nordheim and surrounding school districts voiced concerns about groundwater contamination, traffic and roadway safety, and reduction in property values. The hearing examiner for the RRC recommended the commission approve the facility saying it met state requirements. On a 2–0 vote with Commissioners David Porter and Ryan Sitton voting in favor, the commission voted to send the permit application back to agency staff to consider changes made to the site plan during the hearing process and whether the facility could handle storm water from a 50-year flood due to proximity to the Gulf of Mexico. The agency standard is a 25-year flood event.

Seismic hearings update: ties between disposal wells and seismicity activity in Azle, Texas, area, unsupported Earlier this year, an article regarding a study by Southern Methodist University (SMU) titled “Causal Factors for Seismicity near Azle, Texas” drew a connection between disposal well activity and seismicity that occurred in the North Texas area. Subsequently, the Railroad Commission initiated a series of actions to evaluate the relationship, if any. During the summer, Commissioner Ryan Sitton convened a technical meeting with experts and staff and Chairman David Porter and Commissioner Christy Craddick joined to order two “show cause” hearings to take evidence regarding specific disposal operations in the area. Specifically, the commission directed the Hearings Division to initiate proceedings requiring the operators of two disposal wells in the area of Azle to “show cause” of why the injection permits for the wells should not be canceled and the wells ordered shut-in. The Hearings Division was directed to fully consider the SMU report, any controverting evidence from the operator and other admissible evidence. The two wells at issue were XTO Energy Inc.’s West Lake SWD No. 1, Newark, East (Barnett Shale) Field, Parker County and EnerVest Operating LLC’s Briar No. 1, Caughlin (Strawn) Field, Wise County. The show hearings were held on June 10 and 11 for XTO Energy and June 15 and 16 for EnerVest. In reference to XTO: On August 31, according to the Proposal for Decision entered in the docket, the examiners concluded the evidence in the record does not support a finding of fact that XTO’s well is “likely to be or determined to be contributing” to seismic activity. Therefore the examiners recommended entry of an order maintaining XTO’s current disposal permit for the well at issue. In reference to EnerVest: On September 10, according to the Proposal for Decision entered in the docket, the examiners concluded the evidence in the record does not support a finding of fact that the EnerVest well “is likely to be or determined to be contributing” to seismic activity. As with XTO, the examiners also recommended entry of order maintaining EnerVest’s current disposal permit for the well at issue. It is important to note that, in both proposals for decisions, the examiners concluded that the preponderance of the evidence supported a finding that the investigated wells were constructed and operated in accordance with their permits. It should also be noted that the testimony and evidence entered during the hearings was lengthy, highly technical and not identical, although the proposed findings of fact and conclusions of law are indeed almost identical. The proposals for decision will be considered in future commission open conference and final orders entered.

Sunset Advisory Commission review process underway Under Texas law, every state agency must go through a comprehensive review of its functions and performance every 12 years by the Sunset Advisory Commission, a 12-member commission appointed by the Lieutenant Governor and the Speaker of the House. The Railroad Commission is scheduled to undergo review by the Sunset Commission in 2017 despite efforts toward the end of the last legislative session to delay the review until 2023 — six years later than the current schedule. The Railroad Commission has undergone the Sunset process during the last two sessions; but Sunset legislation garnered major opposition both times, even though many legislators also defend the commission’s

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record. Other legislators say the process itself should be changed and that reviews should be as narrow as possible as the current Railroad Commission differs from when review was initiated. Previous Sunset Commission recommendations include changing the commission’s name, shortening the period in which commissioners can fundraise, barring commissioners from accepting contributions from parties with business before the commission, expanding its recusal policy and requiring commissioners to resign before running for another office. Recent comments indicate that other issues may be up for consideration including jurisdiction over utility rate cases and clarification of the commission’s allocation well permit authority. Critics also argue the agency should do more to address the effects of urban drilling and wastewater disposal. Regardless, the legislation in place established requirements for broad review of the agency — providing that the Sunset Commission may contract for assistance in performing the review, evaluation, auditing and forensic auditing as it deems necessary. Expenses incurred in the review process are to be paid by the Railroad Commission. Other issues for possible review include examination of alternative organization structures and alternative methods for performing the commission’s responsibilities and assessment of existing state agencies that would be able to perform the commission’s functions. In anticipation of the Sunset Commission review, the Railroad Commission has submitted its selfevaluation report, which contains data about RRC activities including inspection and enforcement statistics and the new automated system. Sunset Commission staff will be meeting with RRC staff during the interim and will issue a report with updated recommendations to the next legislative session.

About the author: Gloria Leal is an attorney and government affairs consultant in Austin, Texas. Leal has a solo practice primarily relating to energy, environmental and healthcare matters. She also represents the Texas Alliance of Energy Producers, a national association of independent producers and service providers. She can be reached at GLealLaw@sbcglobal.net.


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POLIC Y

IS AMERICA SPOILED? BY: BILL KEFFER

A

fter thirty years in practice, including associations with two Dallas-based law firms, an in-house stint with a major oil and gas company, several years running my own law office and a couple of terms in the Texas Legislature, I’m now in my second year — and second career — as a law school professor, teaching courses in oil and gas law and legislative process. But my overarching assignment at the Texas Tech University School of Law is helping build on and expand the great tradition of our energy law program. With the Permian Basin as our backyard, there is no better place for students seeking an energy education. Toward that end, one of the initiatives we introduced last year is the law school’s energy law lecture series, in which we bring recognized speakers in the energy field to speak on energy topics of the day. During the lecture series’ inaugural year, we were fortunate to hear from Russell Gold (Senior Energy Reporter for The Wall Street Journal and author of The Boom), Carlos Ortiz (DirectorGeneral for Research and Talent Development for the Secretaría de Energía), Corey Goulet (TransCanada’s President of Keystone pipeline projects), Shelby McCue (retired ExxonMobil Manager), Donna Nelson (Chairman of the Public Utility Commission of Texas), and Christi Craddick (former Chairman of the Railroad Commission of Texas). This academic year’s lineup is equally impressive, and we kicked off the lecture series with Mark Mathis, an Albuquerque, New Mexico-based media consultant and former television news anchor and reporter. Mathis produced, directed and co-wrote the 2011 documentary about the energy industry titled spOILed, which challenges the public’s assumptions about oil and other energy sources. In addition to having the opportunity to screen the movie at Alamo Drafthouse the evening before, Texas Tech law students listened to Mathis deliver our first lecture of the year, in which he continued to

FROM PROVIDING TRANSPORTATION TO FUELING POWER PLANTS TO BEING THE BASIC BUILDING BLOCK IN THE MANUFACTURE OF COUNTLESS PRODUCTS, PETROLEUM SHOULDNÕT BE VIEWED AS A SUBSTANCE OF ADDICTION, BUT RATHER AS A MODERN-DAY MIRACLE

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challenge the political and media orthodoxy of the day regarding the oil and gas industry. In spOILed, Mathis makes the provocative argument that Americans are energy-illiterate and, as a result, are in no position to offer opinions regarding their preference for certain energy sources over others. Specifically, Mathis makes the case that Americans have become so accustomed to the comforts of a modern economy — and are so equally ignorant of the explanations and reasons for those comforts — that we have effectively become “spoiled” by the modern conveniences only made possible by oil and natural gas. One of the catchphrases used repeatedly in the debate over competing energy-source preferences is that “America is addicted to oil.” Even former President George W. Bush, himself an oilman, made that declaration during his 2006 State of the Union speech. Former Vice President Al Gore scolded Americans that “oil is dirty” and that it’s “destroying the planet.” President Barack Obama has made it clear that oil is not the future, withholding his approval of the Keystone XL pipeline and seeking to impose onerous restrictions on the oil and gas industry in a quixotic quest to save the planet from climate change. Mathis questions these assertions by starting with the seemingly unanimously held belief that America has an addiction to oil. His rebuttal is to question why we would use such a negatively charged word like “addiction” to describe the single most important ingredient in producing our modern economy. From providing transportation to fueling power plants to being the basic building block in the manufacture of countless products, petroleum shouldn’t be viewed as a substance of addiction, but rather as the modern-day miracle that stimulates the national economy. It makes no more sense to consider oil an addiction than it does food, shelter or clothing. An addiction suggests a behavior that needs to be stopped immediately to save the life of the individual. Is that really what we believe — that we need to stop our use of oil and gas for our health and the health of the planet? If we stop our use right now, what would we propose to replace it with? How would we fuel our planes, trains, ships, tractor-trailers, trucks and automobiles? Along with the continued need for coal, how would we fuel our power plants and ensure a stable, dependable supply of electricity for industries, hospitals, businesses and homes? With what unknown feedstock would we replace the petroleum-based products that provide the essential building blocks for plastics and the vast array of manufactured


goods? These questions are intended to be rhetorical, but does anyone ask them? Can anyone answer them? The answer is that we have nothing with which to replace them, at least in any meaningful way. Oil, natural gas and coal still provide more than 80 percent of all energy generated in America. Substantially reduce them and you would unavoidably devastate the greatest economy in the world. How has such a proposition become so acceptable, even urgent, among so many? Mathis argues that the only possible explanation is an excessive concentration on the alleged “negatives” of oil and gas, to the exclusion of acknowledging the endless list of “positives” that oil and gas have made possible. That is energy illiteracy.

OIL, NATURAL GAS AND COAL STILL PROVIDE MORE THAN 80 PERCENT OF ALL ENERGY GENERATED IN AMERICA. SUBSTANTIALLY REDUCE THEM AND YOU WOULD UNAVOIDABLY DEVASTATE THE GREATEST ECONOMY IN THE WORLD

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Mathis screened this movie to sellout audiences across the country, especially in energy capitals, such as Denver; Dallas; Midland, Texas; Tulsa, Oklahoma; and Bakersfield, California. Not surprisingly, his message preached well to the choir. But persuading the alreadypersuaded choir was not his objective; rather, it was to equip the choir with a tool that might enable them to spread the message. With the policy initiatives that have been coming out of Washington over the past seven years, it remains questionable whether Mathis’ message has spread at all. For some inexplicable reason, we have allowed successive generations to grow up in ignorance regarding the essential role that oil and gas have played, and continue to play, in our domestic economy. With ignorance comes the inability to make the most informed decisions regarding public policy. As with those who are doomed to repeat the history they never learned, America will willingly condemn itself to something less than first-world status by depriving itself of the oil and gas resources that remain abundant in this country. Oil is the lifeblood of this nation; we need to stop the bleeding.

About the author: Bill Keffer is a contributing columnist to SHALE Magazine. He teaches at the Texas Tech University School of Law and continues to consult. He served in the Texas Legislature from 2003 to 2007.

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BUSINE S S

COPYRIGHT IN THE DIGITAL AGE How has technology changed the use of copyrighted material? BY: SEN. CARLOS I. URESTI

E

ach day, thousands of folks take a minute or two out of their day to post various videos to their favorite social media platform. You can find everything from Psy’s “Gangnam Style,” to an assortment of videos featuring mischievous cats, dancing babies, ridiculous sporting endeavors and everything in between. While most people don’t realize it, there is an assortment of laws that protect certain content. The most readily identifiable of which

THE ONSET OF THE DIGITAL ERA, INCLUDING THE PROLIFERATION OF THE USE OF THE INTERNET AND GROWTH OF SOCIAL MEDIA SITES, HAS SERVED TO EXPAND COPYRIGHT INTO A WHOLE NEW AREA is copyright infringement, which has been a constant issue in our legal history. The onset of the digital era, including the proliferation of the use of the Internet and growth of social media sites, has served to expand copyright into a whole new arena. In 2007, Stephanie Lenz posted a 29-second video to YouTube of her baby dancing to a Prince song being played in the background. When Universal, who owns the rights to Prince’s music, was first made aware of the video, they sent a “takedown notice” to YouTube citing the Digital Millennium Copyright Act of 1998. YouTube then notified Lenz and the video was taken down. In response, Lenz filed her own complaint and decided to sue Universal, backed by the Electronic Frontier Foundation, for wrongfully accusing her of copyright infringement. This case has become known as the poster child for copyright in the digital age, Lenz v. Universal, and has

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applied the fair use doctrine to content posted to the internet. In 1998, under the Clinton administration, Congress passed the Digital Millennium Copyright Act in response to the massive growth of the Internet and growing concern about potential for copyright violation. As a part of the act, it established security for site and service owners from being prosecuted for content that infringed on copyrights. It did this by allowing rights holders to send in notices of the alleged infringement, and in turn, the site owner would respond to the notice by removing such content. In doing this, the act shifted liability from the site in question to the individual who had posted the content. The effect of this law was the takedown notice, which allowed rights holders to send complaints when they saw their material being wrongfully used on the Internet. While this has many reasonable applications, such as Internet content piracy of videos, music and photos, it also opened the door to many questionable extensions of copyright law. The fundamental component of copyright law is the concept of fair use. Fair use gives individuals the right to use parts of copyrighted material for commentary, criticism and parody. It is this component of law that allows critics to cite a portion of a movie or book, or allows teachers to use a copy of an article in class for critical examination. In fair use, the important thing is that the original material has undergone a transformative process. Though this sounds vague, it was intentionally meant to be an expansive definition open for interpretation. When there is disagreement over fair use of copyrighted material, that is when the courts come into play. To determine the legitimacy of use of a copyrighted material, judges typically look at four factors to determine whether it is fair use or not. First is the nature of the contested piece, does it add value and demonstrate originality? Next is the type of work that is being copyrighted, taking into consideration published versus unpublished works, lyrics,

videos or other similar factors. Third is the actual amount of the copyrighted material used. This refers to how much of the work the individual in question used in their new representation, such as the length of the song used or its recognizability. Lastly, the court also takes into account the potential market loss of the owner of the copyright due to the alleged infringement. All of these play a role in determining whether the accused individual fairly used the copyrighted material or not. And, as you can imagine, this is not always an easy distinction. The difficulty of establishing fair use in copyright cases is evident as we return to the Lenz v. Universal case. The legal battle, lasting over eight years, finally concluded that Universal must take into account fair use before it sends takedown notices to sites such as YouTube. The need for consideration of fair use will limit the more indiscriminate use of takedown notices and is being called a victory for the average Internet user who may post content such as Lenz’s video that may contain copyrighted material in some form. Though this may serve to help the average user, it is still important to consider whether something you desire to post contains copyrighted material before you post it. Take time to identify any potential copyrighted material, assess whether the original material has undergone a transformative process and determine if the fair use doctrine applies. If in doubt about the use of content, it is always best to seek the guidance of a trusted attorney.

About the author: Sen. Carlos I. Uresti is a practicing attorney in San Antonio at Uresti Law Firm, PC For more information or to schedule an appointment with an experienced family and criminal lawyer at the Uresti Law Firm, call 210-227-5678 or visit www. urestilaw.com.


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NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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BUSINE S S

THE FUTURE OF O&G: IT’STo stay A alive GENERATIONAL THING and thrive in oil and gas, updating archaic software is a smart start to attracting top talent

BY: BEN LAMM, CEO OF CHAOTIC MOON STUDIOS AND MANAGING DIRECTOR OF ACCENTURE INTERACTIVE

F

or a company in the oil and gas sector, uncertainty and shifting economic conditions have always been hallmarks of the trade. In 2006, no one would have suspected the U.S. to be a major world producer, but the discovery of the Parshall oil field in North Dakota radically shifted the global oil and gas landscape. Yet, for an industry defined by change, most companies have been reluctant to adapt and keep pace with rapidly changing infrastructure technology. There are plenty of factors that determine revenue, profit and overall success for a company in the oil and gas industry, ranging from gas prices (for the record, the monthly average price for a gallon of gasoline in September was $2.46, which — according to government data — is the lowest it’s been since 2004) to legislation (take the House voting in early October to lift the 40-year-old ban on oil exports). But these factors are, for the most part, out of an individual company’s control. So what’s the best investment a company can make to achieve stability and success in a fluctuating, ever-changing environment? Despite the industry’s largely unpredictable course, it is undeniable that we’re at a technological crossroads. Despite legislation, gas prices and other inconsistent determining factors, future success is going to be largely dependent on the strategic implementation of technology and a company’s ability to nimbly adapt as we move forward into an age that’s becoming more and more digitally focused. In short, the best investment an oil and gas company can make is cutting-edge software. Here are a few things oil and gas companies have to keep in mind to survive and thrive as we move toward a future that’s becoming more tech-focused by the second:

A Shifting Workforce

Millennials. While this word has been used to the point of exhaustion over the last few years, it nonetheless defines a demographic that companies have no choice but to embrace. Millennials now not only define the emerging workforce, but as Time magazine reported in May, they’ve also surpassed Generation X to become the largest generation in the U.S. workforce. The quality of one’s employees determines the future success of the company, and that’s

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why it’s crucial to hire the best. And there are certain requirements that the best require. For millennials, these requirements are defined by which companies appear to be the most forward-thinking and innovative. Talent entering this industry has been raised on new, constantly adapting technologies and high expectations and standards of usability, speed and intuition. It’s this technology-driven, often-demanding demographic that’s going to propel oil and gas forward, simply by offering

IN AN AGE WHERE YOUR SMARTPHONE CAN GET A WEATHER READING FROM HALFWAY AROUND THE WORLD IN AN INSTANT, WHY ARE WORKERS ON OIL RIGS KEEPING AND MANAGING CRITICAL OPERATIONAL INFORMATION ON THE EQUIVALENT OF POST-IT NOTES? companies no choice but to get on board or fall behind. In short, cutting-edge software is necessary and alluring to smart, experienced and hungry millennials. And to succeed in the future, these are the people you want and need using that cutting-edge software.

Modern Tools

Software is obviously no longer merely an internal tool used within the company; it’s now a critical element of recruiting, with candidates making employment decisions largely based on the tools they get to use. But it’s not just about luring the best talent with flashy user interface (UI) and user experience (UX) design. In a field as massive and data-centric as oil and gas, the right software has the power to totally transform businesses big and small. Designing and developing truly effective software with an intuitive UX spans the entire oil and gas system in terms of implementation and usability, from the planning to extraction to transport phases. And unifying this software and

SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015

making it more intelligent will make alerts, tasks and problems easier to access and diagnose. Also, updating software will enable oil and gas companies to compare and analyze new holistic data that was previously inaccessible, allowing them to ingest, compare and analyze sets of data more accurately, effectively and efficiently than ever before. This leads to better-informed operational decisions, which have better results. The real question is, in an age where your smartphone can get a weather reading from halfway around the world in an instant, why are workers on oil rigs keeping and managing critical operational information on the equivalent of Post-it notes? Oil and gas is operating with infrastructure that is effectively, technologically speaking, light years behind. In any industry, the right software is key. In oil and gas, it’s imperative.

The Right Partner

After a company determines they’re going to make the competitive decision and take their technology from archaic to state-of-the-art, it’s critical to go all-in and do it right. Software isn’t a cookie-cutter business; what works for one company likely won’t work for another, and hiring a random development shop to mimic the best option on the market is a recipe for disaster. When it comes to creating custom software, research and execution are equally important. The best practice is to choose a team of experts with proven experience in oil and gas to dive in and diagnose goals, strengths and weaknesses — a team of experts powered with the skills and experience to determine the best plan. And then, execute it. You need a team of experts that handles strategy, design and development from day one. This is the best way to guarantee a final product boasting impeccable performance and an incredible, intuitive user experience. It also ensures that as technology progresses, the software — along with the company — can progress as well. Chaotic Moon Studios is a creative technology studio transforming business for the world’s biggest brands by designing, developing and delivering digital experiences of consequence. For more information, visit www.chaoticmoon.com.


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BUSINE S S

CONSTRUCTIVE VS. DESTRUCTIVE MANAGEMENT BY: ALEX CHARFEN, CO-FOUNDER AND CEO OF CHARFEN

T

here are really only two types of management: constructive, which focuses on identifying and improving the potential of your people; and destructive, which views people as resources to be squeezed or used up. These management styles can have long-term effects on company performance, ultimately determining whether the business itself is constructive or destructive for its customers and industry. At their core, destructive management tactics lower confidence, put teams on the defensive, limit transparency and cause employees to hide their mistakes. They typically emerge from company cultures of “performance at all costs” often seen at large organizations, and they can lead to employees and managers making challenging decisions. We’ve actually seen this play out in the automotive industry, with global issues affecting General Motors, Toyota and, most recently, Volkswagen. While some destructive tactics are quickly improved or thrown out as leadership adapts to what works best, many are still encouraged or even considered best practices. A shining example of this issue is the concept of “management by walking around” or MBWA, popularized in the 1970s by Hewlett-Packard. The purpose of MBWA is to interact and receive information spontaneously, and improve morale, productivity and attachment to the company mission. I believe that MBWA not only limits information sharing and productivity, but also hinders overall company performance. For this reason, it is a highly destructive Learn more about management tactic. management and The greatest issue with MBWA is its other entrepreneurial emphasis on wandering, or the unstructured, topics at www. ambiguous journey among employees. charfen.com. Without a clear definition of results or desired outcomes for the manager, feedback and interaction from employees will be similarly undefined. In this environment, employees may feel empowered to provide suggestions, and then become frustrated when their ideas are not adopted. Conversely, employees may also feel suspicious, reactive and constantly on guard for their next manager “pop quiz.” These employee sentiments are indicative of most destructive management practices and should be seen as warning signs. Another limitation of destructive management tactics like MBWA

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is a lack of transparency. Without a clear understanding of the structure or goals surrounding management activities, employees will be on edge and fearful of how to act. A team working with excessive fear may appear productive and may even produce, but they are not fully leveraged and will struggle with creativity. They will also burn out, disconnect from the company’s mission and become detractors of management. As a consultant, I had the chance to speak with managers participating in MBWA. When I asked about the goals of this tactic, I usually heard something like: “I like to see if people are getting their work done.” “First thing in the morning, I take a quick lap around the office and make sure everything is where it needs to be.” “I like to show up when they don’t expect me; that way I know they are working when I am not there.” As you can see, while the original purpose of MBWA was for information sharing and engagement, it quickly becomes a check-in on productivity and a representation of the manager’s distrust of their employees. Now, look at those responses again and consider how their teams feel toward their managers and companies. When comparing manager and team perceptions of MBWA, we typically see the following correlations:

MANAGER PERCEPTION

TEAM PERCEPTION

Walking around

Looking for problems

Finding an issue

Interrupting work flow

Asking questions

Interrogating

Questioning process

Investigating

Solving an issue

Thinking we’re not capable

There is an argument to be made that some factory and manufacturing facilities can benefit from a spontaneous inspection or visit by managers. However, even these environments benefit from more strategic and long-term management tactics. Otherwise, organizations run the risk of increased employee alienation and other workforce challenges. Long-term success with people requires intention, feedback and outcomes that provide clarity — the hallmarks of constructive management. One of the most effective constructive management tactics is the team or one-on-one meeting. However, in order to be constructive, these meetings require intention, feedback and clearly defined outcomes, creating what we call Targeted Interactions. Otherwise your meeting simply becomes part of the “death by meeting” equation we all dread. If your meeting is important enough — which team meetings absolutely should be — then take the time to define the intention of the meeting, what feedback you expect, and the outcomes you hope to achieve. Then share this with all participants. As a manager, your transparency will help enroll employees in the success of the meeting and in achieving your desired outcomes. In addition, transparency into these desired outcomes helps employees understand what constitutes a “win,” and winning breeds greater engagement. New foundational management paradigms are necessary in order to create the highest probability of individual success within an organization. Constructive management tactics improve outcomes, enhance employee engagement, drive productivity and ensure alignment among the team. When looking at how to enhance your team’s productivity or engagement, take a look at your management tactics. Are you making your team reactive and distrustful, or are you looking for ways to engage and enroll them in your success? The answer will help you understand whether you’re building a destructive company or a constructive one.


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WHY WAIT? CONTACT our AWARD WINNING ENERGY CFO, Paula Waggoner-Aguilar at: www.theenergycfo.com San Antonio 210.802.8640 Houston 832.521.8190 NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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BUSINE S S

MEASURING NATIONAL CONTENT IN THE MEXICAN HYDROCARBON SECTOR BY: ROGELIO CUEVAS

MANY QUESTIONS REMAIN UNANSWERED, INCLUDING FISCAL CONDITIONS IN THE CONTRACTS, FEES FOR THE WORK, THE QUALITY OF THE SUPPORT INFRASTRUCTURE YET TO BE BUILT AND LOCAL CONTENT REQUIREMENTS

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T

he energy industry around the world has its eyes on Mexico as the country implements constitutional and legislative reforms that are set to open its energy industry up to private investment for the first time in 75 years. The Peña Nieto administration and Mexico’s regulatory agencies face challenges as they begin to implement the reform. Many questions remain unanswered, including fiscal conditions in the contracts, fees for the work, the quality of the support infrastructure yet to be built and local content requirements. Meanwhile, questions from potential investors center on local content requirements and the state’s first competitive bid round. The Hydrocarbons Law went into effect in August 2014. In articles 46 and 126, the law states that companies holding contracts for the exploration and production of hydrocarbons should use in their operations a minimum percentage of domestic content. The minimum percentage to be met for 2015 is 25 percent, which will gradually increase to 35 percent in 2025. This measure excludes deep- and ultra deepwater projects, the minimum percentage for which will be determined on a case-by-case basis. On Nov. 13, 2014, the Ministry of Economy published an agreement establishing the methodology for measuring local content based on five principles, with consideration on criteria that does not generate undue advantages, which may affect the competitive position of assignees or contractors.

The Origin of Goods and Services Goods: This comprises the value of Mexican goods used by the producer, including the proportion of domestic materials incorporated into the goods and excluding the value of imported materials as well as the value of materials produced locally but do not qualify as Mexican. There is an option to consider the total cost of a material when it is not possible to determine the value. Services: This includes the value of property used, the leasing of property,

SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015

salaries or fees paid to domestic workers employed by the service provider, and subcontracted services. Local labor force includes the value of wages, salaries, fees and benefits paid in Mexico to national workers, according to the number of man-hours incurred in the activities. Training includes the value of training to national workers granted by the assignee or contractor. Investment in local physical infrastructure includes the value of the total expenditure incurred in the territory in order to improve the urban and rural environment (including construction and maintenance of highways, roads, bridges and public transit routes, hospitals, schools, housing, drinkable water supply systems, sanitation and drainage, public and sports parks). Transfer of Technology includes building and operational costs of research and development centers related to the sector, the value of patents, and financing new techniques and technologies in the hydrocarbon sector. Note that the contracts will require contractors to incorporate in their plans for exploration and development a local content compliance program, including deadlines and stages, which will be reviewed by the National Hydrocarbons Commission with input from the Ministry of Economy. Monetary sanctions for noncompliance with the percentages of required local content are provided. Payment of contractual penalties through the Mexican Petroleum Fund for Stabilization and Development are equivalent to a percentage of the value of the concepts outlined in the methodology. Such sanctions may gradually increase each year.

Visit www. cuevasandcuevas.com to learn more about the international business advisors at Cuevas & Cuevas LLP.


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LIFESTY LE

MASSAGE THERAPY 360 AWARENESS SPECIAL TO SHALE

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DE PREMIER SPA SERVICE Spa Prestige Ultimate Pamper Package Intensive Hydration Facial + Eye and Lip Delight Treatment + Body Polish + Relaxing Aromatherapy Massage + Re-mineralizing Body Wrap + Cellular Foot Detox Therapy + Deluxe Pedicure + Deluxe Lunch

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This ultimate pamper package provides total relaxation from head to toe. It is designed for customers who would like to fight against the effects of aging. It firms, tones, moisturizes, renews and revitalizes the entire body.

For more information, visit www.depremierspa.com or contact Rita Olufowoshe at info@depremierspa.com or 281-496-3772. Disclaimer: Rita Olufowoshe has provided this article for your information. It is not intended to substitute for the medical expertise and advice of your primary health care provider. We encourage you to discuss any decisions about treatment or care with your healthcare provider. The mention of any product, service or therapy is not an endorsement.

SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015

GOSPHOTODESIGN/BIGSTOCK.COM, YACOBCHUK/BIGSTOCK.COM

MASSAGE THERAPY 360 is a holistic approach to optimum health. This therapy approach is free of toxins and complications, complementing traditional western medicine. Professional therapeutic massage is healing to the mind, body and soul. It is an excellent stress management tool for everyone, regardless of age. Many don’t know the powerful health benefits of massage therapy. Massage therapy has been used for generations to treat different health problems, ranging from stress to life-threatening diseases such as cancer. Stress causes anxiety and can be brought on by extreme emotion, financial problems, work or home situations, etc. Stress is inevitable in one’s personal life and workplace. How we accept stress as a fact of life is critical to our physical, mental and emotional health. As counterintuitive as it may seem, stress is not the problem; the problem is stress management. Workplace stress can be devastating to both employees and the organization if the stress is not effectively managed. If an employee is stressed, an organization may have negative effects as a result, such as poor morale around the workplace, high absence rates, low retention and low workplace happiness. This is why some companies have seen the benefit of workplace massage. Workplace massage is effective in promoting physical and mental health for both the employees and the company. Showing the employees how much the company appreciates their contribution by providing workplace massage therapy can improve productivity, while reducing healthcare costs. Massage therapy is the manipulation of muscle, fascia and other soft tissues in the body using varied modalities and techniques.


end of the year

SEPT/OCT 2015

WEATHERING THE STORM BUSINESS IN A DOWNPOUR

REPRESENTING THE SERVICE SECTOR

LESLIE SHOCKLEY PRESIDENT BEYER PESA

OPEC

J U LY / A U G U S T 2 0 1 5

SCOTT SHEFFIELD A PETROLEUM

TEXAS NATURAL GAS VEHICLE AND FUELING STATION GRANT PROGRAM

INTERACTIVE MUSEUM EXHIBIT TEACHES OIL AND GAS

SHALE

OIL & GAS BUSINESS MAGAZINE

STATE OF EMPLOYMENT TEXAS WORKFORCE COMMISSION

CONNECTING THE DOTS WITH START

ASSISTING THE OILFIELD COMMUNITY: OILFIELD HELPING HANDS

DAVID PORTER: NEW CHAIRMAN OF THE TEXAS RAILROAD COMMISSION

THE TRUTH ABOUT

OIL AND GAS FACING PUZZLING POLICIES

LIFT THE BAN THE IMPACTS OF LOW OIL PRICES

special M AY / J U N E 2 0 1 5

OIL & GAS BUSINESS MAGAZINE

OIL & GAS BUSINESS MAGAZINE

SENATOR CARLOS I. URESTI: 84TH LEGISLATIVE SESSION GOOD FOR OIL AND GAS

A BRIEF HISTORY: NATIONAL ENERGY POLICY

PIONEER

» LIFESTYLE AND LEISURE FOR FINE LIVING

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NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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LIFESTY LE

A TEXAS STAR: THE BRYAN MUSEUM

SPECIAL TO SHALE  PHOTOS BY: CHRISTY LANDRIAULT

GALVESTON ISLAND welcomes the Bryan Museum, home to the largest collection of art, artifacts and documents relating to the American Southwest. J.P. Bryan, founder and CEO of Torch Energy Advisors, is a descendant of Moses Austin, the father of Stephen F. Austin. An avid collector of books, documents, artifacts and works of fine art documenting the history of the American Southwest, Bryan and his wife, Mary Jon, have amassed the largest and most significant collection of its type in the world. More than 70,000 pieces, spanning 2,500 years of history, are permanently housed in the immaculately restored historic Galveston Orphans Home located at 1315 21st St. When asked what inspired him to create the museum, Bryan says, “When you get an opportunity to share with other people, it’s a far more gratifying

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experience, especially the history of the state of Texas, and the evidence of thousands of heroes and heroines, visible and invisible, who populated the southwestern United States — it’s a wonderful story. It’s one of the most interesting chapters in world history.” Bryan chose Galveston Island following a search of a number of locations in other cities. He decided on the Galveston Orphans Home immediately upon setting foot inside its doors. “For our collection, the building’s large rooms and high ceilings [are] a marriage made in heaven,” he states. The ambience of the stately building combined with the warm, elegant interiors will greatly enhance visitors’ experiences. The original Gothic Revival-style building was rebuilt in 1902 following the devastation of the 1900 hurricane with a simpler Renaissance Revival exterior. Home to thousands of children for more than 100 years, the historic property now protects and preserves 2,500 years of history for future generations. The city of Galveston recently awarded Bryan the annual City of Galveston Landmark Commission Rehabilitation Award for outstanding restoration, renovation and use of building. In addition to restoring and repurposing the historic property, Bryan installed a geothermal system designed to cost-effectively provide consistent temperatures in an environmentally effective way. Geothermal systems have been recognized by the EPA and U.S. Department of Energy as the most environmentally friendly way to heat and cool a facility. Unlike other comfort systems, geothermal does not emit carbon dioxide, carbon monoxide or other greenhouse gasses, which contribute to airquality pollution. The museum gardens perpetually bloom with the official plant of Galveston, the oleander, forming a picturesque backdrop for the Victorian gazebo and antique fountains popular for weddings and outdoor events. The permanent collection, on exhibit year-round, encompasses treasures ranging from ancient

SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015


Native American cultural artifacts to modern 21st-century pieces and includes rare documents, exquisite saddles and spurs, antique firearms, rare books, fine art, religious art, folk art, portraits and exceedingly rare maps. The ground floor, dedicated to children, features interactive learning displays and activities. In addition to its collections, the museum is available for special events, including weddings, conferences and meetings. Committed to the preservation, education and promotion of the history and art of the American Southwest through engaging exhibitions and programming, the Bryan Museum is supported by grants, contributions and its membership program. It’s Executive Director is Jamie Christy, Ph.D.

Museum hours are Friday to Monday, 11 a.m.� 4 p.m., closed Tuesday � Thursday. Admission is $10 for adults, $8 for seniors and military members, and $4 for ages 6�12. Visitors under 6 years old is free. Memberships are now available, and group tours can be booked by appointment.

»

For more information, call 409-632-7685 or go to www.thebryanmuseum.org. NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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LIFESTY LE

LEARNING IS FUN AT THE DOSEUM IN SAN ANTONIO WITH WORLD-CLASS EXHIBITS and sustainable, thoughtful architecture, The DoSeum is already establishing itself as one of the leading children’s museums in the nation. San Antonio’s museum for kids is a 21st-century learning playground, with more than 60 percent of its interactive exhibits focusing on concepts in science, technology, engineering and math (STEM). The DoSeum, which opened in early June, has already attracted more than 250,000 visitors to experience its innovative approach to learning and play. In every nook of the museum’s more than 104,000 square feet, children can find something to explore, play with, puzzle over and create. “The DoSeum is one of the most beautiful, exciting and interactive children’s museums in the entire United States,” says Vanessa Lacoss Hurd, CEO of

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SHALE OIL & GAS BUSINESS MAGAZINE // NOVEMBER/DECEMBER 2015

The DoSeum. “It is a place where children tap their inner creativity and curiosity, and where science, math, technology and art become a playground for their minds and bodies. Our hope is that The DoSeum sparks a genuine zeal for learning that kids will take with them through childhood and beyond.” At the museum, kids feed their appetite for learning as they choose from an impressive menu of exhibits including a state-of-the-art robot named Baxter, a spy academy filled with math challenges, an interactive puppet parade and a musical staircase. Indoors, guests can explore six main exhibit areas: the Sensations Studio, Explore, Innovation Station, Imagine It, Little Town and Spy Academy. As a museum within a park, nearly 39,000 square feet of The DoSeum’s footprint is outdoors, encouraging kids to explore, climb, crawl and run.

PHOTOS COURTESY OF THE DOSEUM

SPECIAL TO SHALE


Little explorers can get a little wet while learning about the amazing power of water at the Water Works exhibit or scale a stunning tree house designed by local artisan Attie Jonker. At the heart of The DoSeum’s East Yard, visitors will discover the Children’s Stream, a peaceful area where children can splash about. When planning the design of The DoSeum, one important detail was making sure the space would be accessible to children from all backgrounds. The entire museum is ADA-accessible per the Americans with Disabilities Act’s specifications, including the 26-foot-tall tree house. Spanish-language signage is placed throughout the space, and museumgoers have the opportunity to interact with exhibits in their preferred language. The DoSeum also serves as an inclusive community partner, making its extensive educational resources available to local educators. As a trusted resource for schools, The DoSeum offers professional development training for teachers, provides a learning space for educators to gather and collaborates with schools to turn ideas into action, inside and outside the classroom. All of these initiatives are just the start of what The DoSeum plans to help San Antonio achieve a globally competitive workforce. “Children’s museums can be powerful players in a community’s learning landscape,” says Laura Huerta Migus, executive director of the Association of Children’s Museums. “They are unique in their ability to convene stakeholders from all sectors who are interested and invested in the success and well-being of children and families.” “The DoSeum will certainly confirm San Antonio’s place in the global network of cities striving to create civic environments for healthy children, empowered parents and vibrant workforces,” she adds. In addition to being a space for learning, The DoSeum is equipped with charming rental space available for social and professional events. It can work with organizations and event planners to offer team-building activities. Proceeds from facility rentals will directly benefit the museum and its educational programming for the community. Visitors to The DoSeum enjoy amenities, including an on-site cafe featuring healthy, kid-friendly meals and The DoSeum store, which offers fun, innovative and inspiring toys, gifts and projects related to the STEM fields of learning.

»

AS A MUSEUM WITHIN A PARK, NEARLY 39,000 SQUARE FEET OF THE DOSEUMÕS FOOTPRINT IS OUTDOORS, ENCOURAGING KIDS TO EXPLORE, CLIMB, CRAWL AND RUN

For more information about The DoSeum, including hours, ticket information and directions, visit www.thedoseum.org. NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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LIFESTY LE

WITH A NOD TO THE PAST, THE ST. ANTHONY UNVEILS ITS TRUE COLORS Renovation seamlessly blends hotel history with contemporary design for a timeless future

SAN ANTONIO’S first luxury hotel opened in 1909 with glamour and extravagance that made everyone green with envy. When that same hotel, The St. Anthony, a Luxury Collection Hotel, San Antonio, celebrates its grand re-opening in mid-November, it will make everyone see green again; though this time, it will be “St. Anthony Green” as guests enjoy the hotel’s striking redesign featuring a signature color custom-designed for the hotel by legendary interior designer Dorothy Draper. While the hotel is celebrating its distinguished past, thanks to a painstaking restoration and renovation, the best is yet to come. Relying on the iconic hotel’s history to guide the redesign, the property has been meticulously restored to its original grandeur. The new look is timeless: historically modern with a thoughtful and respectful nod to the magnificent legacy of the hotel known as “the Waldorf on the Prairie,” as it was considered the equal of New York City’s global luxury destination: The Waldorf Astoria. Even the most discerning travelers’ expectations will be exceeded with a walk through the hotel’s glamorous public space, taking in the original architecture as it playfully contrasts with modern furnishings, historic artwork and The St. Anthony’s own collection of antiques. The redesign of the St. Anthony restores the National Historic Landmark’s famed opulence, polishing the gem that has hosted generations of San Antonio’s social elite

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PHOTOS COURTESY OF THE ST. ANTHONY

SPECIAL TO SHALE


THE REDESIGN OF THE ST. ANTHONY RESTORES THE NATIONAL HISTORIC LANDMARKÕS FAMED OPULENCE, POLISHING THE GEM THAT HAS HOSTED GENERATIONS OF SAN ANTONIOÕS SOCIAL ELITE ALONGSIDE HOLLYWOOD STARS, FAMED POLITICIANS AND INTERNATIONAL ROYALTY SINCE ITS OPENING IN 1909

About The St. Anthony, a Luxury Collection Hotel, San Antonio

alongside Hollywood stars, famed politicians and international royalty since its opening in 1909. Guided by history, the entire hotel has been refined as part of an extensive, multimillion-dollar renovation that has reclaimed the hotel’s enchanting past, including unearthing original tile floors in The St. Anthony Club, and returning the stairs off of the lobby and the registration desk to their original locations. Through the renovation, areas of the hotel that have not been seen in more than 50 years will once again shine, offering guests the opportunity to enjoy The St. Anthony as it was originally designed.

Be a Part of History

Celebrating its debut as a Luxury Collection hotel, becoming part of Starwood Hotels & Resorts Worldwide Inc., The St. Anthony is embarking on the next phase of its deep-seated role in San Antonio. Delivering unparalleled luxury and personalized service to its guests, The St. Anthony is now part of The Luxury Collection’s portfolio of 16 diverse hotels in North America, ranging from the iconic Palace Hotel in San Francisco to the modern art deco Chatwal hotel in New York. Each Luxury Collection hotel and resort is a unique and cherished expression of its location — a portal to the destination’s indigenous charms and treasures. As part of its grand re-opening celebration, The St. Anthony is offering a special history package, which gives a glimpse into the historic landmark’s extraordinary story. Guests who reserve the grand opening offer will receive a copy of a new book on the property’s history,

»

Dusting Off a Legend: The St. Anthony Hotel, as well as a concierge-led tour of the property, which will explain details of the artwork and antiques that grace the hotel, as well as the stories behind the legendary St. Anthony Club, Anacacho Room and the celebrities who have enjoyed The St. Anthony’s legendary hospitality. The package also features Double Starpoints per stay for Starwood Preferred Guest members and two signature cocktails at The St. Anthony Club to toast the rebirth of the “Queen of San Antonio.” The offer is valid for stays through December 31, 2015, and may be booked online or by calling 866-716-8166 and asking for rate plan LAPKG1.

A Texas jewel reborn, crafted from the dreams of two Texas cattlemen in 1909, The St. Anthony, a Luxury Collection Hotel, was the first luxury hotel in San Antonio and has remained one of the finest expressions of Texas hospitality for more than a century. Featuring 277 guest rooms and suites, as well as more than 31,500 square feet of indoor and outdoor meeting and event space in the heart of downtown San Antonio, The St. Anthony is an unrivaled classic reborn with contemporary glamour and opulence. The hotel’s timeless elegance and tradition, fused with stunning city views and modern design, serve as the epicenter of San Antonio’s social scene, including its sixth-floor outdoor pool and tenth-floor rooftop lounge; the storied St. Anthony Club, a cocktail lounge with historic tales to share; Rebelle, San Antonio’s newest culinary destination; and Haunt, a bar offering classic cocktails inspired by the haunting legends of The St. Anthony.

For reservations or for more information, call 210-354-9244 or visit www.thestanthonyhotel.com. NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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 SC ENE 

STATE OF ENERGY

PHOTOS BY FERNANDO GUERRA

SHALE MAGAZINE, in conjunction with the Corpus Christi Chamber of Commerce, presented the inaugural State of Energy luncheon in Corpus Christi on Oct. 14 at the Congressman Solomon P. Ortiz International Center. Tickets sold out and speakers addressed to a full room of interested community members, business owners, oil and gas professionals, and elected officials. Our keynote speaker was Matthew Most, Vice President of Governmental Affairs with Encana. Our panel was moderated by Omar Garcia of STEER, and panelists included Matthew Barr with Cheniere Energy, Barbara Canales with the Port of Corpus Christi, Iain Vasey with the Corpus Christi Regional Economic Development Corporation, and Paula Waggoner-Aguilar with The Energy CFO LLC.

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NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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 SC ENE 

HALLIBURTON SAN ANTONIO GOLF TOURNAMENT MORE THAN $64,000 was raised for San Antonio-area nonprofits at a charity golf tournament hosted by the Halliburton San Antonio District. More than 200 employees and company vendors participated in the 16th annual tournament, held October 17 at The Republic Golf Club in San Antonio. The proceeds will be given to employee-selected children’s charities and community service events, bringing a lot of happiness to children in need this Christmas. “This event went way beyond anything we expected with our current market conditions,” says Neil Schmidt, Senior District Manager for Halliburton’s South Texas operations. “It is truly a testimony to Halliburton’s commitment to play a major role in the communities in which we work. It was a great pleasure to see the smiles on all the employees’ and vendors’ faces. It also brings cheer to all when thinking about the children who will benefit from this fundraising event.” Trophies were awarded to the top three golf teams at the tournament: • 1st place: S.E.S.A. • 2nd place: San Antonio Halliburton Business Development • 3rd place: Cotton Logistics

PHOTOS COURTESY OF HALLIBURTON

The golf tournament was preceded on October 16 by an employee chili cook-off held at the Halliburton San Antonio Operations Center. Fourteen teams participated, with trophies awarded to grand champion, second and third places. “At Halliburton, giving back to the communities in which we work is a Core Value of our company,” Schmidt says. “To our way of thinking, it is important for us to give in every way we can. We believe if we are part of a community, we need to be there to help. Our employees want to participate in community activities and sincerely enjoy helping others.”

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EAGLE FORD NEWS is dedicated to sharing news, information, events, jobs, resources, opinions and conversations related to the Eagle Ford Shale. We have the largest Facebook page dedicated to Eagle Ford, where we encourage two way communication from our fans and members. www.facebook.com/EagleFord You can also join our conversations on LinkedIn and Twitter

News where you get to participate. NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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 SC ENE 

CONOCOPHILLIPS SCHOLARSHIP GOLF TOURNAMENT PHOTOS COURTESY OF CONOCOPHILLIPS

SUPPORTING higher education and continuing the legacy of building strong relationships in its community continues to be a top priority for ConocoPhillips. On Oct. 2, ConocoPhillips hosted the second annual Drilling and Completions Scholarship Golf Tournament at Riverbend Golf Club in Floresville, Texas. Participants and sponsors from ConocoPhillips and various service partners raised over $120,000. Kenedy ISD graduating seniors are all encouraged to apply for the ConocoPhillips Drilling and Completions Legacy Scholarships to be awarded this year. “Commodity prices may have shifted over the last year, but not our commitment to be a community partner,” says a ConocoPhillips spokesperson. Center photo: Members of this year’s committee are pictured left to right: Seth Crissman, Rosie A. Garza, Jessica Garza, Samantha Gray, Philip Taylor, Levi Coon and Dereck G. Middleton.

PHOTOS COURTESY OF COMMIT

THE COMMIT FOUNDATION partnered with Tudor, Pickering, Holt & Co. on Oct.15–16 to provide 14 select military veterans the opportunity to participate in a unique mentoring workshop in Houston. The veterans were able to connect with successful leaders in the energy, oil and gas sectors. The participating veterans learned about these fields and worked with mentors to establish clear career goals and strategies for a successful transition.

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A veteran-and minority-owned business, Excel Safety Consultants Inc. is owned by a safety professional with over 20 years’ experience who understands the needs of the oil and gas industry. We are committed to providing experienced Safety Advisors to fit our clients’ needs – from one Safety Advisor to multiple ones – at a reasonable price with 24/7 availability. Our Safety Advisors have a wide variety of knowledge and experience from the petrochemical industry performing turnarounds, construction, drilling and completions (onshore and offshore), pipeline, as well as operations onshore and offshore. Whatever our clients need, we have the experience necessary.

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Excel Safety Consultants also provides Case Management services. We have partnered with a board-certified occupational physician and a Texas Workers’ Compensation insurance adjuster who believe in the ability to interpret OSHA recordkeeping standards and to implement best-practice methods which not only offer the employee the best medical care but also allow for reduced OSHA recordability to our customers. NOVEMBER/DECEMBER 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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