Well Servicing Magazine: March 2022 by Well Servicing Magazine

MARCH 2022

IN THIS ISSUE John Daniel Market Outlook Well Services Committee Base Beam Report In Conversation With Rep. Garret Graves Training in Virtual Reality

Security in Safety How Members are Addressing Their Cultures

Frac Different: Faster. Safer. Smarter Get to first oil faster, safer and smarter with iComplete™. Our integrated system enables you to frac differently by leveraging flexible pipe, automation and digital efficiency to minimize complexity and eliminate intervention in the red zone. Learn more. TechnipFMC.com

CONTENTS 4 ISSUE 3 • MARCH 2022 An Energy Workforce & Technology Council Publication

Leslie Beyer, Energy Workforce & Technology Council

LESLIE BEYER CEO/Editor in Chief

10 MOLLY DETERMAN COO/Editor STEPHANIE FUQUA Director of Marketing

CEO’s Perspective Cover Story: Marshall Dodson, President & CEO, Key Energy Services Market Outlook John Daniel, Daniel Energy Partners

Legislative Outlook

Building a Safety-Oriented Culture Will Barnes, Evolution Well Services

COUNCIL STAFF

18 20

PEGGY HELFERT Vice President Programs & Events CORRY SCHIERMEYER Senior Director of Communications

Safety Training in VR Gary Childress, Oil States International

TIM TARPLEY SVP Government Affairs & Counsel

Lowering Carbon Emissions, Increasing Worker Safety Through Remote Operations Simao Silva, Oceaneering

Hazards in Operations: Tools for Success Gay Wathen, NOV

MARIA SUAREZ Director of Government Affairs

DEIDRE KOHLRUS Director of Government Affairs RONI ASHLEY Director of Operations

Gabriel Rio, Milestone Environmental Services

SUSAN DUDLEY Administrative Assistant

M&A Perspectives in a Rapidly Evolving Market Austin Harbour, Piper Sandler

PHILLIP DEBAUCHE Director of Environmental & Technical EDDIE BOWMAN Events Specialist

OPINION: Energy Waste Management and the Carbon Agenda

Well Services Committee Releases Base Beam Systems Report

Energy Workforce Graduates Largest Cohort from Training Programs

Congressional Spotlight: Rep. Garret Graves (LA-06)

Advertiser’s Index

ABOUT THE COVER Marshall Dodson, President & CEO, Key Energy Services (Photo by Upright Digital)

2500 Citywest Blvd., Suite 1110 Houston, TX 77042 713-932-0168 info@energyworkforce.org wellservicingmagazine.com

Well Servicing Magazine is published quarterly by Energy Workforce & Technology Council as a complimentary publication. Interested subscribers should email info@energyworkforce.org to be placed on our mailing list. Postmaster: Send address changes to Energy Workforce & Technology Council, 2500 Citywest Blvd., Ste 1110, Houston, TX 77042. Copyright 2022 Energy Workforce & Technology Council

WellServicingMagazine.com

CEO’S PERSPECTIVE/

Focusing on Advocacy By Leslie Beyer, CEO, Energy Workforce & Technology Council

Members,

technologies such as

This past year has brought a number of significant

offshore wind, geother-

challenges facing the industry, but Members continue

mal and CCUS. These

to inspire us to elevate and unify the energy technology

conversations are key

and services sector during such demanding times. It’s

to keeping our com-

more important than ever to have a unified sector that

panies’ contributions

provides the energy necessary to meet growing global

in the minds of policy-

demand while simultaneously developing technological

makers.

innovations to reduce emissions. The Council continues One of the Energy Workforce & Technology Council’s

to lead our industry through the preparation of best

primary tenets is to advocate for the sector and industry.

practices documents used for Member Company

It is paramount that we tell our sector’s story of innova-

operations. The Well Stimulation Committee is currently

tion and ingenuity to all stakeholders, key among them

drafting a well stimulation best practices guidebook that

our government leaders. Our recent work in Washington

will be the first of its kind in pressure pumping. The Well

includes important discussions with members of

Services Committee is working to update the Well

Congress and the current Administration about the

Servicing best practices document which has been used

importance of our sector. When policies threaten our

for decades as the industry gold standard for safety.

businesses, we will always respond and tell the true story of our sector and its critical role in the future of

I’m optimistic about the future of our industry. We have

energy.

a seat at the table, a role to play in the energy transition, and alliances with key stakeholders. We will continue to

Energy Workforce has also worked extensively with the

empower our workforce through trainings and certifica-

current Administration offering the technology and

tion programs, invest in the future leaders of the

workforce of our sector as an asset and partner in

industry through our scholarship programs, support

meeting their goal of a lower carbon future. We have

efforts towards an inclusive workforce, and offer our

pushed back on overreaching policies that overlook

resources for business intelligence. The Council tells

the significant benefits of natural gas, and policies that

a compelling story about both the challenges facing

arbitrarily discriminate against fossil fuels. We have had

the sector and its successes, and we look forward to

constructive conversations with the Administration

working with Members to highlight the work of the men

highlighting new carbon lowering technology developed

and women who bring affordable, reliable energy to the

by Member Companies and our leading role in

country and the world.

Leslie Beyer CEO Energy Workforce & Technology Council

Well Servicing Magazine/March 2022

NEW NAME. BACKED BY 160 YEARS OF INNOVATION.

Gardner Denver High Pressure Solutions is now GD Energy Products. What will never change, is our dedication to providing industry-leading pumps, parts and service. Find out more @

gdenergyproducts.com

WE BUILD CONFIDENCE.

WellServicingMagazine.com

COVER STORY/

Leading the Change KEY ENERGY SERVICES FOCUSES ON THEIR EMPLOYEES

s an industry leader in oilfield services, Key Energy Services has been part of the backbone of the energy production sector for more than 40 years. Led by President & CEO Marshall Dodson, Key oversees one of the largest well service rig fleet in the U.S. Dodson recently sat down with Well Servicing Magazine to discuss Key’s robust safety culture, his people-focused leadership style and how companies can flourish in the post-pandemic economic recovery. Dodson joined Key after a stint in the financial industry and found the inherent challenges of the business intriguing. “This is a capital and peopleintensive business with so many moving parts spread out over long distances,” Dodson said. “The people part of the industry has drawn me more into the business. We have a tremendous workforce; it is very hard work outside in the heat and cold, rain and snow, performed away from the comforts of home or office.”

“Our industry is one where someone who did not have the educational opportunities I did, can change the trajectory of their family’s lives with the skills they acquire through dedication and hard work. I have heard countless stories and met peo-

Well Servicing Magazine/March 2022

Safety Culture

To be successful in protecting the safety of employees, all companies must develop and implement a robust and sustainable safety culture that is pervasive throughout every level of the company. “Nothing is more important to me than the safety of our workforce and that of the communities that we live in and share the road with,” Dodson said.

“I am passionate about the people of our industry, and the good that our industry does for society. I want to do anything I can to champion that.”

An industry that changes from “just a job” to pay the bills to one that affords families and children the opportunities they might not have had otherwise is something to value, he said.

ple who have proved it out.”

In order for this culture to materialize into the implementation of actual safety-improving processes, the organization must first fully understand the challenges that are posed from jobsite to jobsite. “We can have the best processes in the industry, with mitigation layered to keep people safe, but there is always a human element,” Dodson said. “I think that ensuring that our employees first know they have a voice and role in their own safety, but also understand why following the process is important, is a step in creating the right behaviors and culture.”

One barrier that companies often face in the development of an effective and comprehensive safety protocol is a disconnect between what “should” happen versus what “actually” happens. Without first-hand insight into the nitty gritty details of a job on the site, it can become common practice for a safety plan to hold up in theory alone. To remove the veil separating theory from practice, Dodson relies on the company’s most valuable assets for information: its people.

“I do not believe you can build a common culture and ensure your message is being received with office meetings, emails or posters,” he said. “You have to be present, and our leaders have to be present to model and demonstrate our culture and values.” With the sheer geographic spread of concurrent operations, it is essential that safety standards are modeled correctly and directly by the leadership across the board. “You cannot find out what you need to change without listening and getting feedback from employees,” Dodson said. “How I experience Key every day is different than the experience of someone new to the company or working on a customer’s location. You have to give employees a voice and listen to know what is working and what is not.”

Post-Pandemic Economy

Energy markets have oscillated dramatically over the past two years with supply and demand trends fluctuating dramatically. The world watched as disruptions to critical elements of the industry quickly translated to market uncertainty and speculations being questioned more than ever. In the early stages of the global rebound as the world began to slowly pull itself out of its economic slump, the market began to rebalance and companies started to open up their portfolios to new ventures. “Pandemic or not, having a diversity of assets with different revenue sources, either geographically or different services or economic drivers can provide stability against a disruption to any market fluctuations,” Dodson said. While extoling the advantages of having a diverse portfolio of assets, Dodson also warned against playing too far away from a company’s strengths. While a diversification of assets can be key to an organization’s success, Dodson said, “most companies cannot be great or even good at multiple things, so there has to be a balance or common threads and synergies.”

Dodson also provided insight on the importance of companies to establish trust in the investment sector in order to regain critical funding. “First and foremost, demonstrate to investors that we are good stewards of their capital. In turn, that will earn a return to investment in our sector.”

Energy Technologies

As the energy transition is underway, it’s crucial to realize that the transition is not about switching from one fuel source to another but reshaping the entire energy ecosystem to accommodate emerging technologies that will make energy production more reliable, more affordable and cleaner. In a time where investors want to see companies reduce their climate impact and improve environmental performance, allocation of capital is crucial. “Technologies such as digitalization, automation and remote operation will reshape the landscape

WellServicingMagazine.com

of the oilfield and allow us to be smarter about how we work or deploy capital and leverage the capital we do put to work,” Dodson said. The energy industry is in an era where innovation and technological development will be essential to achieve the goals of meeting growing energy demand and reducing greenhouse gas emissions.

Looking to the Future

Over the past decade, there has been a remarkable effort by the global economy to promote economy-wide decarbonization goals and robustly decrease all forms of emissions. While the prospect of a quick an easy path for a comprehensive departure away from hydrocarbons has been touted through the media, Dodson urges the narrative to recenter itself around the facts.

However, this cannot be a sustainable enterprise if the technology deployed in the field and the cap“I’m not sure the pandemic has really changed ital investment that supports it do the fundamentals of society’s longnot prioritize safety and emphasize term need for reliable energy and “I think that ensuring putting the welfare of the people where hydrocarbons fit into that that our employees first. mix,” Dodson said. “I think energy usage through the pandemic and first know they have “The returns on technology inboth the supply and demand for a voice and role in vestments that improve safety are oil and gas may have lulled many their own safety, but not nearly as visible as those that into a belief that a transition away drive more revenue or better marfrom hydrocarbons could occur also understand why gins, but they are there,” he said. quickly.” following the process

Attracting New Talent

is important, is a step in creating the right behaviors and culture.”

A crucial critical part of enhancing the resilience of the energy workforce is the ability to attract diverse, innovative talent that will shape the future of the industry. However, Dodson urges that the narrative around the perception of the oil and gas industry needs to change before we see a significant change in oilfield employment.

“First, I think we need to overcome the perception that our industry has an end date inside the lifetime of someone entering the workforce today,” Dodson said. The other challenge to attracting and retaining the talent that buoys the success of the industry are the “boom and bust” cycles that the energy sector has undergone over the past two decades. “I am hopeful that this new era of capital discipline can hold on long enough to perhaps smooth some of the fluctuations out and allow for the industry to retain talent through the cycles.”

Well Servicing Magazine/March 2022

As policy makers and public narratives work to push impractical policies with unrealistic deadlines that would realistically leave our energy industry in a catatonic state were they to be met, it is important for the world to continue working towards a lower carbon future while simultaneously remaining rooted in reality. “Oil or gas production from a well declines over time. If we cease to invest and add new wells and production, over time we will have less oil and gas. I don’t think the industrial capacity exists today to pivot away quickly to a viable alternative across the globe, and we will need to continue to invest in oil and gas.” In the end, Dodson believes that what sets a company apart from others is the services they offer and the people they employ. “I’m passionate about the people in our industry and the good that our industry does for society. I want to do anything I can to champion that.”

WellServicingMagazine.com

MARKET OUTLOOK/

Are We Heading for a Multi-Year Upcycle? By John Daniel, Daniel Energy Partners

ith the Russia/Ukraine conflict continuing to escalate, to say 2022 is off to a bang is an understatement. Oil prices are hovering well north of $90/barrel, so the importance of energy independence is once again a legitimate discussion topic. However, Wall Street’s call for E&P capital discipline rings as true as ever as investors continue to demand free cash flow versus production growth. Consequently, the meteoric rise in crude prices does not necessarily manifest itself in a potential meteoric rise in domestic oil and gas drilling and completion activity. At least, not yet. Thankfully, commodity prices have steadily recovered from the COVID-2020 lows due to a global rebound in demand as well as moderating oil inventories. This improvement allowed domestic drilling activity to rebound throughout 2021 from under 250 rigs in late 2020 to a healthier level of 635 rigs as of late February 2022 (using the Baker Hughes U.S. land rig count). No doubt a 400+ rig count gain is impressive, but the outlook near-term is somewhat tempered due to continued E&P capital discipline. Presently, we foresee the U.S. rig count rising to as many as approximately 700 rigs by year-end 2022, a more than 10% rise from today. Near-term visibility is clear as all the leading land drillers cited on their recent earnings call an expectation of higher rig counts in the coming weeks. Completion activity, meanwhile, is stable-to-slightly improving as sand and logistics issues, not to mention labor challenges, limit near-term upside to the U.S. frac crew count. In fact, most of the leading public pressure pumping companies foresee only a modest improvement in effective utilization in Q1 2022 versus Q4 2021. Completion demand should, we believe, improve heading into Q2 as some of the supply chain and mine-related issues are resolved. We anticipate the active U.S. frac crew count rising from the approximately 240 range to 250-260 fleets later this year.

Well Servicing Magazine/March 2022

For the U.S. well service sector, two important variables exist. First, high commodity prices provide great incentive for operators to keep older wells pumping, thus demand for production work should remain robust. Moreover, as production work often does not hit an E&P’s capital budget, the ability to allocate more money to production-related work should, in theory, be easier. Second, the U.S. well service industry is finally witnessing much needed industry consolidation as several legacy-leading businesses have now been merged into other enterprises (i.e., C&J, Basic, Forbes, Superior and Nine). This consolidation process is a critical step for remaining larger players to leverage cost synergies, but also to address what has for many years been a supply/ demand imbalance. And while we cheer consolidation, more is needed as legacy rigs, many from defunct companies, are now being sold/auctioned and recirculating back into the market. In fact, several industry contacts report a growing number of small players, particularly, in the Permian are now emerging, most with three or less rigs. A viable business model? We’ll see, but for E&P companies simply chasing low bid, the rise in competition might play well to such a strategy. On the other hand, larger players continue to report efforts to increase rig rates as stronger financial returns are a necessity to remain a going concern. More money, understandably, is required to reinvest in a depreciating asset base as two years of industry equipment neglect is/will become an issue. Thankfully, rig builders report a rise in remanufacturing and Cat 4 inspections with backlog for both now growing. In some cases, rig builders are building rigs on spec given a belief in higher returns may result in either existing or start-up players seeking new equipment. But before the industry can press the accelerator on newbuild activity, further price increases will be required as inflationary cost pressures abound. Thus we foresee a continued effort by the industry to push pricing. This means returns for the sector should improve. As for forecasting the outcome of today’s geopolitical events, that falls well outside the Daniel Energy Partners’

comfort zone. Nevertheless, with Q4 earnings season in the rear-view mirror and with the benefit of numerous 2022 E&P capital spending budgets now made public, visibility and outlook for 2022 both seem strong. Beyond this year, that’s anybody’s guess, but the overall belief within the vacuum of the U.S. upstream energy complex is the prospect for a multi-year upcycle. The oil futures curve, which has oil prices above $70 barrel through 2024, would lend credibility to this view. However, as 2020 taught all of us, weird and unexpected things can happen, so best to be prepared.

...................................................................................................... John Daniel is the Founder and CEO of Daniel Energy Partners. Prior to founding DEP, John served as a Managing Director and Senior Research Analyst with Simmons Energy, A Division of Piper Sandler, covering the U.S. onshore oilfield services sector for over 12 years. John graduated with a BS in Finance from Lehigh University and an MBA from Tulane. WellServicingMagazine.com

Well Servicing Magazine/March 2022

LEGISLATIVE OUTLOOK/

Need for Reliable Energy in the U.S. More Important Now Than Ever By Energy Workforce Government Affairs Team

he energy services and technology sector faces many critical policy issues that affect the more than 600,000 American workers who make up our Member Companies and workforce. Energy Workforce is a strong advocate for our members by engaging with government at both the state and federal levels to elevate the industry and tell the story of the men and women of the sector who bring affordable, clean energy to the country and the world.

Federal Leasing Program

Since the beginning of the Biden Administration, the federal oil and gas leasing program has had its ups and downs. Given that the Biden Administration began with an executive order that paused new lease sales both offshore and onshore, as well as an administrative temporary pause on permitting, it should not come as a surprise that issues and concerns continue. In June 2021, a federal judge in Louisiana blocked the executive order and instructed the Department of Interior to halt the moratorium and restart the federal lease sale process. In response to this ruling, the Department of Interior hosted Lease Sale 257 on November 17, 2021. In January, a federal judge in Washington held that this lease sale, which was conducted by following guidelines developed during the Trump Administration, did not follow proper NEPA guidelines. The Biden Administration has yet to either appeal this ruling or conduct a new NEPA analysis in order to attempt to satisfy the terms of the ruling. This deadlock means that the federal offshore leasing program is on hold. In February, the industry appears to have been pushed back by a few more yards as the Biden Administration once again halted new leases and permits for federal oil and gas drilling. U.S. District Judge James Cain of the Western District of Louisiana issued an injunction preventing the Biden Administration from using the social cost of carbon formula in decisions around oil and gas drilling on public land or in rules governing fossil fuel emissions. The ruling has consequences for a range of Biden

Administration actions on climate change, with the Interior Department’s federal oil and gas leasing program being the most significant. In an appeal filed by government attorneys on February 19, the Biden Administration argued Cain’s injunction left them with no choice but to institute a pause on all projects where the Administration was using this calculation. Shortly after the ruling, the Interior Department issued a statement making it clear that the decision would delay any upcoming lease sales. “The Interior Department has assessed program components that incorporate the interim guidance on social cost of carbon analysis from the Interagency Working Group, and delays are expected in permitting and leasing for the oil and gas programs. The Department continues to move forward with reforms to address the significant shortcomings in the nation’s onshore and offshore oil and gas programs.” Where does all this leave the U.S. energy industry that relies on these leases for future production? With increasing energy demand coming from all over the world, now is the absolute worst time for our country to be taking available energy off the table. It appears that the Department continues to look for legal and other avenues to slow and delay the restart of the federal leasing program. This delay grows ever more serious as the crisis in Europe threatens the energy supply of our friends and allies, making the need for reliable U.S. energy even more important.

Russian Invasion of Ukraine

Russia’s full-fledged invasion of Ukraine prompted the United States, in partnership with several European nations, to issue a series of sanctions on Russia. The first wave of sanctions included a halt to the Nord Stream 2 pipeline. This controversial pipeline, set to carry natural gas from Russia directly to Germany via the Baltic Sea, was seen as a threat to energy security throughout Europe. Germany announced it would suspend certification of the pipeline and the United States announced its own sanctions on the company Nord Stream 2 AG and its senior leadership. WellServicingMagazine.com

While the halt of Nord Stream was intended to be an impactful move, it did not deter Russia from furthering its invasion into Ukraine. The United States and Europe, in keeping with their promises, swiftly announced additional sanction intended to cripple the Russian economy and force the military to abandon plans of a further of their invasion. Sanctions against Russia, one of the top energy producers in the world, have already impacted the price and supply of oil and natural gas throughout the world. Russia’s aggressive actions in Ukraine are set make a much greater impact throughout the global markets, only compounding the current energy supply issues the world already faces.

“Build Back Better”

President Biden’s signature legislative package, “Build Back Better,” remains stalled in the Senate after a version passed the House last fall. With the Senate divided 50-50 between Democrats and Republicans and the GOP united against the package, every Democrat is needed to support its passage. Sen. Joe Manchin (D-W. Va) pulled out of negotiations with the White House after voicing concerns about the cost of the package, its climate provisions, its impact on the deficit and its effect on rising inflation. The White House and President Biden suggest the proposal will pass later this year, but its scope is narrowing. Initially looking to address everything from climate change to prescription drugs, it is more likely that components of the bill will be broken off and passed individually. While Sen. Manchin has expressed a desire to break up some of the climate portions and attempt to pass them on their own, the prospect of this grows more unlikely as time goes on. Upcoming elections and a likely pivot of focus on the Russian invasion of Ukraine will likely dominate the political calendar for the time being.

Forced Labor Prevention in China

In December 2021, President Biden signed the “Uyghur Forced Labor Prevention Act,” a bill intended to combat the use of forced labor, specifically in the Xinjiang region of China. The bill is intended to punish China for their actions in Xinjiang against the Uyghur minority. The bill operates on the basic premise that goods produced in this region of China have a significant chance of being produced using forced labor, so it aims to keep any products or materials produced in the region out of the U.S. markets. While U.S. companies strongly support this legislation in practice, keeping these products out of the market will be challenging. The Chinese government cannot be relied upon for transparency and has been known to 14

Well Servicing Magazine/March 2022

use a variety of tactics to hide places of origin, making it difficult for U.S. companies that are based thousands of miles away to identify the origin of products imported from China. The Department of Homeland Security, which is overseeing the implementation of this law, is partnering with industry to effectively enforce this legislation. In order to not exacerbate the current supply chain issues, DHS is seeking input from companies on issues such as origin verification techniques and unique features of specific raw materials from the region. Energy Workforce plans to offer input where appropriate, to join in the shared goal of compelling the Chinese government to end the horrific oppression of the Uyghur people.

REGROW Act

In November 2021, Congress passed legislation that will fund and support state-sponsored orphaned wells plugging programs starting in the summer of 2022. The Revive Economic Growth and Reclaim Orphaned Wells (REGROW) Act of 2021, which was integrated into the bipartisan infrastructure bill, will provide $4.275 billion for orphaned wells cleanup on state and private lands, $400 million for cleanup on private and tribal lands, and $32 million for research. Energy Workforce & Technology Council, led by the Well Servicing Committee, is forming a working group to draft a best practices document to help support and educate the sector for plugging orphaned wells. The document will detail and emphasize safety standards and requirements that should be considered during the initial bidding process of all upcoming plug and abandon (P&A) projects. Plugging orphaned oil and gas wells presents an opportunity to mitigate harmful emissions and provide an economic boost to communities transitioning away from fossil fuel economies. This working group will help ensure that all future P&A jobs are facilitated responsibly and safely. The group will also offer education and resources on how Member Companies can access the opportunities around the country for this work. ...................................................................................................... Energy Workforce's Government Affairs team covers the critical issues that impact the energy sector and our Member Companies. To become involved, contact SVP Government Affairs Tim Tarpley at ttarpley@energyworkforce.org.

OIL STATES INDUSTRIES THREE LEADING BRANDS

Providing quality well servicing products to the oil & gas industry for over 75 years. WELL SERVICING EQUIPMENT Tel +1 817 548 4200 well.servicing@oilstates.com

oilstates.com

WE ARE HERE FOR YOU Since 1917, BITCO has provided customized insurance programs and services to support the backbone of the American economy. For over 70 years, we’ve helped our customers navigate the ups and downs of the energy sector. Looking for a partner who values long-term relationships, understands your business and affords you the benefits of being insured by a carrier that provides the financial strength and stability of being in a part of one of America’s 50 largest shareholder-owned insurance businesses? Look no further. We are committed to you and are here for the long run. Visit BITCO.com to learn more and find a specialist agent near you.

Full service branch offices: Atlanta Charlotte Dallas Denver Des Moines

Service offices:

Milwaukee

Indianapolis Little Rock New Orleans Oklahoma City

Pittsburgh Portland St. Louis San Antonio

Nashville

All programs may not be available in all states. Insurance contracts are underwritten and issued by one or more of the following: BITCO General Insurance Corporation and BITCO National Insurance Company (domiciled in Iowa), rated A+ (Superior) by A.M. Best, A2 Stable by Moody’s, and A+ Strong by Standard and Poor’s.

1-800-475-4477

BITCO.com

WellServicingMagazine.com

THE SAFETY ISSUE/

Building a Safety-Oriented Culture By Will Barnes, Evolution Well Services

very organization has a culture, whether meticulously cultivated or grown subconsciously.

When done with intention, this cultural backbone can underpin core values which drive success and alignment in all aspects of the business. If underdeveloped, the culture will instead work to impede an organization’s growth and development. This evaluation becomes more pressing when contemplating the repercussions of a poorly developed safety culture in a hazardous industry. Fortunately, no matter the stage of the organization, there are techniques a company can employ to establish or improve its safetyoriented culture. The first step in orienting a culture towards safety is to gauge where that culture is currently at in terms of maturity. This process should be enlightening, uncomfortable and should incorporate the entire leadership team.

Finally, the most mature phase is interdependent, where employees care for each other. Using this model to identify the current state of a safety culture will help to provide clarity around potential opportunities and next steps for an organization. As outlined above, a fully developed safety-oriented culture requires that employees internalize safety. To achieve this, an organization must empower their people by providing the necessary support and opportunities. If executed properly, these efforts will develop a culture of interdependence. There are three key elements an organization should Well Servicing Magazine/March 2022

Finally, they must feel included. The support and development of these elements should guide an organization’s approach to building and maintaining a safety-oriented culture, regardless of the organization’s current phase. To integrate these elements into a culture, there must first be a commitment to caring about safety that emanates from the highest levels of the organization. The leadership team must agree with where the organization’s safety culture is currently and set milestones for progressing along the maturity curve.

“Leadership's dedication is integral in influencing culture. If leadership cares, so too will the organization.”

One useful strategy is to breakdown maturity thresholds into distinct developmental phases of safety culture. The least mature phase is reactive, where employees rely on instinct to manage risk. The next phase is dependent, where the business relies on supervision to manage risk. The third phase is independent, where employees begin to care for themselves.

focus on when crafting an interdependent culture: care, confidence and inclusion. People must care about the safety of both themselves and of others. They must also have confidence that they will be supported.

Communication of this commitment must be public, consistent and relentlessly reinforced. Leadership’s dedication is integral in influencing culture. If leadership cares, so too will the organization.

Second, that commitment must be communicated. Communication is an incredibly powerful tool when building safety into a culture. Words really do matter, whether written or spoken, and they must continually reinforce the value an organization places on safety. Leadership’s commitment to safety should be documented and distributed to all employees and reinforced with subsequent communication via meetings, videos, postings and memos. It is important to remember that action is the most influential form of communication. Verbal and written communication must be reinforced through action. When employees see that their leaders follow through on their safety pledges, it validates their words and gives employees the confidence to adopt them as well. Lastly, the organization must make purposeful efforts to be inclusive of employees’ opinions and recommendations in the cultural journey. Employees need to feel like they are an essential part of the team by seeing the impact of their words and actions.

Courtesy of Evolution Well Services

By including employees in safety-related efforts, organizations can engender a sense of ownership to the collective mission. If done properly, inclusion and the resulting efforts can serve to bind a safety culture. An inclusive culture is critical to creating an engaged and empowered workforce that truly embraces safety.

foundation establishes our commitments and expectations for People and Pride, Relationships, Innovation, Safety and Service Quality and Mindset of Team. It is through executive-driven commitments like this that an organization can successfully build a strong, enduring, safety-oriented culture.

As a leader in the electric hydraulic fracturing space, Evolution Well Services’ innovation does not stop with its equipment and solutions offerings. Innovation is valued at every level, including in our culture. We know that organizational culture plays a crucial role in the success of our company and the safety of our workforce. Therefore, safety was a key consideration in the development of Evolution’s Values and Culture PRISM.

..................................................................................................... Will Barnes is Vice President, Health, Safety & Environment at Evolution Well Services. With over 15 years of experience, Mr. Barnes has dedicated his career to HSE roles in oilfield services.

The safety of our people are primary concerns; PRISM formalizes that commitment and intertwines it with all aspects of our business. We act with integrity and honesty, we take responsibility, and we value an enterprising spirit. These core beliefs and principals are central to everything we do and form the foundation of PRISM. This

Prior to Evolution, Mr. Barnes served as the Vice President of HSE for Nine Energy Service supporting completion tools, wireline, cementing, and coiled tubing operations. Mr. Barnes is a Certified Safety Professional. He holds a bachelor's degree in Occupational Health and Safety and is currently pursuing his master’s degree in Organizational Leadership.

WellServicingMagazine.com

THE SAFETY ISSUE/

Safety Training in VR By Gary Childress, Oil States International Representing the Energy Workforce HSE Committee

he oil and gas industry has always found unique and innovative ways to solve problems concerning safety in the oilfield, especially in physically challenging environments. Effective training, especially that which gives workers the tools and skills to identify and assess job risk, is essential to worker safety. To ensure that every employee entering a jobsite can perform their job safely, energy companies are starting to rely less on textbooks or conventional on-site learning in favor of new methodologies. Currently, oil and gas companies are finding innovative ways to capitalize on the benefits of virtual reality (VR) and augmented reality (AR) technologies for staff training, jobsite simulation, monitoring of performance standards, and for developing and improvising processes and products.

VR Safety Training

The purpose of a VR-based safety training program is to offer a safe working environment where employees can effectively rehearse tasks and ultimately promote their abilities for hazard recognition and intervention. It allows training through the experience of failure without suffering possibly life-changing consequences. The ability to identify risk is something workers hone through years of work experience. VR offers an opportunity to expedite that process and allows an organization to cultivate a workforce whose experience in hazardous situations is both robust and varied. Perhaps the most influential, beneficial and practical use of VR simulated training could be placing an industry leading subject matter expert (SME) in the same room as any trainee, anywhere in the world. There is no limit to the number of SMEs or management observers you could have watching while the employee interacts with the designed trainings or procedures. One over-the-shoulder viewing perspective can now be seen simultaneously by tens, hundreds, or thousands of people. Through the use of VR, you can insert an industry expert into any training environment in the world and create a workforce that is highly experienced in recognizing hazards and assessing risk that may not otherwise have field or on-site experience. Safety failures (injuries, fatalities, near-hit incidents) have served as what-not-to-do examples and have been 18

Well Servicing Magazine/March 2022

used to improve safety programs in most industries. VR scenarios where employees can experience failure without real-time penalties or costs can be one of the most valuable training tools, as it provides first-hand knowledge of circumstances that cannot easily be replicated in a classroom setting. From failure, employees not only gain a better understanding of job tasks and the associated risks, but often place an even higher value on safety procedures and have greater retention of training objectives

Advantages of VR Training

Unlike manufacturing industries or other centralized organizations, oil and gas facilities and rigs are often located in remote locations, both onshore and offshore. One of the primary benefits of VR training is that it can take place anywhere in the world. When virtual reality training becomes a standard part of the onboarding process, new hires can now perfect their skills before ever setting foot on an offshore rig. In conventional training settings, the scenarios are often classroom and theory based, which limits the ability of an employee to fully immerse themselves into a real working environment. Gaining the same hands-on, onsite practice as you would with VR training against real scenarios could take years. Augmented reality (AR) overlays (such as smart glass hardware, analytics, back-office tools) can help improve worker safety and effectiveness by providing visual clues and indicators, process steps, and repair and operation instructions. For example, gesture-control armbands can initiate a video conference between an on-site worker and a remote expert, who can see what the worker sees, talk them through a set of tasks and provide annotated instructions on the worker's augmented display. With a head nod or tilt, the worker can maintain a digital log or “checklist” of completed activities and create new notations via voice as the repair is underway, ensuring best practices are maintained and implemented globally. Delivering virtual reality-based, on-demand training sessions that leverage in-person walk-throughs, computers and other advances can improve knowledge retention and reduce traditional classroom training costs. Further, VR and AR applications allow engineers to monitor equipment without being physically present at the

location, as well as train employees without putting them in danger of affecting the normal work routine. Instead of having to fly out in person to the off-field regions in which oil and gas companies operate, AR remote assistance can be used, and an onshore support engineer can help an oil rig crew member, seeing the equipment through his eyes. Highly realistic VR training for dangerous situations can assess safety and compliance protocols and improve procedural execution in the event of an emergency safety incident. Another innate advantage of a VR-based training experience is that each trainee can create an individualized, self-paced curriculum. This enables the organization to monitor development, fast track, reassign, or provide additional training when needed, and narrow in on a trainee’s strengths and areas of improvement. Virtual/augmented reality-based training also enables the usage of digital twins, creating a unique, hyperrealistic training program customized to each organization’s operations. These simulations allow for risk-free training with dangerous situations, test trainee’s safety and compliance protocols in the event of an emergency and reduce the potential for mistakes during unplanned incidents. As a result, the self-confidence of trainees increases, and they can practice operations that have unique or tricky situations in advance.

As the workforce becomes increasingly diversified and the work at hand becomes more complex, the rigors required to safely plan, deploy, and execute a job increase as well. The enterprise potential of augmented reality and virtual reality in the industry is constantly growing. As these technologies become more widespread and more immersive, their utility in active operations and training becomes increasingly apparent. With the ability to bring in an SME to personally oversee the training process, train employees without disrupting on-site, improve the quality of trainees with customizable programs, and reduce costs while increasing safety, virtual and augmented reality will undoubtedly become a prominent part of the industry and soon become the standard. ...................................................................................................... Gary Childress is Vice President – Health, Safety, Environmental and Sustainability at Oil States International. He is the Chair of Energy Workforce's HSE Committee. Gary has 43 years of combined operations and QHS&E experience in the oil and gas industry, serving in global roles supporting both manufacturing and field operations during his career. WellServicingMagazine.com

THE SAFETY ISSUE/

Lowering Carbon Emissions, Increasing Worker Safety Through Remote Operations By Simao Silva, Oceaneering

emote offshore operations are becoming more commonplace as technology advances. The benefits are evident due to the reduced crew size required on the offshore asset, leading to reduced CO2 emissions and a safer work environment. Oceaneering achieved proof of concept for remote piloting of remotely operated vehicles (ROVs) in 2004 with successful execution on multiple assets in the North Sea. To date, Oceaneering has completed nearly 70,000 hours of remote ROV operations from shore with technology adoption accelerated by the COVID-19 pandemic, lowering the number of personnel needed offshore while maintaining operational standards. In simplified terms, the operation of ROVs has always been remote. The pilot controls the underwater robot from the floating asset, where all commands flow through a cable or fiber optic. Operating these robots from shore adds one chain to the communication link. The information is now also transmitted via the internet before it arrives at the machine.

Managing the communications path is the biggest challenge in moving ROV control to an onshore facility. In the GoM, many offshore facilities are not in the LTE network range as in Eu“Training is an rope, but this infrastructure is expanding fast with the adoption of radio essential portion of links. The challenge is due to the loremote operations cation of the assets and their distance projects. It allows team from the beach. In addition, offshore data communications links are narrow, members to diminishing the ability to transfer data become familiar with in real-time. Because communications from the operating TLP were already the subsea field available, remote ROV piloting was a layout.” prime candidate for this project.

Remote piloting and automated control technology enable complete ROV piloting via virtual connection technologies such as vessel-to-vessel radio frequency, satellite/internet and subsea optical link. This capability allows for increased technical and operational support from onshore during complex or long-duration activities, providing access to a broader team of subject matter experts (SMEs) and specialists.

In 2015, Oceaneering launched the onshore remote operations centers (OROC) enabling effective execution of offshore operations from a remote base. Working from an OROC eliminates offshore safety risks for the shorebased team. In addition, it increases efficiency by decreasing the number of workers mobilized offshore, reducing operational wait time, simplifying the interaction between the customer representative and ROV pilots and operations. It also enables teams to manage multiple operations that require specialist oversight from a unique location. 20

Well Servicing Magazine/March 2022

Remote piloting of ROVs gained popularity in the North Sea due to the availability of high-speed communications infrastructure offshore. Previous trials of remote piloting have been performed in the Gulf of Mexico (GoM) on the Ocean Evolution vessel using high latency satellite communications. In 2020, Oceaneering conducted the first commercial remote piloting of an ROV in the GoM utilizing the operator's existing infrastructure, including high-speed communications connected to a tension leg platform (TLP).

Special equipment is needed to manage remote ROV operations. It relies on the data transferred from the offshore asset to the onshore facility. The ROV pilot needs to see and respond in near-realtime subsea for this solution to be effective. This scenario is especially true for work programs where it is vital to transmit the data from glass to glass (i.e., camera to monitor) in the least amount of time. The data stream passed through a data transport system using secure, encrypted tunnels to transmit data between the offshore asset and onshore facility to ensure cybersecurity. The ROV control software has the flexibility to allow complete control of the ROV and manipulators by either offshore or onshore pilots. With a collaborative approach, the pilot at one end controls flight while the pilot at the other end controls manipulators. Cybersecurity is one area that receives the most attention, including using a specialized company to test the system by trying to hack into it.

A pilot and other personnel oversee remote ROV operations from an OROC in Stavanger, Norway. Courtesy of Oceaneering

A proprietary remote piloting system transmits this project's video, audio and control data. In addition, the configuration safely and securely controls and store data. Designed to upgrade the existing ROV control system, the remote piloting add-on was shipped to the offshore asset and installed by the ROV crew already onboard in a couple of days. The activities carried out using remote operations from shore-based centers involve drilling support and subsea completions. Most are general visual inspection, close visual inspection, cleaning with less frequent operations involving valves actuation and tooling manipulation. Training is an essential portion of remote operations projects. The pilots train on simulators onshore to learn how to adjust how they maneuver the ROV to account for signal latency to execute work subsea effectively. The training program also includes a portion designed to be asset specific. It allows team members to become familiar with the subsea field layout. One of the main changes from the standard mode of operations is how the pilots interact with each other. They communicate via a voice over internet protocol (VOIP) communication link for remote operations instead of face-to-face. In this project, the training and familiarization process lasted approximately four weeks before responsibility for the controls was transferred to the

shore-based remote pilot to execute the work scopes. The ROV control software and data communication hardware ensured the pilots' safe and robust execution at both ends of the link. Control is handed over in a structured manner that involves a series of invite and acknowledge commands sent via the software. This methodology, along with visual and audible indicators, ensures that each pilot is fully aware of who has control of the ROV at any given time. In addition, the pilots are in direct voice communication with each other via a VOIP communication link. With the positive results of the inaugural GoM project, this technology is gaining a foothold in the United States. In addition, as communication networks in the GoM improve, such as implementing 4G LTE in the region, remote operations will become easier to implement. ...................................................................................................... Simao Silva is a Director at Oceaneering in Houston, TX. He has over 20 years experience in the subsea sector, 17 with Oceaneering. Simao studied Engineering at the Rio de Janeiro State University (UERJ), has a Business degree from Aspen University, and is a certified Project Management Professional (PMP). WellServicingMagazine.com

THE SAFETY ISSUE/

Hazards in Operations: Tools for Success By Gay Wathen, NOV

SE starts with the commitment from the top of the organization through the ranks with the same focus every day – to have everyone go home in the same shape as when the shift started.

each type of instance that may occur. Identify the lock needed for a specific operation and train the operator as to the proper use if an incident occurs or to prevent an incident.

Working in an operations setting can create many risks if there is not an awareness of those hazards. To have the employees educated and trained to identify potential issues for harm to individuals or equipment is the most efficient way to prevent incidents.

Identify the proper PPE for each operation and check it regularly to ensure that it is not damaged. This seems so simple, but it takes only a second to strain a back, break a finger or get a particle in an eye. If the employee doesn’t have the training with the proper PPE, there is a greater risk for injury. This can be addressed on each Job Hazard Analysis (JHA) that should be reviewed before starting any operation.

Start each day with a “tool box talk” to address any issues, such as near misses, weather alerts, preventative training, changes within the operation, etc. This will make all employees start the day with HSE in mind. Have each member of the team present the lesson, so that everyone is engaged and responsible for a message. Monthly safety meetings are the most efficient way to address a broader issue that is not specific to a particular operation. This is a good forum to have employee input, management insight and team building. Sign-in sheets are necessary so as to identify those workers that were absent and need to be informed individually of the subject matter covered in the meeting. Implement “Stop Work Authority” that gives responsibility to each worker to stop an operation if there is an unsafe act. Identify safety leaders for reporting any unsafe acts so that the incident can be investigated. Confirm that all employees have the proper equipment training and are up-to-date with refresher courses. This would encompass forklifts, cranes, working from heights, etc. Accurate recordkeeping is critical. Establish a communication system between the workers and management. This may be a suggestion box or observation cards, which will give a voice to the workers in your operation to share ideas for improvements or potential hazards. Address these during safety meetings to let the employees know that management is planning for or considering each issue. Establish a committee to manage these and create timelines for corrections or implementations. Implement a “lock out/tag out” practice to protect workers from operating an unsafe machine or eliminating a potential hazard. Verify that there are proper locks for 22

Well Servicing Magazine/March 2022

Good housekeeping will help in preventing slips, trips and falling objects. Establish the safety barriers with painted lines and keep aisles clear. Remove clutter in the work area to have necessary space to perform the task. Everyone in the facility is accountable for this task and should be aware of their surroundings. Being organized will help the employee be more effective and efficient. Misusing tools and machines are the most prevalent causes of workplace injuries, and all workers should be trained prior to use. Scheduled maintenance and inspections are critical for prevention of incidents. Identify “homemade” tools and gather information from operations/engineering to replace them with OSHA safe tools. Many jobs will require multiple tools for one operation but attempt to find universal solutions. Discuss best practices. Once tools are identified and replaced there may need to be training for the proper use of the tool. Share the knowledge and findings among all the other operations within the organization. The organization may use best practices methods, safety alert notices or lessons learned notices to make all employees aware of the hazards. Being consistently pro-active is a diligent process that will result in a safer environment for all assets including the most important assets – our employees. .................................................................... Gay Wathen is Vice President Mobile Rigs at NOV and Chair Emeritus of the Energy Workforce & Technology Council.

WellServicingMagazine.com

OPINION/

Energy Waste Management and the Carbon Agenda Opinion By Gabriel Rio, Milestone Environmental Services

espite the supply and demand cycles of our industry, and advances in the development of alternative energy sources, oil and gas remains – without question – the world’s most effective source of energy with unparalleled cost and reliability advantages. Supply models predict that fossil fuels will remain a major part of the global energy mix for decades to come, and when strong demand is coupled with concerns about climate change and other environmental impacts, it becomes all the more important that our industry continues to adapt and improve on its environmental performance. Over the past couple of years, most E&P companies have committed to net-zero or other measurable decarbonization goals. Most of the focus has been placed on reducing greenhouse gas (GHG) emissions downstream of the drilling rig, and while this work is to be applauded, the environmental impact of energy waste remains conspicuously absent from the carbon agenda.

Compliance Is Not Enough

The uncomfortable fact is that, in some states, regulation of energy waste is outdated and unaltered for the modern era of decarbonization. In Texas, for example, due to a ruling last revised in the 1980s, operators still routinely dispose of oilfield waste in earthen pits or spread it out on ranchland, even when environmentally responsible cost-effective alternatives exist. In this case, basic regulatory compliance is no longer enough to satisfy stakeholders and regain the social license our industry needs to continue operating long term. To better illustrate the problem, building a reserve pit involves excavating a hole about 12 feet deep and half the size of a football field at the drill site. Sometimes this has a plastic liner, although this is not always required by Texas regulation, and the pit is filled with oilfield waste as the well is drilled and completed. The waste is then buried with dirt sometime after, creating what has been coined a “waste burrito.” Spreading waste on ranchland—also known as landfarming—is no better. Drilling fluids and cuttings are tilled into the soil on the lease, 24

Well Servicing Magazine/March 2022

and petroleum hydrocarbons and other compounds either evaporate as volatile organic compounds (VOCs) or interact with organisms in the soil, which are eventually expelled as carbon dioxide (CO2). Clearly, these methods pose tangible environmental risks, as well as potential reputation risk to the operator and industry as a whole. Onsite disposal applies waste to the soil, assuring soil contamination and risking groundwater contamination from leachate, even with a liner present. Unlike professional disposal sites, neither reserve pits nor land application require longterm groundwater monitoring of the surrounding area. By design, onsite methods vent VOCs and CO2 to the atmosphere. And don’t forget that liability for pollution remains with the waste generator forever, unless it is transferred to professional disposal sites that carry pollution liability.

In Support of Business as Usual

The conventional argument in support of onsite disposal is the perception that it is the cheapest possible option. Indeed, this may have been the case when the alternative was too remote from location to be feasible. However, in recent years there has been prolific investment in disposal infrastructure, making it more accessible and affordable than ever before. Nowadays, in the Permian Basin, virtually every active lease is within a 30-minute drive of one or more professional disposal facilities. In most cases, this makes the cost of offsite disposal comparable with the cost of building and closing a reserve pit on location. Recent studies also show that if a premium does exist, it is negligible in the overall context of the well cost (less than 1% of the AFE). The other most common claim about dumping in reserve pits or landfarming is that the waste is only water-based and therefore harmless. The reality is, once used in a well, even water-based drilling fluids and cuttings generally include petroleum hydrocarbons, heavy metals, benzene and other contaminants which, although present in nature, are found in much higher concentrations in oilfield waste. Absent its exemption from the Resource Conservation

and Recovery Act (RCRA), it is likely that some of this waste would be considered hazardous.

The Better Alternative

Our industry already has a solution for this and operators do have a better option for handling oilfield waste. The solution is using professional offsite disposal methods like slurry injection and E&P landfills—methods that have been successfully applied and supported by regulation in other states for decades. Slurry injection is the most cost-efficient and environmentally secure way to sequester oily or solids-laden liquid waste. With slurry injection, liquid waste is injected into carefully selected geological strata thousands of feet below the Earth's surface. These permeable strata are capped by massive impermeable layers of rock and shale, blocking any possible migration up into vital water resources. Slurry injection is specifically designed to process oily dirty liquids at volumes and pressures far lower than associated with commercial saltwater disposal. E&P landfills, on the other hand, are designed for longterm containment of solid waste streams. Cuttings, contaminated soil and non-injectable liquids such as cement or frac gels are contained in designated holding cells, each of which have multiple physical layers of protection and a leachate collection system that returns fluid from the landfill cell which is sent for injection. Both methods are heavily regulated and monitored to ensure environmental safeguards and protect E&P operators, landowners and communities from the long-

term effects and liabilities of pollution. Slurry injection in particular helps operators avoid the VOC and GHG emissions associated with onsite disposal methods, and permanently sequester the carbon content of the waste. Scrutiny from the investment community and the public is at an all-time high, and the pressure is on to meet our ESG objectives while maximizing shareholder value. The good news is there is low-hanging fruit when it comes to cost-effectively improving the environmental footprint of energy waste management. A solution exists that is good for operators, landowners, investors and the community at large. Those responsible for determining regulation, developing E&P best practices, and ensuring implementation in the field, all have significant roles to play in making positive change a reality. The risk is that prevailing rules of thumb and business as usual get in the way of making better business decisions. With the right decisions, however, we can all be winners in this high-stakes game. ..................................................................................................... Gabriel Rio is President & CEO of Milestone Environmental Services, which he founded in partnership with Intervale Capital in 2014. Prior to Milestone, Gabriel was a private equity investor at both Intervale and TCR, and EVP of Strategy and Business Development for R360 Environmental Solutions. Gabriel is an elected member of the Energy Workforce & Technology Council Advisory Board and the TXOGA Board of Directors.

WellServicingMagazine.com

FINANCE/

M&A Perspectives in a Rapidly Evolving Market By Austin Harbour, Piper Sandler

ubstantial shifts in the North American (NAM) onshore oilfield services and equipment (OFS&E) market have resulted in a revival of mergers and acquisitions (M&A) as a core component of corporate strategy. This renewed focus is borne out of the absolute necessity to not only survive, but also to outperform in an industry that continues its rapid evolution in favor of companies that provide next-generation solutions enabling customers to ultimately achieve ESG-related goals – namely reducing emissions – without sacrificing field operating efficiency or favorable economics. During the height of the pandemic and generally through the early portion of 2021, deals were largely predicated on survival due to unprecedented headwinds associated with the COVID-induced downturn. The broken OFS&E market structure, defined by overcapacity of competitors and equipment, bloated SG&A, unsustainably low (i.e., below ‘breakeven’) pricing, particularly by weaker players, and incongruent economic rent sharing between E&P operators and service providers, exacerbated the negative impacts of the pandemic and triggered the mindset of “M&A is critical to survival.” Coincidentally, a “new normal” emerged as public and private debt and equity investor behavior and preferences experienced a revolutionary transition. Both groups have allocated an increasing percentage of available dollars to other industries and/or ESGrelated investments and away from traditional energy and OFS&E. As a result, the cost of capital for the industry has experienced a step-change and is likely to remain elevated. At the same time, NAM-focused E&P operators responded to investor demand to prioritize returns versus production growth, resulting in a material reduction in both aggregate drilling and completion spending and activity, as well as a relentless focus on obtaining supply chain pricing concessions, as the oft-cited mantras of “living within cash flow” and “returning cash to shareholders” reverberated throughout earnings calls and investor presentations.

Well Servicing Magazine/March 2022

Consolidation activity has also accelerated among public and private NAM-onshore E&P players, placing flowing barrels and reserves – the effective addressable market for OFS&E providers – in the hands of a smaller universe of clients. A shrinking client base (i.e., fewer E&P operators) and addressable market (i.e., less activity or spending; lower pricing), coupled with investor refusal to recapitalize the industry left OFS&E companies with limited viable strategic alternatives to M&A.

Capital Discipline

However, prolonged capital discipline by investors, E&P operators and OFS&E businesses is driving a healthier market dynamic. In mid-2021, as the economy began to inflect, coupled with a drastic improvement in commodity prices and activity, M&A posture transitioned from a primarily defensive stance largely focused on survival toward a more balanced view incorporating competitive re-positioning. This updated posture integrated the need to reposition the platform, with both existing and next-generation solutions, to outperform in the “new normal” market paradigm. In well servicing, this phenomenon has manifested in transactions with multi-faceted benefits, such as placing assets in the hands of more capable management teams, improving in-basin scale, removal of certain pockets of excess capacity, fixed cost leverage and SG&A synergies, and, in certain cases, price discipline. In a related example, prolonged underinvestment in hydraulic fracturing equipment, particularly next-generation technology (e.g., Tier IV DGB, Electric, Direct-Drive), has led to meaningful tightening of capacity and more favorable economics in this sub-segment – recent M&A activity has been driven by such dynamics. Despite wide recognition and acceptance that consolidation is both a logical and economic solution in the current and foreseeable market environment, M&A activity has largely been confined to a limited number of participants. However, there remain a considerable volume of additional transactions that need to take place to rebalance the equation between available supply of

market participants/capacity and demand for OFS&E products and services. Primary obstacles that typically hinder M&A include bid-ask spread, deal complexity, market volatility, disparate views regarding prevailing market conditions, over-levered balance sheets and social issues. Ironically, there are fewer opportunities to facilitate an exit for the abundance of private companies that, in the past, would have been monetized either via an initial public offering or sold to a “mid-cap” public company. Obstacles notwithstanding, OFS&E companies must evolve and adapt to the “new normal” and, absent internal initiatives, consolidation provides the prudent, efficient path to maximize value.

................................................................................................ Austin Harbour is Managing Director at Piper Sandler. He has over 10 years of investment banking experience. During his career, Harbour has focused primarily on the energy services and equipment sector, including advising on some of the largest M&A and restructuring transactions in the space. Harbour holds a MBA from Texas A&M University. He earned his bachelor’s degree from Texas Christian University.

WellServicingMagazine.com

BEST PRACTICES

Photo (c) Chris Boyer, Kestrel Aerial Services, Inc.

Well Servicing Committee Releases Report on Base Beam Systems

nergy Workforce & Technology Council recently released a report drafted by the Well Servicing Committee titled “The Stability of Well Service Unit Masts.” This report examines the use of base beam systems for well service rigs and details the industry best practices and procedures for utilizing these systems. Compiled by the industry experts represented on the Well Servicing Committee, the report will serve as the industry standard for rig stabilization operations. This report provides an overview of the history of rig stabilization operations and how base beams have served as a standard form of well service rig stabilization for over 20 years. Equipment manufacturers have designed and engineered their rigs and masts for safe, efficient and economical operation when guyed to base beams. These state-of-the-art systems have undergone rigorous engineering and safety analyses, and have proven safety and efficiency records. “The Stability of Well Service Unit Masts” delves into the land and environmental conditions, as well as the structural components that are taken into account when

Well Servicing Magazine/March 2022

determining what type of rig stabilization system is best fit for a specific rig. Rigs located in rugged topography, multi-well pads or limited size locations are just some of the factors that necessitate the use of the base beam stabilization system. Well service rig crews undergo extensive training on the proper rigging of their equipment, and are capable of identifying and mitigating external factors that may interfere with the stability of their systems. Accidents on rigs caused by properly engineered and deployed base beams are virtually non-existent, which demonstrates the quality and safety of the base beam stabilization mechanism. A rig stabilization system that operates as defined in this report will meet any E&P expectations for safety and efficiency. “The Stability of Well Service Unit Masts” has codified the industry standard for well service rig stabilization, and should serve as the definitive authority on these systems. To download the report, visit energyworkforce.org.

Report Excerpt

WellServicingMagazine.com

TRAINING/

Energy Workforce Graduates Largest Cohort from Training Programs

nergy Workforce’s largest executive training cohorts to date graduated earlier this year in ceremonies highlighting accomplishments and focus areas for the upcoming year. Based on Energy Workforce’s mission to advance the industry and those within it, these programs educate, empower and elevate its individual members and Member Companies. The programs include the Executive Leadership, Inclusion & Diversity Business Champion and ESG Certification. During the ESG Certification Program graduation, keynotes Dan Romito, Pickering Energy Partners, and Kaitlyn Allen, Clime.Co, both discussed ESG macrotrends, noting the emphasis on companies finding their role in an increasingly decarbonized world. Romito also noted how “all roads to capital – insurance, banking, equity both private and public – go through ESG,” indicating the increasing role of ESG in accessibility to capital, key to companies in the economic recovery. Allen brought attention to the growing conversation around novel finance and the new tools available to acquire capital. These methods can be tied to target setting and are an opportunity for companies to demonstrate leadership in new areas through ESG. Leadership building within the energy industry continues to be an area of expertise for the Council. The Executive Leadership Program, the longest running program of the Council, graduated its seventh cohort with representation from more than 25 companies. Advisory Board Member Kyle Ramachandran, Solaris Oilfield Infrastructure, discussed how a previous rejection caused him to pivot and change career paths. His leadership style evolved as an intentional component of his personal branding. Finding a mentor who would foster his personal goals was also key to his success. A key factor in mentorship is trust – something Advisory Board Member Pearl Chu, Schlumberger, impressed upon participants. She said “you can influence many people through positive feedback through your interactions” and furthermore “building a foundation of trust allows you to challenge people to achieve greater outcomes.”

Well Servicing Magazine/March 2022

Emerging Executives Committee Chair Chris Berrie, Caterpillar Oil & Gas; Energy Workforce CEO Leslie Beyer; Board Member Pearl Chu, Schlumberger; Advisory Board Member Kyle Ramachandran, Solaris Oilfield Infrastructure

Highlights from the I&D Business Champion graduation program included advice from keynote speakers Maria Lorente, Schlumberger, and Lauren Noyes, ChampionX: • Diversity is a fact; inclusion is an act. • The I&D journey is a marathon, not a sprint. • The I&D business case has never been clearer; it makes good business sense. • Performance and innovation are fueled by a diverse way of seeing things. • Put your learnings to practice and become champions in your own companies.

Graduates of the Inclusion & Diversity Business Champion Program

• This new type of leadership is centered on humility and authenticity, at the heart of diversity and inclusion, invoking change. Moving forward, participants discussed reinforcing inclusion and diversity strategies as integral parts of their company’s business strategy and demonstrating this culture – as opposed to statements without clear actions. Graduates throughout the programs expressed strong desires to champion their gained knowledge within their companies and create learning opportunities for others. Equipping current and future leaders with tools in leadership, inclusion and diversity and ESG evolves the energy industry and enhances its position as a driver of the global economy.

Dan Romito, Pickering Energy Partners

WellServicingMagazine.com

CONGRESSIONAL SPOTLIGHT/

Rep. Garret Graves, LA-06

Rep. Garret Graves has served Louisiana in the U.S. House of Representatives since 2015. He serves on the Transportation & Infrastructure Committee, as well as the House Natural Resources Committee.

Your district and surrounding areas are home to many energy workers who supply the entire country with the oil and gas needed for modern life. What are concerns this workforce has been sharing with you and your colleagues in Washington, DC? I’m very proud to represent our energy workers. These are the folks that are powering America’s economy. Many of these workers have the same concerns as every other American – they’re concerned about our mounting debt, rising inflation and the record high gas prices that hurt their paychecks. The most frequent frustration we hear is that America is putting additional American energy off limits while asking countries like Russia, Saudi Arabia, Iran and others to produce more oil. It is hard to hear that — especially from their own president. Louisiana is a leading energy producer that powers the nation. We fulfill a large share of America’s energy demand, and we do so in a way that is cleaner and more efficient than any other nation. Energy workers are baffled that this Administration would rather shift the blame and beg the foreign OPEC alliance rather than support good-paying jobs or produce cleaner energy right here at home.

As Ranking Member of the Select Committee on the Climate Crisis, what are the major goals of this committee? Over the last 15 years, the United States has led the world in reducing emissions – reducing more than the next seven countries combined. But not only did we reduce emissions during that time, we lowered energy costs for Americans. Cheaper energy and reduced emissions did not happen because of more federal regulations, mandates, and taxes – they came through American resources and innovation embraced by the free market. That should be the model going forward, and this is what I’ve advocated for as Ranking Member of the House Select Climate Committee.

Well Servicing Magazine/March 2022

Policies that create American jobs, enhance American competitiveness, and provide maximum national security and energy security while protecting our environment. We can either follow the successful strategies that have worked, or we can continue to go down the wrong road of mandates and attempting to force consumer markets — resulting in higher emissions, constrained energy supplies and higher prices for American families.

Energy Workforce companies are actively involved in the ‘energy transition,’ which you have previously alluded to as an opportunity for the oil and gas industry in Louisiana and the U.S. What is the public misunderstanding about the role of oil and gas in reducing carbon emissions? Where do you see Louisiana being a leader in the energy transition? Reducing emissions shouldn’t mean reducing energy choices. America’s strategy should be based on our strengths and our resources. Some have focused on demonizing fossil fuels when it is the emissions that we should be targeting. Eliminating America’s supply of fossil fuels does not dampen global demand, it only ensures that demand will be met with higher emitting sources from OPEC and Russia. If we truly want to reduce global emissions, eliminating U.S. fossil fuels is counterproductive. U.S. energy resources are the most reliable, efficient and abundant, and play an important role in the United States economy, and to promoting energy security globally. Innovation that allows us to utilize our American resources with lower emissions should be a focus of policymakers. It has been noted that fossil fuels will continue to play a significant role in providing energy to the world. In fact, according to the Energy Information Administration, overall energy demand is expected to increase and global natural gas demand is expected to increase 31-58% by 2050. That demand should be met with U.S. resources that often have the lowest lifecycle carbon emissions in the world and investment in U.S. technologies to further reduce emissions. Louisiana has some of the best geology and geography for carbon sequestration to complement the growing global demand for conventional fuels and opportunities

to expand wind, wave, hydropower and solar energy.

Washington seems increasingly polarized on major issues affecting Americans and their everyday lives. Do you think there are areas where the country and its Congress can come together to get things done? There is no doubt that things have become more divisive; however, one way to break through the fighting is simply incorporate more science and data into decision making. There have been many opportunities to learn from energy and climate policy successes and failures right here in some of our states and around the globe. The path to affordable, clean, exportable energy solutions is pretty clear. There are several areas where bipartisanship should exist from innovation and natural solutions to resilience. Efforts to make our communities more resilient to disasters should be bipartisan. Natural solutions have a lot of room for bipartisan cooperation as well – whether it is the ‘Trillion Trees’ initiative or precision farming. Infrastructure important to our energy sector, including upgrading our grid, has the support of both parties. Innovation that advances clean energy technologies should be bipartisan. Republicans support effective solutions that utilize American resources and American innovation that support U.S. competitiveness. Those solutions can and should be unifying. We should not be adding burdensome regulations – and the federal government should not be dictating winners and losers. Whether you’re talking about bipartisanship or energy production, the solution should not be all or nothing, the solution should be all of the above.

A number of our Member Companies are working on CCUS technology. What is the goal of H.R. 1761, the CCUS Innovation Act? Carbon capture is key to any global effort to address emissions and vital to allow America’s energy resources to address our energy needs. This technology has the potential to make a gallon of gasoline, a cubic foot of natural gas or a kilowatt of electricity from solar panels indistinguishable from an environmental standpoint. I'm proud to support the bill with Rep. David McKinley. This legislation will help to ensure we will continue to be a global leader in reducing emissions using American resources combined with American ingenuity and innovation. We must continue to lead on innovation to ensure cost effective climate solutions that support the U.S. economy and jobs while providing affordable and reliable energy here at home and for our allies abroad.

What pieces of legislation or work on behalf of the Louisiana 6th district are you most proud of? I’m very proud that our legislative team was recognized as one of the top five performers last Congress, and we have already accomplished much this Congress. We recently reauthorized the Sport Fish Restoration & Boating Trust fund that will continue to provide funds to restore coastal wetlands and further conservation for fish and wildlife. We also passed a bill in the House to improve the ecology and water quality in the Lake Pontchartrain Basin, which is one of our state’s best assets. Perhaps our most important win this Congress was securing recovery funding and resilience investments for those most impacted by Hurricane Ida. In terms of energy-related legislation, I am looking forward to advance a bill to reform the way we study and deliver infrastructure and ecological projects. This focuses on modernizing the National Environmental Policy Act (NEPA). Our legislation, “Building U.S. Infrastructure through Limited Delays & Efficient Reviews” (BUILDER Act), will make project reviews more efficient, reduce project cost, spur economic activity and help rebuild our nation with our own resources. The bill has broad support from industry, Republican leadership, every ranking member of U.S. House committees and most people that have ever been through the NEPA process. WellServicingMagazine.com

2022 CALENDAR/

A PRI L APR 6-8 POINT CLEAR, AL Annual Meeting

MAY 16 HOUSTON National Scholarship Golf Tournament Fundraiser

JUNE MIDLAND Permian Basin Chapter Meeting

AU G U ST APRIL 28 ODESSA, TX Permian Basin Chapter Scholarship Golf Tournament

AUG 3-5 WESTMINSTER, CO Summer Meeting

M AY MAY 5 NATCHEZ, MS Natchez Chapter 15th Annual Golf Tournament, Benefiting Secondary Education Scholarships

AUGUST MIDLAND Permian Basin Chapter Meeting MAY 25 HOUSTON Leadership Forum: Board Member Tracie Reed, Silverstream Energy Solutions

AUG 29-SEPT 1 HOUSTON U.S. Foreign Service Officer Industry Training Program

JUNE JUNE 7-8 MIDLAND – In Person Field Operations Leadership Program

MAY 10-12 WASHINGTON, DC Washington, DC Fly-In

Well Servicing Magazine/March 2022

JUNE 21-22 VIRTUAL Field Operations Leadership Program

S E P TE M B ER SEPT 19-20 VIRTUAL Finance for Non-Finance Professionals Training Program

O CTO B E R OCTOBER 5-6 HOUSTON Oil & Gas 101

ADVERTISER’S INDEX

BITCO Insurance Companies ...............................................................................................15 Cavins Oil Well Tools ...........................................................................................................36 GD Energy Products...............................................................................................................5 Lucky Rental Tool ...................................................................................................................9 Lucky Services ........................................................................................................................9 Lucky Health & Safety ............................................................................................................9 Oil States Industries...............................................................................................................15 TRM LLC ................................................................................................................................9 TechnipFMC............................................................................................................................2

OCTOBER 12 HOUSTON Energy Transition Seminar: Digital Transformation and Integration

OCTOBER HOUSTON Shoot for the Stars Marksmanship Tournament

NOV EM B E R NOVEMBER 4 DUBAI Annual Middle East Chapter Golf Tournament

Field Operations Leadership Program JUNE 7-8: In Person Midland Course JUNE 21-22: Virtual Course The Field Operations Leadership Program is a two-day seminar with a one-on-one executive coaching session designed to transform managers from individual contributors into effective leaders. The Field Operations Leadership Program materials are suitable for frontline workers, field service crew and anyone new to a role in field operations. Learn more at www.energyworkforce.org

WellServicingMagazine.com

Reborn in the U.S.A. Before Recertification

After Recertification

When you need to refurbish or recertify your pipe handling equipment, you want it done right and delivered to you right away. That’s why Cavins has a three-acre facility wholly dedicated to doing just that. Right here in the U.S.A. We’ve been in the well servicing business for 90 years designing and manufacturing the highest quality oil well tools in the industry. We know how expensive downtime can be, so we get your equipment back to you in the shortest time possible. We follow API-Q1 and ISO9001 regulations and can load test up to 350-ton capacity. We have the

know-how and the specifications to refurbish the vast majority of pipe handling equipment in the field today. You can count on Cavins to do the job right the first time and get your tools back to you right now so you can get up and running without delays. Call today or Email us at repair@cavins.com (661) 827.1200 Fax (661) 827.1300 www.cavins.com email: repair@cavins.com

Born in the U.S.A. ®

Spiders Slips Power Tongs Sand Pumps Bailers Hose Connections Depthometers Oil Savers Junk Snatchers Safety Clamps Sucker Rod Elevators Tubing Elevators Cement Dumps Blowout Preventers and Rod Strippers Rod and Crane Hooks Elevator Links and Hooks Baash-Ross, Foster, Hillman-Kelly, KelCo and Web Wilson are licensed trademarks of National Oilwell Varco, LLC

Well Servicing Magazine: March 2022

Articles inside

Congressional Spotlight: Rep. Garret Graves, LA-06

Energy Workforce Graduates Largest Cohort from Training Programs

Well Servicing Committee Releases Report on Base Beam Systems

OPINION: Energy Waste Management and the Carbon Agenda

Hazards in Operations: Tools for Success

Lowering Carbon Emissions, Increasing Worker Safety Through Remote Operations

Building a Safety-Oriented Culture

Legislative Outlook: Need for Reliable Energy in the U.S. More Important Now Than Ever

Market Outlook: Are We Heading for a Multi-Year Upcycle?

Leading the Change: Key Energy Services Focuses on Their Employees

CEO's Perspective: Focusing on Advocacy