august 2014 the bakken magazine

August 2014

PlusSaltwater Disposal FirmsBusy But Look to ExpandPage 36

AND Oilfield Waste Changes AheadPage 44

Unprecedented New PolicyShifts Approach to Flaring

Page 24

g

www.THEBAKKEN.comPrinted in USA

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THEBAKKEN.COM 5

CONTENTS AUGUST 2014 VOLUME 2 ISSUE 8

Pg 24 INFRASTRUCTURE & CONSTRUCTIONExecuting Th e Gas Capture PlanFlare reduction regulators offi cially have teeth with the advent of recently implemented policies. A midstream gathering fi rm and a technology analyst explain what to expect of the gas capture plan. BY PATRICK C. MILLER

Pg 36 LOGISTICS

Th e Surge Of Saltwater Disposal ServicesSteady oil production has saltwater disposal well operators constantly looking for expansion opportunities. BY EMILY AASAND

ON THE COVER: With communication between midstream gas gathers and operators at an all-time high, projects to install right-sized infrastructure from the well site to a gathering station are becoming even more common. PHOTO: CALIBER MIDSTREAM

Pg 44 LOGISTICS

Nothing Left To WasteScott Radig, Environmental Materials Inc. and Next Generations Solutions LLC have the pulse of the Bakken’s oilfi eld waste sector. Th ey also have perspective on the future of how oilfi eld waste will be treated in North Dakota. BY LUKE GEIVER

CONTRIBUTIONS56 BAKKEN BACKERS

Eff ects of a SlowdownBY ROB LINDBERG

DEPARTMENTSIN PLAY

58 Logical Data Essential To Th e BakkenHow can advanced real estate data be used in the oil and gas industry? This fi rm has shown exactly how the Bakken can benefi t. BY EMILY AASAND

INNOVATORS60 Establishing A North American Headquarters

London-based RecartPS has plans to expand into the Bakken by treating water and managing resources. To do so, it has chosen a unique Grand Forks laboratory space. BY EMILY AASAND

6 Editor’s NoteIndustry’s Take on Flaring, Wastewater and Oilfi eld Waste ChangesBY LUKE GEIVER

8 ND Petroleum CouncilReal Stories From the BakkenBY TESSA SANDSTROM

10 Events Calendar

14 Bakken NewsBakken News and Trends

The BAKKEN MAGAZINE AUGUST 20146

Flaring is a topic that can launch a thousand conversa-tions, each diff erent in scope, length and proximity to the truth. The most basic conversations about fl aring begin with the questions:Why does it occur and why is the valuable resource underutilized? Then comes the question of logistics and how can the oil and gas industry, in conjunction with North Dakota, effi ciently and economically capture the fl are? And fi nally, there’s the question of when—when will an acceptable level of gas be captured?

Answers to these questions are becoming clear, thanks to unprecedented regulatory action by the North Dakota Department of Mineral Resources and David Scobel’s team at Caliber Midstream. Staff Writer Patrick C. Miller writes about Scobel’s perspective on fl aring in his timely story, “Executing The Gas Capture Plan,” in which Scobel recounts a lunch time conver-sation he held with a fi nancial analyst. The conversation helped Scobel realize that midstream gas gathering in the Bakken is unpredictable and, in many cases, a task that requires reworking previous infrastructure build-outs that at one time seemed to be appropriate.

As chief fi nancial offi cer of Caliber, a midstream gas gathering company heavily focused on the Williston Basin, Scobel’s overall commentary regarding the backstory of fl aring, logisti-cal challenges and the unpredictable nature of the Bakken seems to be as close to the truth about fl aring as we could hope for.

Although we could have devoted an entire issue of the magazine to fl aring, we chose to include updates on wastewater and oilfi eld waste in the Williston Basin instead. The easy summation of the Bakken’s wastewater handling and disposal industry can be described this way: growth. As the Bakken moves into full production mode and multi-well pads become the norm, water volumes of produced and fl owback water could outpace the projected capacity and economic viability of the Bakken’s current saltwater disposal infrastructure. Consequently, water disposal fi rms, such as Citadel Energy and 1804 Operating, are planning future expansion while they enjoy current success.

In the oilfi eld waste handling and disposal sector of the Bakken, change is coming. A conversation with Scott Radig, the North Dakota Department of Health’s director of waste management, revealed that how oilfi eld waste is handled and where that waste can be disposed of in North Dakota will change—possibly in 2014. The state will implement new regulations aimed at tracking oilfi eld waste from the cradle to the grave, a situation that is not currently happening. More importantly, North Dakota could soon allow higher levels of naturally oc-curring radioactive material at special landfi lls within the state’s borders. Radig is awaiting the results of a study that could validate his belief that North Dakota can, and should be able to, dispose of its own oilfi eld waste. As the story reveals, the waste disposal industry is similar to the midstream companies of the Bakken––both sectors are not only in favor of a new regula-tory landscape, they are already working to meet their industry’s challenges.

Industry’s Take on Flaring, Wastewater and Oilfi eld Waste Changes

Luke GeiverEditorThe Bakken [email protected]

EDITOR'S NOTE

For the Latest Industry News:www.TheBakken.comFollow us:

twitter.com/thebakkenmag facebook.com/TheBakkenMag

THEBAKKEN.COM 7

www.THEBAKKEN.com

VOLUME 2 ISSUE 8EDITORIAL

Editor Luke Geiver [email protected]

Senior Editor Sue [email protected]

Staff Writer Emily [email protected]

Staff Writer Patrick C. Miller [email protected]

Copy Editor Jan [email protected]

PUBLISHING & SALES

Chairman Mike Bryan [email protected]

CEO Joe Bryan [email protected]

President Tom Bryan [email protected]

Vice President of Operations Matthew Spoor [email protected]

Vice President of Content Tim Portz [email protected]

Business Development Manager Bob Brown [email protected]

Account Manager Tami [email protected]

Marketing Director John Nelson [email protected]

Circulation Manager Jessica Beaudry [email protected]

Traffi c & Marketing Coordinator Marla DeFoe [email protected]

ART

Art Director Jaci Satterlund [email protected]

Subscriptions Subscriptions to The Bakken magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States. To subscribe, visit www.TheBakken.com or you can send your mailing address and payment (checks made out to BBI International) to: The Bakken magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Reprints and Back Issues Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or [email protected]. Advertising The Bakken magazine provides a specifi c topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To fi nd out more about The Bakken magazine advertising opportunities, please contact us at 866-746-8385 or [email protected]. Letters to the Editor We welcome letters to the editor. If you write us, please include your name, address and phone number. Letters may be edited for clarity and/or space. Send to The Bakken magazine/Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or email to [email protected].

TM

Please recycle this magazine and remove inserts or samples before recycling

COPYRIGHT © 2014by BBI International

ADVERTISER INDEX

32 ABUTEC LLC

20 AE2S

28 Allied Oil & Gas Services, LLC

38 Bartlett & West

47 Capital Lodge

30 Capps Van & Truck Rental

11 CARBO Ceramics

54-55 Centek Group

22-23 Energy Effi cient Group

35 Environmental Materials, Inc.

49 FMC Technologies Inc.

34 Gamajet Cleaning Systems, Inc.

29 Gibson Environmental Services

39 GTUIT

33 Hotsy Water Blast Manufacturing LP

52 International Road Dynamics

40 J-W Energy Company

21 Mattracks

3 MBI Energy Services

12-13 National Oilwell Varco

63 NCS Energy Services, Inc.

43 Peak Oilfi eld Service Company, LLC

41 Presto Geosystems

18 Protego USA, Inc.

31 Quality Mat Company

2 Rossco Crane64 Summit Casing62 2015 The Bakken | Three Forks Shale

Oil Innovation Conference & Expo

46 Taylor Power Systems53 Trelleborg4 Tyco Fire Protection Products

42 Watford City Homes Inc.48 Wells Concrete10 Westeel19 Wingate By Wyndham


NORTH DAKOTA PETROLEUM COUNCIL THE MESSAGE

I have a confession to make.

I’m a pessimist. The glass is half empty, and that is simply the way it is for me. But, when it comes to oil development, I am optimistic. I am optimistic be-cause at one time, I watched my state beg people to come here and its leaders consider legisla-tion that would more or less pay people to stay through various incentives.

Today, however, it is very much the opposite, thanks to a growing energy sector. North Dakota is an economic pow-erhouse that has a tremendous business environment for entre-

preneurs looking to start their own businesses and great-paying careers for people in just about any fi eld. North Dakota has gone from a state in decline to a state of growth and revival.

Yes, there are growing pains, and we are all aware of the impacts. Humans, by nature, seek improvement and when we see construction zones or traffi c lines, we think we can do better. But sometimes that improve-ment requires getting a little bit dirty fi rst. For example, many of us have probably been in a posi-tion where we have remodeled a house, apartment, yard or maybe a business. Those improvement projects usually create a lot of

dust and require a lot of equip-ment, but in the end, that home, apartment, yard or business is better for it. Rebuilding our state is no different.

Yet, it is sometimes easy to get lost in that construction phase and lose sight of our end goals. We may become fatigued and begin to look at the glass half empty, and it’s for this reason the Oil Can! Program launched a series of testimonials that feature real people telling their real stories.

Those testimonials came from people like Tim Adair, who had to leave the state to fi nd a job in his fi eld, but was able to return as more and more job op-

portunities opened up at home. Today, Tim is living in Bismarck and working for an engineering design fi rm. He is able to do the things he loves in his free time – hunting and fi shing – with the people he loves like his nephews who were able to be with him when he was telling his story.

Also featured are stories from three business owners who have seen their businesses grow along with the oil activity. Their stories come as no surprise. North Dakota has continually ranked as one of the best states for businesses and was recently ranked second in the nation for business survival rates.

This positive business

Real Stories From Th e Bakken By Tessa Sandstrom

THEBAKKEN.COM 9

NORTH DAKOTA PETROLEUM COUNCIL

climate has allowed people like Aaron and Angie Pelton to pursue their dream of operat-ing their own restaurant. They moved back to Aaron’s home-town of Watford City and opened Outlaws Bar & Grill, which serves up hand-cut steaks and is always busy. The restau-rant has been so successful, they’ve been able to open up an-other location in Williston, ND.

Another entrepreneur from Watford City is Luke Taylor. The 29-year old started his trucking business in 2008. Luke started with just two trucks, but the company quickly grew. Luke has seen his hometown benefi t from development as new families move to the area and also rec-

ognizes the role his little town plays in providing a resource that is helping our nation improve its energy security.

Like Luke, former Mayor Ward Koeser of Williston has seen the tremendous opportu-nity that oil development has brought to his community. Ward served as mayor for 20 years, spending much of that time working to attract businesses to the community. Growth was slow. At the end of his term, however, his challenges were much different. Rather than try-ing to attract businesses to come to Williston, he was working to accommodate the growth as businesses and workers streamed into the community. The town

instead had to deal with chal-lenges of growth as housing and infrastructure struggled to keep up. Like many commu-nity leaders who struggled with decline, Ward saw these as good challenges to have and kept his eyes on the future, knowing this growth would help make Willis-ton an even greater community and a “Land of Opportunity” for many years to come.

These are just a few of the perspectives that have been high-lighted by Oil Can! and we have plans to share even more in the future. Likely, we have all heard these stories and different varia-tions of them, but they all serve as a reminder that, yes, in North Dakota the glass is full and

overfl owing with opportunity for those willing to embrace it.

This isn’t meant to dimin-ish or neglect the challenges communities in western North Dakota face, but as North Dakotans, we have always faced challenges. The difference is we now also have opportunities to complement our agriculture industry and create a stronger, more diversifi ed economy for all of North Dakota.

Author: Tessa SandstromCommunications Manager,North Dakota Petroleum [email protected]

REAL PEOPLE: From left, Ward Koeser, Aaron and Angie Pelton, Luke Taylor, Tim Adair. PHOTO: NORTH DAKOTA PETROLEUM COUNCIL

EVENTS CALENDAR

The Bakken magazine will be distributed at the following events:

Unconventional Resources Technology Conference August 25-27, 2014Denver, ColoradoIssue: August 2014

The Bakken magazine

NDPC Annual MeetingSeptember 24-25, 2014Dickinson, North DakotaIssue: September 2014

The Bakken magazine

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

The Bakken magazine

CARBO enables operators to build durable fractures with higher long-term conductivity that are proven to deliver increased production, EUR and return on investment.

Our wide-ranging portfolio of high quality ceramic proppant enables operators to design and build fractures to address the unique characteristics of formations in the Bakken. Manufactured to have a low internal porosity, our proppant is strong and durable to withstand pressure cycling and avoid the creation of fines, maintaining more space to flow™ for the life of the well.

Choose CARBO proppant for increased conductivity in realistic downhole conditions and lower your finding and development cost per BOE.

Increase production in the Bakken with high quality ceramics that outperform inferior proppant.

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EPA APPROVED

The IssueAre you in compliance with the new

EPA regulations effective April 2014?

EPA’S AIR RULES FOR THE OIL & NATURAL GAS INDUSTRY Storage tanks used in oil or natural gas production are subject to EPA’s 2012 New Source

Performance Standards (NSPS) for VOCs if they have the potential to emit six or more tons of VOCs a year. This legislation (40 CFR 60 Subpart 0000, “Quad 0”) also affects existing tank batteries built

from August 2011 to present. Tanks that come online after the most recent proposal is published in the Federal Register will require controls (a combustor or vapor recovery unit), to reduce VOC

emissions by 95 percent in place by April 15, 2014 or within 60 days after startup, whichever is later.

Get ready now and contact NOV today:Phone: 713 395 5000 | Email: [email protected]

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THEBAKKEN.COM 13

The Solution

NOV’s full line of reliable enclosed combustors are designed to address the ever changing requirements of today’s regulation filled oil and gas industry. The EVC incorporates years of tank vapor experience with a highly effective combustor design— tested and EPA approved “99% plus” for destruction of vent emissions from oil and condensate tank batteries, loading operations and storage facilities. NOV’s stainless steel enclosed flare design is capable of meeting strict environmental industry regulations while also offering significant cost savings. Scalable to customer applications, this combustor is field-proven throughout the world.

For more information visit: www.nov.com/tb/mission

Enclosed Vapor Combustors: EVC


Increases > 99+20 - +49No Change

Dunn+16

Ward+192

McLean+31

Grant+3

McKenzie-205

Morton-31

Cass+1,649

Williams+436

Stark+348

Stutsman+51

Wells+35

Kidder-12

Slope+1

Barnes+77

Walsh+27

McHenry-9

Mountrail+94

Divide+1

Sioux+188

Burleigh+378

Burke-6

Benson+44

Cavalier+6

Emmons+26

Bottineau-11

Traill+2

Pierce+8

Dickey+39

Richland-84

Ramsey+153

Mercer-46

Logan+8

Billings+35

Nelson-1

Towner-8

Adams+6

Bowman+8

Rolette+2

LaMoure+36

Pembina+48

Eddy+3

Oliver+24

Hettinger+6

Grand Forks+493

Steele-1

Sheridan-5

Sargent-15

Renville+27

McIntosh+2

Griggs+15

Ransom-24

Foster+5

GoldenValley

+16

NORTH DAKOTA COUNTY JOB OPENINGS

North Dakota Over-The-Year Numeric Change

SOURCE: LABOR MARKET INFORMATION CENTER, JOB SERVICE NORTH DAKOTA, ONLINE JOB OPENINGS REPORT

COUNTY OVER-THE-YEAR NUMERIC CHANGE (JUNE 2014) Decreases

Over-The-Year Numeric Change+4,081

+1 - +19

NORTH DAKOTA WAGE BY COUNTY2013 AVERAGE1. WILLIAMS COUNTY2. SLOPE COUNTY $72,6223. MCKENZIE COUNTY $72,1624. DUNN COUNTY $70,9425. OLIVER COUNTY $67,8356. MOUNTRAIL COUNTY $64,8957. STARK COUNTY $61,5548. MERCER COUNTY $60,3419. BURKE COUNTY $52,40910. DIVIDE COUNTY $51,61311. MCLEAN COUTY $48,145

STATEWIDE AVERAGE $47,779

13. WARD COUNTY $46,040

14. BURLEIGH COUNTY $44,635

16. CASS COUNTY $44,244

23. GRAND FORKS COUNTY $39,100

$78,390

SOURCE: LABOR MARKET INFORMATION CENTER, JOB SERVICE NORTH DAKOTA, ONLINE JOB OPENINGS REPORT

NORTH DAKOTA JOB OPENINGS5-YEAR TREND

SOURCE: JUNE 2014 ONLINE JOB OPENINGS REPORT--JOB SERVICE NORTH DAKOTA

2010 2011 2012 2013 2014

+21%

+48%

+67%+64%

+72%

ACTIVE RESUMESNORTH DAKOTA VS. OUT-OF-STATE 5-YEAR TREND

SOURCE: JUNE 2014 ONLINE JOB OPENINGS REPORTJOB SERVICE NORTH DAKOTA

2010 2011 2012 2013 2014

+0.3%-1%

-6%-10%

-9%-27% -21%

-30%

-36%-43%

JOBS ARE BEING

FILLED

BAKKEN NEWS BAKKEN NEWS & TRENDS

North DakotaBalance of Oil and Gas CountiesNon Oil and Gas CountiesCore Oil and Gas Counties

20032005

2007

2009

2011

2013

NORTH DAKOTA UNEMPLOYMENT RATEANNUAL DATA

4.3%

1.1%

NORTH DAKOTA PER CAPITA PERSONAL INCOMEANNUAL DATA

2012

2010

2008

20062004

2002

$100,000

$22,000$40,000

North DakotaBalance of Oil and Gas CountiesNon Oil and Gas CountiesCore Oil and Gas Counties

Job Service North Dakota released the June 2014 Online Job Openings showing more than 25,000 openings within the state. Of the transportation and mate-rial moving, offi ce and administra-tive support and construction and extraction occupational groups, the Bakken region saw an increase of 3,953 jobs to 4,289 jobs. The region also saw an increase of jobs in installation, maintenance and repair, shifting from 769 job openings in June 2013 to 1,179 this year.

North Dakota is divided into eight planning regions, four of which include the Bakken oil and gas play. In those regions, Williams County saw an increase of 436 jobs from 2013 to 2014, whereas McKenzie County saw a signifi cant decrease, dropping from 550 job openings in 2013 to 345 openings in 2014.

Grand Forks County, located on the eastern border of the state, reported an increase of 493 jobs

this past year. While not home to hundreds of oil wells, the county offers development-ready proper-ties, available buildings and offi ce space, a skilled workforce, direct transportation infrastructure and qualifying business incentives.

Grand Forks city offi cials developed a campaign a few years ago called the Bakken Initiative to attract expanding companies from the west to the Grand Forks area. Steffes Corp. took advantage of this two years ago when it pur-chased a building west of Grand Forks to increase manufacturing capacity.

The demand for jobs led Steffes to look into further expan-sion, and the company recently announced that it will be adding another facility in the Grand Forks area, which could add up to 30 new employees.

On a county basis, Cass and Burleigh showed the most job openings––their combined total was 5.6 percent lower than

the prior month but 19.0 percent higher than one year ago.

Of the 22 nonmilitary major occupational groups, transporta-tion and material moving re-ported the largest number of job openings with 2,781, followed by offi ce and administrative support with 2,508 and construction and extraction with 2,255.

According to the report, active resumes in the state, which include all online resumes that have been created or otherwise modifi ed during the reference pe-riod, totaled 10,781 in June. There was a total of 8,578 in-state active resumes and 2,203 out-of-state active resumes.

Construction and extraction and transportation and material moving were two of the major occupational groups that saw large numbers of active resumes. With 1,341 and 1,049 active resumes, respectively.

Overall, North Dakota’s job openings rate was 5.5 percent in

May 2014, which is up compared to last year’s rate of 4.6. However, although the job openings rate increased, North Dakota’s overall unemployed persons per job opening decreased within the past year dropping from 0.5 in 2013 to 0.4 in May 2014. Of North Dakota’s 53 counties, 33 of them have reported unemployment rates of less than 1.0.

According to the report, North Dakota had a signifi cantly lower average than that of the nation in persons per job opening. The April comparison showed North Dakota at 0.4 persons per job opening versus the U.S. rate of 1.8.

THEBAKKEN.COM 15

BAKKEN NEWS

Jobs Across North Dakota Rise


BAKKEN NEWS

Enerplus Corp., based in Calgary, Alberta, reports that the future outlook of its holdings in the Fort Berthold, Bakken, and Three Forks core area have signifi cantly improved.

The company said that as a result of its operational performance and continued technical assessment—includ-ing a detailed analysis of well data within the region—the original estimate of 1 billion barrels of oil in place (OIP) has increased by 50 percent to 1.5 billion barrels. Ener-plus also noted a 250 percent increase in its contingent resource, from 39 million barrels of oil equivalent (MMboe) to 136 MMboe.

“We’re pretty excited about where we are with this project right now and how it fi ts into the company,” said Ian Dundas, Enerplus presi-dent and CEO. “Generally, our belief is that this fi eld has gotten consistently better over time. The resource keeps increasing, and we’ve made meaningful strides in enhanc-ing the economics over the last several years through a combination of cost control and productivity enhance-ment.”

The increase in drilling inventory is a result of a re-vised contingent resource as-sessment and the company’s

estimate of future drilling locations. Enerplus estimates approximately 330 future net drilling locations, up from 145 previously, with long horizontal wells representing 60 percent of these locations. This assumes an average well density of seven wells per drilling spacing unit. In addi-tion, Enerplus continues to see further upside potential through additional down-spacing, higher recovery rates and the continued evolution of its well completions.

Enerplus said that changes in its completion design over the past year have resulted in a 50 percent

improvement in capital ef-fi ciencies within the Bakken play. With the increase in well productivity, the net pres-ent value and internal rates of return of this play have improved meaningfully.

“We continue to un-derstand our reservoir. We continue to work on our reservoir modeling,” said Ray Daniels, Enerplus senior vice president of operations. “We’re pointing to a recovery factor of 15 percent, which we’d be comfortable with.”

Dundas said the in-creased opportunity supports a greater growth potential in the Bakken fi eld.

“When we originally got into the fi eld, it wasn’t producing effectively, and we saw a potential upside of 20,000 to 25,000 BOE a day,” he explained. “Now we see a potential upside of 50,000 barrels of oil per day. The pace is going to depend on drilling rigs and well count.

“The potential for more than double from where we are now is quite meaningful. It’s been a really signifi cant win for us. It’s been a key driver of value with the com-pany,” Dundas said.

Enerplus Raises Estimates of Bakken Reserves 250% Increase in Contingent Resource

Original Oil In Place per DSU*BakkenThree Forks 1Three Forks 2Total

TOTAL WI OOIP2P Reserves @ Dec. 31/13Contingent Resource

Utilization Assumptions:BakkenThree Forks 1Three Forks 2

8 – 12 MMbbls8 – 12 MMbbls

n/a16 – 22 MMbbls

1 billion bbls105 MMboe

39 MMboe

100%70%n/a



1.5 billion bbls105 MMboe136 MMboe

100%100%

35%

4 – 20 MMbbls500 MMbbls

97 MMboe

Original Assumption

2014Evaluation

Increase

*Per 1,280 acre drilling spacing unit (DSU)SOURCE: ENERPLUS

THEBAKKEN.COM 17

Even though the number of U.S. refi neries is down from a year ago, refi ning capacity took a slight upturn in 2014.

An annual survey of refi n-ery ownership and capacity by the U.S. Energy Information Administration showed that the U.S. had 142 refi neries at the beginning of this year with a total refi ning capacity of 17.9 million barrels per day. That’s one fewer refi nery compared to the start of 2013, but a capacity increase of 101,000 barrels per day.

Increased crude produc-tion in the Bakken formation in North Dakota and the Eagle Ford in South Texas has spurred the construction of two new refi neries expected to come on line by the end of the year.

Dakota Prairie Refi ning LLC should begin operations at the 20,000-barrels-per-stream-day (bbl/sd) refi nery at Dickinson, N.D., in Decem-ber. Kinder Morgan plans to start up a 50,000-bbl/sd initial phase of a condensate pro-cessing facility on the Houston Ship Channel in November. These will be the fi rst two new refi neries built in the United States since 2008.

Tesoro, which operates a refi nery at Mandan, N.D., bought a 251,0000-barrels per calendar day (bbl/cd) refi nery in Carson, Calif., from BP and

sold its Ewa Beach, Hawaii, refi nery (93,500 bbl/cd) to Par Petroleum Corp. Tesoro is now the seventh largest refi ner in the United States, as measured by atmospheric crude oil distil-lation capacity (ACDU), and the largest refi ner on the West Coast.

Valero Energy Corp. remains the largest U.S. refi ner, with total ACDU capacity of more than 1.9 million bbl/cd. Exxon Mobil Corp. is second at almost 1.9 million bbl/cd. With the purchase of the Texas City refi nery from BP, Marathon Petroleum Corp. be-

came the third-largest refi ner, with a capacity of 1.7 million bbl/cd.

While crude distillation capacity is one of the most widely tracked indicators of refi nery size, the EIA report also tracks the capacity of secondary units. Vacuum distillation, thermal crack-ing, catalytic hydrocracking, catalytic reforming, hydrotreat-ing, and deasphalting capacity all increased slightly this year, while fl uid catalytic cracking capacity decreased.

EIA Report Shows US Refi nery Capacity Increase For 2014

BAKKEN NEWS

Condensate & Light Processing Capacity Additions

1000

750

500

250

0

Condensate Splitters Light Crude Expansions

2014 2015 2016 2017+

CONDENSATE AND LIGHT PROCESSING CAPACITY REFINERY ADDITIONS: According to Macquarie Research, new capacity additions will see little growth in 2014 due to the lead time required for expansion. In 2015, the U.S. will add 450,000 barrels per day of light crude capacity. Construction of additional capacity is possible though not material in the immediate term, according to the company.SOURCE: MACQUARIE CAPITAL (USA), COMPANY DISCLOSURES, MAY 2014


BAKKEN NEWS

The second North Dakota Governor’s Pipeline Summit featured a common trend among presenters and guests: pipeline safety.

Companies across the country want to lay miles of pipeline throughout Western North Dakota to transport Bakken crude oil to refi neries.

“Although rail has played a critical role, we know that over the long haul we’re looking for the safest and the most effi cient way to haul oil and gas,” said N.D. Gov. Jack Dalrymple.”Pipelines are essential to the safe and effi cient transportation of our oil produc-tion.”

According to Justin Kringstad, director of the North Dakota Pipeline Authority, there are three pipelines coming on this year.

“The challenge becomes not only how do we handle today’s production, but how do we handle the future production?” said Kringstad.

The summit opened with comments from state representatives, an introduction by Dalrymple, followed by two panels. The fi rst panel spoke about right-of-way, regulation, response and discussed issues among com-munity members regarding pipeline safety, fi nancial concerns, and reclamation of land for landowners.

“We spend a lot of time fi guring out who these people can talk to about these concerns—to help them with an end product of what their land is going to look like when everything is done,” said Gene Veeder, execu-tive director of the McKenzie County Job Development Authority.

The second panel addressed industry perspectives. Current and potential pipe-line companies showcased their company’s potential, services and Bakken expansion plans. Enterprise Products Partner discussed a proposed 1,200-mile pipeline that would span from Stanley, N.D., to Cushing, Okla., while Al-

liance Pipeline discussed its accomplishments within the past couple of years.

All of the presenters stressed that pipeline safety was one of the, if not the most, impor-tant concerns with moving forward in their pipeline plans.

“We are working hard to determine what technology belongs on these pipelines,” said Dalrymple. “We look forward to being leaders not only in production, but in good care and stewardship of our products.”

Along with Enterprise’s proposed pipe-line, the North Dakota Public Service Com-mission issued a permit approving the North Dakota Pipeline Co. LLC’s Sandpiper pipeline project.

"It is a great milestone for the state of North Dakota as the Sandpiper pipeline will have the potential to move more than 20 per-cent of the Williston Basin's current produc-tion,” said Mark Maki, president of Enbridge Energy Partners.

The Sandpiper pipeline project is 616 miles of pipeline that will be able to transport up to 225,000 bopd from Beaver Lodge Sta-tion in western North Dakota to Clearbrook, Minn. It will then be transferred to an affi liated Enbridge terminal in Superior, Wisc., before transport to markets in North America.

In other pipeline news, Energy Transfer Partners LP has announced the board of direc-tor’s approval to build a crude oil pipeline.

The 1,100-mile pipeline will transport Bakken crude from the Williston Basin to Patoka, Ill., where the Bakken Pipeline will interconnect with Energy Transfer’s existing 30-inch diameter Trunkline Pipeline which is currently being converted from a natural gas to a crude transportation service. They expect to have the Bakken pipeline built and in service by the end of 2016.

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BAKKEN NEWS

In 2010, North Dakota created the Legacy Fund to utilize, as well as save a portion of, state revenue created from oil and gas production. Under state law, 30 percent of state revenue created by oil and gas extraction and gross production taxes are deposited into the Legacy Fund each month. In July, the state received a record high deposit of roughly $112 million. According to Kelly Schmidt, state treasurer, the July deposit puts the Legacy Fund total at $2.207 billion.

The Fund is run by the State Investment Board. The board invests a certain percentage of the fund into a broad range of assets, including stocks, bonds, real estate and infrastructure.

Neither the principal nor the

income of the Legacy Fund may be spent prior to July 1, 2017, according to the State Treasurers offi ce. “The leg-islation establishing the fund requires that income earned after this date will be transferred to the state Gen-eral Fund at the end of each two-year budget cycle,” she said. “To spend any principal of the fund will require a two-thirds majority vote of both the House and Senate.”

According to Schmidt, at its cur-rent pace, the Legacy Fund will receive $3 billion by the end of the 2013-15 biennium.

Legacy Fund Approaches $3 Billion

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The American Petroleum Institute has used information gathered through a series of North Dakota workshops to create an unprecedented commu-nity engagement blueprint for oil and natural gas communities. The standards were developed to help oil and gas companies interact with and help local leaders and residents in places where energy exploration is happening. A list of steps within the standards are aimed at helping companies communicate with local communities during fi ve phases of energy development: entry, exploration, development, operations and exit.

“The energy revolution is now occurring in areas of the country where oil and natural gas exploration

doesn’t have the same history as Texas or Oklahoma,” said David Miller, API’s director of standards. According to Miller, in areas such as North Dakota, local operators are working to ensure newly-opened resources are developed in conjunction with community goals.

“Early in the drafting process, we held a series of workshops, including a 2012 meeting in Bismarck, N.D.,” Miller said. “During the event, local operators encouraged us to address truck traffi c in the new standards based on their experience in coordinating shipments to avoid congestion on the roads.”

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BAKKEN NEWS

Members of the Montana Tech Petroleum Engineering Department are conducting a pilot project to assess enhanced oil recovery options for the Elm Coulee in eastern Montana.

Conventional horizontal drilling and production methods in Montana’s Bakken oil fi eld extract 9 to 15 percent of avail-able oil, while the remainder goes untouched. The research team, consisting of Leo Heath, John Evans, David Reichhardt and Burt Todd plan to fi nd a method to access the remaining oil.

Funded by the Montana De-partment of Natural Resources and Conservation, through the Montana Board of Oil and Gas Conservation, the research team plans to restore underground pressure in and around depleted wells to the level that existed when the wells were fi rst drilled. The pilot project will inject either carbon dioxide or natural gas into

the shale surrounding the original wells to try to get the unrecovered oil to break free from the rock.

The team has a fi ve-year con-tract and is two and a half years into the research efforts.

“There are some phases to this,” said Todd. “Until now, we’ve developed a data base that stores well information for all of Elm Coulee. We’ve built some reservoir simulation models to see what happens when you inject carbon dioxide and what happens when you inject produced natural gas. ”

Todd hopes that fi ne-tuning enhanced oil recovery techniques will lead the Bakken to a more stable oil economy.

“My hope is that as we learn how to do these enhanced recov-ery techniques, that we’ll move out of the boom economy and into something more stable, more long-term, like the oil economy in Texas and Oklahoma, which

has been going on for a hundred years,” says Todd.

The team is very optimistic that injection of CO2 or produced natural gas will be effective in increased recovery.

“In the Bakken, water fl ooding probably won’t work because the rock is too tight and the water viscosity is too high, so we’re injecting enhanced oil recovery fl uids like carbon dioxide or natural gas,” said Todd. “This method acts a lot like water fl ood-ing except that we’re using a much lower viscosity fl uid.”

The University of North Da-kota’s Energy and Environmental Research Center has done similar work with enhanced oil recovery, but unlike UND, the Montana Tech Petroleum Engineering De-partment is solely focusing on the Bakken in eastern Montana.

“The Bakken behaves dif-ferently on the North Dakota side than it does on the Montana

side,” said Todd. “The general thinking is that the Bakken on the North Dakota side is more frac-tured. The Montana side is not very fractured. You have some good wells, but it tends to be a little thinner.”

According to Todd, the hope is that the less fractured, thinner Bakken might perform better under enhanced oil recovery, but that won’t be known for 20 to 30 years.

The team plans to propose a pilot project by the end of the year, which will get them out in the fi eld.

“We have some good relationships with several of the operators out there who are really interested in our work,” said Todd. “We feel like people have been interested in our work and that there’s a lot of different people waiting to see how this comes out.”

EOR Options Explored By Montana Tech Engineers

THEBAKKEN.COM 21

BAKKEN NEWS

A South Dakota mine could provide a cheaper, more convenient source of fracking sand to the Bakken oil patch within the next two years.

According to Patric Gal-vin, South Dakota Proppants, LLC president, Evergreen, Colo., his fi rm plans to open a mining operation in the Black Hills south of Hill City, S.D. The company has claim to 1,750 acres that contain more than 250 million tons of high-grade fracking sand, he says.

Much of the sand used as a fracking proppant now comes from mines in Wis-consin. What could make SDP’s sand more attractive to producers in the Bakken is Galvin’s plan to truck the sand directly from the mine to well sites in North Dakota.

“We can avoid putting it on a train, saving $30 to $50 a ton delivered cost,”

he explains. “Were it not for our geographical location, I wouldn’t do this, but it gives us a competitive advantage.”

Galvin estimates the mine could produce a million tons of fracking sand a year at $40 to $50 per ton. SDP will spend up to $6 million obtaining a mine permit and another $60 million to con-struct a processing facility.

Earlier this year, a South Dakota Department of Environment and Natural Re-sources study said that none of the 256 potential fracking sand samples from around the state it tested met the American Petroleum Insti-tute specifi cations for natural proppants.

However, South Dakota State Geologist Derric Iles says an analysis of the sand from SDP’s proposed mining deposit by a reputable, inde-

pendent lab confi rmed that it met API standards for frack-ing sand. Iles notes that SDP has a long way to go before a mining permit is issued—in-cluding public hearings and a possible appeal process.

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THEBAKKEN.COM 23


INFRASTRUCTURE & CONSTRUCTION

THEBAKKEN.COM 25

A conversation over lunch with a financial analyst gave Dave Sco-bel, chief operating officer of Caliber Midstream, an idea of what the company was up against in transporting and processing natural gas produced in the Bakken.

“We were picking each other’s brains and I said, ‘Do you have any advice for us as a midstream group in the Bakken?’”

The answer surprised Scobel and his colleagues. “The pipelines you’re putting in are too small,” the analyst replied. “We laughed,” Scobel recalled. “You don’t know what size we’re putting in.

How can you say that?” The analyst’s explanation was simple: “Whatever size you’re putting in, it’s

too small.”When it comes to the issue of fl aring natural gas in the Bakken, Scobel’s

lunchtime discussion fi ttingly summarizes the current problem for midstream gatherers: how to correctly scale the infrastructure required to handle the pro-duction output.

The impact of unprecedented flare regulations on midstream gas gatherersBy Patrick C. MillerPhotos By Gaylon Wampler

EXECUTING THE

GASCAPTURE PLAN


LAYING THE FUTURE: Caliber Midstream 16-inch crude oil pipe line awaits installation on a right-of-way leading off a drilling pad in McKenzie County, North Dakota.


Understanding The Scale“We still don’t claim to

have the knowledge of how many wells we can put on a section in any given location,” he says. “The producers went to the midstream providers and said, ‘Here’s what we think we’re going to have. We’re go-ing to have four wells for every unit.’ The midstreams came in and built infrastructure to ac-commodate that.”

As the true production potential of the Bakken be-came apparent, four wells be-came eight, which were further downspaced to 12 and may someday grow to 24.

“Several rounds of pipe have gone in, and they’ve all been too small,” Scobel says. “As an industry, we’ve been trying to get our arms around

the Bakken reservoir and un-derstanding how much downs-pacing we can do. How big are these IPs going to be in any given area? Without that under-standing, without that knowl-edge, it’s diffi cult.”

That’s been the hardest struggle, according to Scobel. “If we, as a midstream group, knew a few years ago exactly how much gas was going to be coming from every township, it would have been easy to lay out a grid to accommodate that. We’ve constantly been sur-prised to the high side at how much is going to come out of the Bakken.”

And that’s what made it a challenge early in the Bak-ken’s recent development for midstream companies such as Caliber to accurately predict

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GROUND PREPARATION: Construction equipment levels a Caliber Midstream right-of-way for high-diameter crude oil pipeline (left) and natural gas pipeline (right) in McKenzie County, North Dakota.

'We’ve constantly been surprised to the high side at how much is going to come out of the Bakken.'Dave Scobel, chief operating officer, Caliber Midstream

THEBAKKEN.COM 27

how much gas transport and gas processing infrastructure was needed.

“Nobody envisioned that it would be as successful as it’s become—not even close. At the time, that would have been a big risk for a midstream company to build out to an un-known,” he says.

Enter The GCPOn July 1 this year, the

North Dakota Industrial Com-mission implemented regula-tions to signifi cantly reduce the level of fl aring in the Bakken and Three Forks Formations by using an approach Depart-ment of Mineral Resources Director Lynn Helms de-scribed as “a completely new way of controlling fl aring.”

The commission’s goal is

to reduce fl aring to 26 percent by fourth quarter this year; 23 percent by fi rst quarter 2015; 15 percent by fi rst quarter 2016 and 10 percent by the fourth quarter of 2020, with the potential for a reduction to fi ve percent.

The policy—which gives the state regulatory teeth to limit gas fl aring—establishes oil production limits that take effect if a producer fails to meet requirements to capture natural gas at the well site.

Gov. Jack Dalrymple called it “a dynamic shift in the way regulators approach re-ducing natural gas fl aring.”

“The surge in shale gas production has required the commission to take an uncon-ventional approach at regula-tions by getting operators to

make plans to capture natural gas at day one,” he added.

Industry Reaction“Nobody wants to fl are

gas,” Scobel says. “Producers want to monetize it. We all want to get the fl ares out.”

He also doesn’t accept the idea that the oil and gas indus-try has been lax in addressing the fl aring issue and needed regulatory persuasion from the

NDIC to get serious about re-ducing the amount of gas fl ar-ing in the state.

“There’s been 10,000 miles of natural gas pipe laid and $6 billion spent since 2006,” Scobel says. “It couldn’t be further from the truth to say that industry hasn’t been trying to tackle this issue.”

Brad Stevens, a research engineer at the University of North Dakota Energy & Envi-

PIPE READY: New pipeline sits stacked at the Caliber Midstream pipe yard in Hay Butte, North Dakota.


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ronmental Research Center, agrees that reducing the amount of fl aring by a signifi cant percentage has been easier said than done for a number of reasons.

“It’s easy to fall into that trap of vilifying the industry by say-ing that they’re just after oil and just fl aring the gas because it’s easy and they can’t make any money at it,” he says. “Most companies don’t want to lose one dime anywhere, but they can’t undertake projects that are uneconomical.”

Gas fl aring is exacerbated by the way the wells are developed, Stevens also says. “The initial fl ow-back of both oil and gas is very high, but it’s a very steep decline curve. It’s diffi cult to overbuild and sink all those dollars into infrastructure. If you build it to be peak capacity, it’s potentially oversized later on. You know you’re going to have that peak on the front end, but where do you build to, capacity-wise? It’s a challenge, especially as a midstream, when you’re not controlling where and how fast these wells come on.”

The EERC worked with the North Dakota Petroleum Coun-cil gas fl aring task force to develop an online database of technol-ogies and expertise to provide a “one-stop shop” for oil produc-ers looking for alternatives to fl aring gas. The database currently lists 50 different entities.

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“It’s not as simple as just putting these technologies out there and saying you’ve got it licked,” Stevens believes. “We took a high-level view of the different technologies and the impact they’d have on fl aring. There isn’t a single technology you can deploy to wipe out the fl aring to the extent that people would like. It’s going to be a basket of solutions.”

Starting Oct. 1, all Bakken and Three Forks wells will be sub-ject to production restrictions if they are fl aring more than the 74 percent gas capture goal.

According to the Department of Mineral Resources, if a gas capture percentage is not met, oil production at the well will be restricted to 200 barrels of oil per day, “if at least 60 percent of the monthly volume of associated gas produced from the well is captured, otherwise oil production from such wells shall not exceed 100 barrels of oil per day.”

In addition, gas fl aring will not be permitted if the North Dakota Department of Health determines that the activity is vio-lating the state’s air pollution control rules, which could trigger further production restrictions.

Oil producers will be required to have a gas capture plan (GCP). This plan details how much natural gas an operator an-

FINE-TUNING: A Caliber Midstream facilities engineer adjusts a patented crude oil pressure vessel that bypasses crude oil storage tanks and enables centralized crude oil processing on a well pad in McKenzie County, North Dakota.



ticipates producing from a well, the method of delivering the natural gas to a processor, and where the natural gas will be processed. Operators failing to comply with a GCP, as well as fl aring reduction targets, may face the production restrictions.

“The overarching goal is to reduce the number of wells fl ared and the amount of gas fl ared,” Helms said earlier this year. “With the help of the commission, we won’t just see percentage of gas fl aring go down, but the volume go down as well.”

However, Scobel believes that produc-tion trends in the Bakken are already moving the oil and gas industry in the direction of fl aring reductions.

Meeting The Flare Reduction Goal“I think the NDIC might get some

undeserved credit,” Scobel says. “My take when I look at what’s going on up here is that it’s been diffi cult for the producers and

the midstreams to have long-term plans to-gether and collaboration while everybody was HBP (held by production) drilling.”

Producers had a hard time scheduling their rigs and understanding what areas pro-duction was going to come from and they were scrambling just to hold leases, he ex-plains.

The move away from HBP drilling to an overall fi eld production mode has helped operators and midstreams unite. “The pad locations are more conducive to getting pipe to them, and producers can work with the midstreams to come up with a systematic approach. I think that’s happening, regard-less of the changes that NDIC has come out with.”

Still, Stevens expects that the new reg-ulations will help bring some clarity to the North Dakota’s fl aring situation.

“All of the operators have unique sce-narios where certain things fi t and other

things are not applicable technology-wise,” he explains. “It takes time to work through those details. Any given company might have certain wells where a different type of technology is a better fi t. That’s the stage we’re in right now.”

Finding The Right PlanEconomics greatly impact the options

available to a producer developing a gas cap-ture plan.

“The most important, effi cient plan is to tie into a pipeline,” Scobel says.

EERC researchers are continuing to gather data in an effort to help government and industry understand fl aring from a big-picture perspective.

“As part of our Bakken optimization program, we’re doing data analysis to bet-ter capture what’s going on with fl aring,” Stevens says. “Everybody heard the fl aring percentage number, but there wasn’t a real

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good understanding of what that meant—where it was coming from or what types of wells.”

Stevens believes that there’s still much to learn to develop an accurate big-picture understanding of fl aring.

“It’s nuanced because you’ve got issues related to fl aring on the (Fort Berthold) reservation that are different from off the reservation, and the numbers come out differently,” he says. “It’s one thing to say that the fl aring is a certain percentage, but it’s another thing to understand where that number comes from and why it’s happening.”

To emphasize how the industry has adapted and responded to fl aring concerns, Scobel points to Caliber’s accomplishment of developing zero emissions pads from which there’s no fl aring of produced gas or tank gas—the “little fl are” to burn off volatile organic compounds from atmospheric tanks.

“You can truly have a zero-emissions pad, and that’s a win in anyone’s book,” he says. “Our goal is to have as small of a foot-print as we can on these pads. By not fl owing through the atmo-spheric tanks, producers need fewer tanks on location so we have a smaller footprint when we’re out there. We’re turning those fl ares off on location, which is more environmentally friendly.”

Helms has said there are already examples of companies be-ginning to work together to improve the effi ciency of capturing and moving gas to processing sites. He is hopeful that the new fl aring regulations will help create industry partnerships that re-duce fl aring.

“The message to me from the commission on the fi rst was very clear and that is that this policy is only going to make a dif-ference if we are very, very strict about granting exemptions to

LISTMAKERS: Chad Wocken, senior research manager, and Brad Stevens, research engineer, of the University of North Dakota's Energy & Environmental Research Center are the developers of the online database for flaring technology and expertise. PHOTO: PATRICK C. MILLER, BBI INTERNATIONAL

THEBAKKEN.COM 33

it,” Helms said. “There is, I think, enough time between now and Oct. 1 and now and Dec. 1—when that October data comes in—for companies to form those alliances and make those cooperative agreements.”

Scobel and Stevens agree that col-laboration and cooperation are playing a key role in getting fl aring under control.

“Collaborating with our competi-tors and our peer group in the Bakken, I’d just point out that none of this was done through regulation,” Scobel says. “This was operators getting together and seeing how we can meet best practices as an industry prior to any discussion from governing bodies.”

In hindsight, it might look like all this collaboration came out because of the new gas capture plans, “but really, indus-try was starting to do this already. There’s much more collaboration going on be-cause it’s just easier to forecast what’s hap-pening with the leases being held.”

The EERC’s online database of orga-nizations with gas fl aring technology and expertise has had the unforeseen benefi t of encouraging collaborations between different entities.

GATHERING EXPERIENCE: Before joining Caliber, Dave Scobel was vice president of operations at Meritage Midstream where he served on the management team that built the Eagle Ford Escondido and Cuervo Creek gathering systems in Texas.



“Where there are opportunities to pair up a natural gas liquids company with some other company in CNG (com-pressed natural gas), they don’t choose to go down that path,” Stevens says. “It probably doesn’t make a lot of sense for them to create their own CNG platform, but they can partner with somebody who already has a system and strike an arrange-ment. They’ve got a broader package to offer than if they’re just NGLs (natural gas liquids) or just CNGs.”

“We’re seeing more of that happen-ing, and we’ve encouraged it to help these vendors and technology people to get in line with what we’re seeing E and P (explo-ration and production) companies looking for,” Stevens also said. “They’re looking for a turnkey solution. They want someone to bring in a solution that they’re looking for and operate it and prove economics.”

However, bringing a solution to a well site can come with complications.

“One of the most misunderstood

terms in our business is ‘skid mounted,” Scobel believes. “When people hear that a process is skid mounted, it implies that you pull it up with your pickup, plug it into the wall and away you go.”

“Even skid-mounted equipment needs quite a bit of connection and con-struction to get it all bolted together on location,” Scobel explains.

It’s not so much that there isn’t a solu-tion to gas fl aring, but the amount of time needed and the number of obstacles that must be overcome to implement them.

“The areas that you see the most fl ar-ing are the areas furthest from processing and that don’t have enough pipe infra-structure,” Scobel says. “The low-pressure gathering that’s required to get this gas to a processing point is intensive. It takes large pipe. It takes dollars to do this. It takes time to acquire right of ways and get this stuff built and designed and installed and to work out deals with the operators.”

In addition, Scobel noted that other

THE RIGHT APPROACH: For nonremote wellpads, pipelines are the best option, Scobel says. The industry is just now learning which pipeline sizes are adequate.

THEBAKKEN.COM 35


factors impacting the construction of in-frastructure includes the cost of acreage, rugged topography, traversing U.S. Forest Service land and dealing with Lake Saka-kawea and wetlands.

“On our side, when we’re evaluating the economics, it can make deploying those assets more complicated or more expen-sive,” he says.

Signifi cantly reducing fl aring isn’t the only area in which Caliber Midstream is working to improve the quality of life in the Bakken. Scobel said the company pro-vides a full suite of services to its operators aimed at improving safety, reducing truck traffi c, creating better relations with land-owners and minimizing environmental im-pact.

For example he noted that: “We’re putting in four or fi ve lines in a right of way. The landowner benefi ts from dealing with one company instead of four or fi ve. We can also bring our safety program into a right of way and have a corridor where all

the construction is controlled by one com-pany. It’s safer and more friendly to land-owners as well.”

Caliber delivers freshwater to well sites by pipeline and transports produced water, crude and gas away from the site by pipe.

“As an industry, we’re seeing a reduc-tion in truck traffi c as a result of being con-nected by pipe,” Scobel says. “We’re trying to get all the trucks off the road. It’s a lofty goal, but that’s where we’re headed.”

Besides eliminating gas fl ares, Scobel sees visible differences on well sites ser-viced by Caliber.

“You see a much smaller footprint, fewer tanks on location and less capital deployed by our partners,” he said. “That’s certainly a success story.”

Author: Patrick C. MillerStaff Writer, The Bakken [email protected] 1-855-814-8833

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LOGISTICS

POPULAR SIGHT: In western North Dakota, disposal sights and fresh water depots are popping up almost every two miles.PHOTO: CITADEL ENERGY

THE SURGE OF SALTWATERDISPOSAL SERVICE

The business of saltwater disposal has never been more important to the develop-ment of the Bakken. With the industry moving into full production mode—a process that puts more oil wells on a single pad—oil production has reached record levels. As oil production rises, so too does the production of flowback and pro-duced water created during the oil retrieval process. The constant increase in new wells coming online and the advent of slickwater fracking—a method that relies on high volumes of water during the fracturing process—has created an unprecedented demand for saltwater disposal service providers.

Citadel Energy and 1804 Operating are just two of many companies working to provide a safe and dutiful resolution to take care of the saltwater and waste management issue found in the Bakken. Although each fi rm offers a different backstory, both have experienced quick growth and provide insight into the current state and future of the salt-water disposal business.

Citadel EnergyCitadel, which began as a freshwater provi-

sioning company, recognized the demand for an effective way to dispose of saltwater. The Citadel team laid out a plan to expand its services and brought on key members to help execute its expan-sion plans.

As operators move to full production, saltwater disposal providers are in expansion modeBy Emily Aasand

THEBAKKEN.COM 37

LOGISTICS


LOGISTICS

One of those new members is Bruce Langhus, the former state director for Class II Underground Injection Control for the Oklahoma Corporation Commission, an entity responsible for roughly 25,000 oil and gas saltwater disposal wells in the state. Langhus has been in the geology industry for the past 25 years.

“We brought Bruce Langhus, our chief geologist, on board so that we could take a different approach toward saltwater disposals and really try to make a real, scalable business in the Bakken and to build a sustain-able, complete solution that could serve the exploration and production companies in the area,” says Stanton Dodson, founder and executive chairman of Citadel Energy.

The company currently operates three freshwater depots on the Fort Berthold Indian Reservation, but the main focus for Citadel is in the saltwater disposal business.

Citadel began drilling its fi rst saltwater disposal well in December 2013 and was scheduled to open the July 1. Due to harsh winter condi-tions and a tornado that went through western North Dakota earlier this summer, Citadel’s construction was delayed by a few weeks, pushing back the opening of the disposal well by roughly one month.

The fl uid services management provider’s facility has been permit-ted to dispose of 15,000 barrels of saltwater per day and features state-CHANGE IN FOCUS: The Citadel team began as a freshwater supplier before

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LOGISTICS

of-the-art monitoring technology that assess-es the well facility 24 hours per day, seven days a week. Permanent surface tanks store the oil and gas waste and saltwater. The saltwater is eventually injected through a high-pressure pump into a permitted injection zone.

The process to drill a saltwater disposal well is similar to that of a vertical oil well. The state does require each disposal well to run a mechanical packer on the top of the disposal well. Mechanical packers are components in

the well used to seal the outside production tubing from the inside of the casing or liner. The packer provides for the presence of a monitoring annulus between the casing and the tubing so that personnel monitoring the well can detect if a leak occurs in the casing or tubing.

1804 Operating 1804 Operating, a North Dakota-based

company founded a little over three years

ago, began as an idea from a small company that had working interests in a few Bakken wells. It was then that the founders, Patrick Walker and Robert Rubey, noticed a shortage of disposal wells and timely wait periods for disposal access.

Walker and Rubey developed a fl uid ser-vices plan. Fred Kershisnik helped the duo form the company and was appointed presi-dent. Prior to joining 1804, Kershisnik was fi eld superintendent for Tracker Resource Development II from 2008 through its sale to Hess in 2011.

After forming the executive trio, the team began to design facilities that would withstand the weather extremes in North Da-kota. After research and planning, 1804 de-veloped their fi rst disposal well only months after forming.

“The greatest need we’ve seen from our customers is being able to unload water

'We’ve looked into expanding beyond North Dakota and we have a couple areas that we’re considering. We haven’t had to look too much further to keep ourselves occupied. We’ve been very busy and very thankful.'Fred Kershisnik, president, 1804 Operating

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quickly and effi ciently, without a long wait, and a place that can handle more than two trucks at once,” says Kershisnik. “We’ve kind of designed our facility to deal with those de-mands, plus we’re trying to make long-term commitments with our customers to provide it to them at a lower cost with better effi cien-cy.”

1804 only has facilities in the Williston Basin.

“We’ve looked into expanding beyond North Dakota and we have a couple areas that we’re considering,” says Kershisnik. “We haven’t had to look too much further to keep ourselves occupied. We’ve been very busy and very thankful.”

The saltwater disposal company has slowly begun to add pipelines to their creden-tials.

“Our goal is to set up a disposal well where it’s needed, create a long-term relation-

NO REST FOR THE WEARY: Saltwater disposal service providers are in high demand to safely and efficiently treat flowback and produced water at well sites.PHOTO: 1804 OPERATING


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ship with the local producers in that area and facilitate to their water needs,” says Kershis-nik. “And part of that is to get it [saltwater] in a pipeline system and bring it in automati-cally.”

According to Kershisnik, one concern he hears from those in the fi eld has to do with the recycling of water produced at the well site. In his opinion, the industry is taking care of that issue the best it can.

“I think we’re doing a good job with all of our disposal wells and all of our opera-tions,” says Kershisnik. “We have a good fa-cility design that can take care of the water and any other byproducts in a very safe and careful manner.”

A Surge In Competition Both companies have found successful

ways to handle saltwater being produced at

well sites, but that hasn’t come without chal-lenges.

“The weather has always been a tough situation,” says Kershisnik. “Trying to keep the truckers happy and fi nding good, reli-able construction crews is diffi cult. We feel that we have a really good staff of pumpers and people working for 1804 to keep our fa-cilities running.”

“More than anything, the biggest chal-lenge has been the weather and the usual challenges of competition” says Dodson. “Other than that, the state has been great, the permitting process we have to go through is relatively straight forward.”

Both can attest that the competition for saltwater disposal facilities has been on the rise in the past few year

“The competition is there because the demand is there,” says Dodson. “Everyone

out there wants to be mindful and care-ful. Everyone’s out there trying to do business so we want to strategically put these wells in places where everybody can get along, yet still make money.”

“When we fi rst started there wasn’t a lot of competition,” says Ker-shisnik. “Now, there are some places with public disposal wells every two miles. There are a lot of saltwater dis-posal companies who make deals and get worked in with oil companies and only work for them, so there’s quite a bit of positioning going on out there too.”

An Increase In DemandAccording to Dodson, Citadel has

more disposal sites coming within the next 12 months to support the over-whelming demands.

“There are more disposals coming because there are more wells coming,” says Dodson. “Depending on what part of the Bakken your production is in, you’re going to get different levels of produced water. If you multiply the barrels of water produced each day at a well by the number of wells, we’re going to have to be strategically locat-ing saltwater disposals.”

1804 Operating currently has six disposals running and has three more in the construction process.

“We have a system that works well that provides a good service for the in-dustry,” says Kershisnik. “We’re work-ing with our customers—the oil com-panies—to try to help them get rid of their water as quickly and effi ciently as they can. That’s what we strive for.”

Author: Emily AasandStaff Writer, The Bakken [email protected]

LOGISTICS


LOGISTICS

Scott Radig isn’t responsible for track-ing oil production, power consumption or water use in North Dakota, but as the director of the state’s division of waste management, he still has some impressive numbers to share. Radig and his team track and regulate three main programs: solid waste, hazardous waste and tank storage. In 2001, Ra-dig says the division of waste management was responsible for regulating roughly 9,000 tons of oilfield waste generated in the state. In 2013, the team monitored 1.78 million tons of oilfield waste. “In relation to the oil and gas industry,” he says, “our jobs have changed dramatically.”

Around 2005, only three very small, very specialized waste landfi lls capable of handling oilfi eld waste existed, according to Radig. Today, there are 14 large-volume special waste landfi lls. “We have one under public comment for a new permit and several more coming. I see the num-ber doubling in the next fi ve years,” he says. Prior to the Bakken-related oilfi eld activity there has been only one new landfi ll permitted in North Dakota in the past 20 years, he says. In addition

Best practices and the future of oilfield waste managementBy Luke Geiver

FULL SERVICE: Next Generation Solutions is certified to perform remediation at well sites including the removal of spilled material or damaged infrastructure.PHOTO: NEXT GENERATION SOLUTIONS

NOTHING

THEBAKKEN.COM 45

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LEFT TOWASTE


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to new landfi lls, existing landfi lls are looking to expand and if they aren’t, Radig says, “They are anticipating it.”

Since taking over the waste management division in 2005, Radig has seen constant change in his regulatory reach over oil-fi eld waste generated in North Dakota. This year has been no ex-ception. The state is currently awaiting results of a U.S. Argonne National Laboratory study aimed at determining the impact of technologically enhanced naturally occurring radioactive material (TENORM)—naturally occurring radioactive material that has been altered by a man-made process like oil retrieval. The results could drastically change the state’s stance toward oilfi eld waste and its allowance, by gram, of waste containing NORM. Cur-rently, the state does not allow in-state oilfi eld waste disposal of anything with more than fi ve picocuries per gram. The curie is a standard measure for the intensity of radioactivity contained in a sample of radioactive material. A picocurie is about one-trillionth of a curie, some six times smaller than the thickness of a human hair. Montana allows up to 30 picocuries per gram. Other oil pro-ducing states, such as Texas or Colorado, also accept much higher levels of oilfi eld waste for disposal. DETAILED METERING: Radioactive material detection and monitoring is a major

service for firms like Next Generation Solutions that are certified to handle naturally occurring radioactive material. PHOTO: NEXT GENERATION SOLUTIONS


LOGISTICS

As Radig waits for, and anticipates, the test results, he has been working to en-hance the level of monitoring and safety linked to oilfi eld waste. New regulations put forth by his team will require waste producers to better track and record oil generated in North Dakota. Some oilfi eld waste management fi rms have already established operations based on sound science, traceable services and safety pro-tocols that could someday be the norm

for all Bakken-based oilfi eld waste opera-tions. The combination of Radig’s work to better regulate an oil production by-product that is growing as rampantly as the state’s monthly oil output, with fi rms that have proven how to responsibly manage oilfi eld waste reveals a clear path on which the industry is headed.

Follow These ExamplesKurt Rhea lives and works out of

Colorado. After forming Next Genera-tion Solutions LLC, a radioactive mate-rial handling and treatment fi rm in 2010, he’s become very familiar with the North Dakota Bakken hubs of Williston, Minot, Dickinson and Bismarck. He fi rst started working in North Dakota in 2011, and only three years later, he sold his fi rm to Secure Energy Services.

Rhea still runs the company under the same name and offers the same ser-

METER SERVICE: Next Generation Solutions started in Colorado providing services like those pictured here that involve radioactive level monitoring. PHOTO: NEXT GENERATION SOLUTIONS

THEBAKKEN.COM 49

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LOGISTICS

vices that his team became recognized for as one of the leading waste manage-ment providers in North Dakota. When an abandoned gas station was found in Noonan, N.D., fi lled with used fi lter socks earlier this year, Radig brought in Rhea and his team to clean up the fi lter socks. The North Dakota Petroleum Council and oth-er regulators have also turned to Rhea for guidance dealing with oilfi eld waste in the Bakken, he says.

Rhea’s credibility among the industry started in 2011 when several operators realized that their oilfi eld waste limit was ranging higher than the 5 picocuries per gram limit that the state allows for in-state disposal. According to Rhea, it led to the rejection of loads at Williston’s landfi ll and another large landfi ll in McKenzie County. “At the time, we had the knowledge of

how to properly handle it and we under-stood the science behind it. We were in the right place at the right time with the right resources to meet a need,” he says.

With fi ve radiation offi cers in the company with experience writing regula-tions for Canada and the U.S., the team was able to bring an element of credibility to treating oilfi eld waste that its clients were looking for, Rhea says. Secure Energy Ser-vices was working to dispose of, or recycle other materials and saw an opportunity to add the expertise of Rhea and his team.

Current services offered by Next Generation Solutions include handling TENORM and transporting it to Colo-rado or Idaho where landfi lls permitted for higher levels exist. The team will also remove damaged tanks or equipment af-ter a fi re or lightning strike. Filter sock

handling is a major service as well. The company provides fi lter tank disposal con-tainers placed at the client's drilling site. “When our clients have full containers, we send out trained personnel to pick them up, transport and dispose of the material and then provide fresh containers onsite.” Contaminated soil and other geological areas in need of remediation can also be tested, treated and monitored by Rhea.

Environmental Materials Inc., a Mon-tana-based company that operates under Weave Management, has also created a positive reputation and successful Bakken –based waste handling business. According to Terry Cook, general manager of EMI, the company started out as a fl y ash com-pany. After creating a product designed to stabilize drill cuttings created in the oil and gas industry, the business took off.

AFTER THE STORM: Disasters can ruin tanks and other infrastructure at a well site or processing facility. In such an event, certified firms need to remove the material due to the presence of NORM.PHOTO: NEXT GENERATION SOLUTIONS

THEBAKKEN.COM 51

LOGISTICS

In 2011, when open pits were allowed for drill cutting disposal, EMI was selling 20 truckloads per day, Cook says. Today, EMI provides cutting solidifi cation services on 83 drilling rigs in the Bakken for some of the play’s most well-known operators and drilling rigs. The success with drill cuttings opened the company’s perception of the oilfi eld waste business. But, the opportu-nity to make a profi t didn’t push EMI to in-crease its service offerings without increas-ing its internal knowledge and capabilities.

In 2012, the company purchased a solid control company that had a piece of equipment designed to process drill cut-tings. In 2013, the company also acquired a consulting fi rm that allows EMI to re-main in compliance and provide a high level of certainty to its clients that all of the work related to oilfi eld waste handling

and disposal is being carried out prop-erly. In March 2013, EMI was offi cially running its fi rst oilfi eld disposal site near Chimney Butte on U.S. Highway 85. The company recently opened its second facil-ity in Divide County, also on U.S. 85. War-ren Transport, a sister company to EMI, provides waste transport for clients close to either disposal site.

“We are a relatively small company,” Cook says. The size of EMI hasn’t im-pacted its ability to form lasting relation-ships with Bakken operators, however. As waste comes off the drilling rigs, the EMI team can handle the waste, return the fl u-ids back to the rig and then take the waste for treatment before it goes to the landfi ll. “We could be a lot bigger than we are, but

'We see ourselves in a really cool role where we understand the science and we can help the public understand it. We can also help the industry. By virtue of helping the industry do the right thing by the public, we are making the regulators, job easier.'Kurt Rhea, president, Next Generation Solutions LLC


our goal is to provide high quality and good customer service,” Cook says. “We want to be there with the operators in 20 to 30 years. We really pay attention to detail, that is why we aren’t serving 20 customers. We service fi ve rigs. We could be at 20 rigs if we wanted too.”

The Future of Oilfield Disposal

The main factor driving the business of oilfi eld waste disposal is location. Ac-cording to Cook, operators will always work to place waste suitable for a North Dakota facility in the closest landfi ll. In ad-dition to its two current facilities, EMI is currently undergoing the permitting pro-cess for a new landfi ll in North Dakota.

Radig believes the push to move oil-fi eld waste out of small, operator owned

pits to landfi lls like EMI’s is simple: liabil-ity. “That is a huge reason for the increase in volume going to landfi lls,” Radig says. “Waste generators are looking for facilities with better liners, leaching collection and long-term ground water monitoring.”

Rhea can cite examples of large oil producers that were fi ned for more than $1 billion for failing to keep track of and monitor oilfi eld waste. According to Rhea, the fi nes could’ve been avoided by a few thousand dollars’ worth of investment.

In the Bakken, waste generators will have to invest in record keeping and waste containers for fi lter socks or a service that can provide them. There will be require-ments for containers, record keeping and manifesting cradle to grave, Radig says, “so we know exactly where waste is generated,

who transports it and where it ends up for fi nal disposal.”

Companies will be required to keep records on hand for three to fi ve years and also submit periodic summary reports to the department of health. There are no current requirements for record keeping or reporting.

The biggest change for the business of oilfi eld waste will be in the state’s stance on TENORM. “I think we will be moving forward with changing our land-fi ll rules to potentially raise that limit,” Radig says. The Argonne study will help provide the state with science to justify a different stance. From an engineering standpoint, the design of special waste landfi lls is no different in North Dakota than other states that accept higher lev-els, including Montana.

“There isn’t a lot of documentation of how those other states came up with their accepted levels,” Radig says. “That is why we commissioned this study. Any changes we do make we want to be based on science and not because some-one else has a higher number.”

Existing facilities in North Dakota would not have to perform retrofi ts, and, if North Dakota does raise its ac-ceptable NORM limits it would most likely match that of Montana. “Once our study is done, we will probably try and have matching limits with Montana so that there isn’t a temptation to cross the border and get the advantage one way or another,” Radig says. “I think that if waste is being generated in North Dakota, we should have the option to dispose of it here.”

While Radig continues his quest to create a more robust tracking and long-term monitoring process for oil-fi eld waste (and awaits evidence that will aid in a NORM decision), the EMI and Next Generation Solutions teams both are pursuing a constant goal. Providing oilfi eld waste services, they both say, is about educating.

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THEBAKKEN.COM 53

“We are open and we are honest,” says Jon Kees, EMI manager.

“There have been a lot of people who think they know what they are doing out there, they just see it as another busi-ness opportunity,” Rhea says. “I think the biggest challenge for the industry is to try and help people understand what the rel-ative risk is. It is about educating,” adding that, “when we say this word, ‘radioac-tive,’ there is this fear factor.” According to Rhea, a granite countertop has roughly 25 pecocuries per gram, a much higher level than the state allows in landfi lls.

Both Rhea and Kees also shared per-spective on their respective roles in the industry that Rhea tried to summarize. “We see ourselves in a really cool role where we understand the science and we can help the public understand it. We can also help the industry. By virtue of help-ing the industry do the right thing by the

public, we are making the regulators job easier.”

Radig does believe most waste han-dling fi rms are responsible like EMI or Rhea’s team. But, the few that aren’t shed a very negative light on a situation that can be handled properly. Until then, Ra-dig has a request in to the state for more employees and he awaits the Argonne study expected to arrive this fall. He is also taking action now. “We are changing the rules so that there is a more compre-hensive way to regulate the waste that is created here.”

Author: Luke GeiverManaging Editor, The Bakken [email protected]

WASTE SPECIFIC: According to North Dakota regulators, the mismanagement and incorrect sorting of oilfield waste like filter socks from regular garbage was a problem.PHOTO: NEXT GENERATION SOLUTIONS

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Effects of a Slowdown

BAKKEN BACKERS: CONTRIBUTION

For years, the word “slowdown” has been thrown around. It might come from media outlets op-posed to flaring, an environmen-talist concerned about impacts, or, more understandably so, a western resident longing for times before the Bakken.

What makes the idea of a slowdown so concerning? Unlike previous drilling and exploration in the Williston Basin, the explo-ration of the Bakken impacts our state to a far greater extent. The oil and gas industry is now one of the state’s largest industries and its success affects each of our communities. Nearly every type of business and worker in North Dakota is tied to the Bak-ken, while every taxpayer has seen a substantial reduction of income and property taxes. Most notably, the state now relies on the Bakken for more than 50 percent of its total tax revenue.

This last point should be

concern us all. A well’s production does not remain steady over time. In fact, it declines very quickly (insert m-dash no space at either end) 65 percent in year one, 35 percent in year two, 15 percent in year three and 10 percent every year thereafter. While high initial production is advantageous for a return on capital, this character-istic matched with a regulatory-driven slowdown leaves the state with a dangerous reliance on what would be a rapidly declining tax base. The total amount of lost tax revenue would be immense. Drilling at a pace of 2,000 wells per year, a total shutdown of the industry (which happened in the Gulf) for five years would cost the state $43 billion dollars of lost revenue over the life of the wells. A more plausible scenario of a 20 percent slowdown would be still an enormous $8.6 billion, which represents over $1 billion less returned to build infrastruc-ture in oil producing counties and

similarly more than $1 billion of lost investment in North Dakota’s Legacy Fund.

If these two losses are of little impact to you, surely part of the other $6 billion will touch your life. The impact on education would be devastating with signifi-cantly less ability to fund our local schools, colleges, and universities. Flood control across the state would be a tough battle for fund-ing in a government of limited fi-nancial strength. Almost certainly, the groundbreaking on June 12th of the new $124 million medical school at the University of North Dakota would have not have hap-pened if we set a slowdown for the Bakken five years ago.

However, the greatest impact of a slowdown would be on the pace of development in western North Dakota, our state’s small businesses and the careers of young adults.

Talk of development in western North Dakota usually

gives an impression that public investments in roads and other in-frastructure comprise the bulk of the region’s investment. Despite the impression, private invest-ment in the region has accounted for hundreds of millions, if not several billions of dollars in the past five years. Any sign of slow-down would stop overnight the commitments made by entrepre-neurs and investors in western North Dakota, meaning the re-gion loses out on expanded hous-ing, as well as the abundances of new options for shopping and dining. These investments have bettered western communities and will continue to do so.

A slowdown would have an impact on all of the communi-ties in North Dakota, particularly from a decrease in drilling and the subsequent flight of investment. A reduction in drilling is a direct reduction in well pad tanks pro-duced in Fargo and other well pad equipment produced in Grand

By Rob Lindberg

DEVELOPMENT AS IT HAPPENS: A multi-well pad, including pumpjacks, a drilling rig, storage tanks and gas gathering infrastructure, still in development near Tioga, N.D.

THEBAKKEN.COM 57

CONTRIBUTION

Forks. Slower drilling activity means fewer jobs for the soft-ware engineers on the east side of the state who design and deploy systems that monitor tanks and truck deliveries within the Bak-ken. Lowered demand for hous-ing, commercial and industrial construction would take a big bite out of the success eastern and central engineering, construction, and electrical firms have found in the western side of our state. These types of firms in Grand Forks alone generate hundreds of millions of dollars annually for the community. These are real jobs and businesses that will lose in the midst of a slowdown.

Most disturbingly, a slow-down affects the ability to start a career in North Dakota. For far too many years, our state struggled to create rewarding op-portunities that would allow our youth to build a career and start a family. The normal path for a North Dakota native was to

graduate high school, attend col-lege near the Red River, and head to the Cities after graduation where the jobs were plentiful and the pay was significantly higher. Today, because of the Bakken, we’ve reversed the trend with an economy that grew and astound-ing 9.7 and 13.4 percent in 2013 and 2012, respectively. Our state has become the youngest in the nation, the fastest growing econ-omy and population, and a top-five state for personal income.

The cost of a slowdown is truly unbearable and most often based on facts of limited scope. For instance, due to the efficien-cies of horizontal drilling and multi-well pads, oil and gas devel-opment will cover only 1 percent of the rural landscape. Similarly, the gas flared in North Dakota represents less than 3 percent of the total value of produc-tion. Suggesting a slowdown to reduce flaring is the equivalent to the average person choosing un-

employment because driving to and from work would cost $100 per month in fuel. We have to re-member that western North Da-kota is a work in progress and the region has made tremendous im-provements in the past two years. The region’s new roads, housing, shopping, and even opinion polls (as discussed in my June column) clearly show it.

Finally, there is a national and international component to the importance of the Bakken. American oil and gas production is at the highest rates in 25 years or more and we have become the world’s largest oil and gas pro-ducer, topping both Saudi Arabia and Russia, respectively, for the honors. Our nation’s ability to take these honors rests heavily on oil production from the Bakken and has minimized the impact of the recent international crisis in Iraq, Syria and the Ukraine. North Dakota’s production, pro-jected to grow from 1 million

barrels of oil per day (bopd) to 1.4 to 1.7 million bopd will fur-ther bolster our ability to weather world threats to security, energy and industry while creating jobs across the country.

So be careful suggesting a slowdown for the industry. The effects impact much more than the state’s oil producers.

ON THE WEBJoin Bakken Backers at BacktheBakken.org or fi nd us at Facebook.com/BakkenBackers

Author: Rob Lindberg Director, Bakken [email protected]

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of The Bakken magazine or its advertisers. All questionspertaining to this article should be directed to the author(s).

BEFORE AND AFTER: Storage tanks (right) lined up at a remote site in North Dakota before installation.


Logical Data Essential To The Bakken

IN PLAY

CoreLogic provides data and analytics to the real estate industry. While the company has a long history in collecting, normaliz-ing and providing residential and commercial property informa-tion to clients, it also provides valuable information to clients in the oil and gas sector.

Having one of the leading databases in property informa-tion has allowed CoreLogic to help clients in the oil and gas industry, specifically in the Bak-ken, plan the next route of a

pipeline, explore the under-ground features of the earth or manage compliance processes. The company combines granular property insight with geo-spatial tools to pinpoint where a current or future asset is in relation to a client’s asset. CoreLogic can also provide information on the as-sets themselves.

One way oil and gas cli-ents use the information is to help maintain compliance re-quirements. Maintaining those requirements is a challenge be-cause of constantly changing

ownership and land use around every parcel of property ranging from a wellhead to gas gather-ing transmission lines. Although right-of-way issues may get the attention for most clients, the CoreLogic service can also help a client identify where there are any critical changes in property information in relation to that company’s assets.

“CoreLogic is built upon the foundation of our property level insight and our geospatial tools and what value we can deliver to oil and gas clients,” says Jay

Kingsley, senior vice president for CoreLogic Spatial Solutions. “We have a core competence in collecting, maintaining and de-livering property information across the United States, which our oil and gas clients need, whether it’s for understanding ownership information, explora-tion or laying transmission lines.”

Companies in the Bakken taking advantage of CoreLog-ic’s ParcelPoint database range from exploration and produc-tion companies to midstream pipeline providers, Kingsley

By Emily Aasand

THE NEED FOR MORE DATA: Operators are looking to companies like CoreLogic for a more robust understanding of right-of-ways and installed infrastructure.

THEBAKKEN.COM 59

IN PLAY

says. ParcelPoint allows oil and gas managers to quickly deter-mine parcel boundaries and ac-cess ownership information to shorten cycle time-to-market, enhance business processes, improve decision making and streamline asset management.

“Oftentimes we provide more information to the trans-mission and midstream pro-viders to help them maintain compliance, but in new areas where there’s more exploration happening, they use our service as well. It really depends on the area and where more maturity in the oil field is happening,” said Kingsley.

According to the company, ParcelPoint enables users to ac-cess the highest level of posi-tional accuracy for developing location-based solutions and to better manage assets.

The database CoreLogic provides is so granular that it can provide customers with ev-

erything from the first and last name of the owners of a resi-dence or occupied building, to the number of air conditioning units a property has. Clients also have access to parcel boundar-ies, parcel latitude and longitude coordinates, tax ID numbers, property addresses and parcel ownership data.

Although such data may be available through other means, CoreLogic believes it has found an edge by focusing on two im-portant aspects in its data collec-tion: the accuracy and currency of the data, and the speed in which they can deliver the data.

“It’s part of our business model that we’re collecting data every day, so as soon as clients need it, we can deliver it to them

immediately versus a client hav-ing to embark upon a new proj-ect to go and collect that data,” says Kingsley. “As soon as they have a new area they’re looking to explore, they can check with us to see if we’ve already done the heavy lifting to acquire that data and to continually get up-dates because that’s part of our process.”

For clients interested, Core-Logic has a database that can be licensed. Once licensed, they provide a database for the cli-ent to install in their GIF system where they are able to manage and receive updates to the data-base.

“We’re working on a set of API so on a transactional basis if a client wants to provide ei-

ther an area of interest or spe-cific addresses that we would return information on, we can do that as well,” says Kingsley. “Today, the primary use with our client is sending a database that they can render into their GIF systems.”

There’s a fee associated with licensing an area of inter-est depending on the number of parcels that lie within a particu-lar area of interest and oil indus-try clients are taking advantage of the service.

“In the oil and gas indus-try, we’re developing deeper and better relationships with our cli-ents,” says Kingsley. “It’s defi-nitely an area of interest and an area of growth for us.”


RecartPS Energy Calls UND’s REAC Its North American Headquarters

INNOVATORS

In February, Kevin Wiles flew from Lon-don, to explore options for expanding his engi-neering and technology company, RecartPS, into Western North Da-kota. With the help of the University of North Dakota’s research enterprise and com-mercialization (REAC) facility and UND’s engineering depart-ments, he found the exact loca-tion for his company to success-fully service the needs of the Bakken.

RecartPS is an energy industry-focused resource, en-gineering and technology com-

pany that services resource management and the supply of project teams on a global basis.

Wiles, the operations and development director of Re-cartPS, believes that locating outside of the actual oil play can greatly benefit his company. With the resources available at UND and with UND’s REAC facility, Recart will be able to service three major issues the team believes exists in the Bak-ken: including resource (lack of manpower), water and flaring.

“Within our group of com-panies, we had various elements that could tackle those particular areas, and it made sense for us to do that through the University

By Emily Aasand

A NEW NEIGHBOR: RecartPS signed a lease to house their North American Headquarters in UND's REAC facility, allowing for feasible partnerships with university programs. PHOTO: THE UNIVERSITY OF NORTH DAKOTA

THEBAKKEN.COM 61

INNOVATORS

of North Dakota,” says Wiles. “One of the projects we’re look-ing at is a produced water sepa-ration unit which is a five phase unit. Another is bringing the re-sources and expertise here, and the final project we’re looking into is assisting UND with the personalization of their intellec-tual property through our global network.”

Kevan Rusk, the director of REAC 1, the University of North Dakota’s Technology Ac-celerator, began conversing with Wiles in November 2013 about potential for company growth within REAC and with UND.

The REAC facility is part of UND’s campus, and offers office and laboratory space to private-sector companies that are look-ing to partner with the Univer-sity for a variety of research and commercialization purposes.

Recart’s internationally ex-perienced company has taken the steps to establish linkage to UND with the Petroleum Engi-neering department and has be-gun to work on highly technical conversations and equipment, processes and projects with them, says Rusk.

Rusk and Wiles met when Rusk spent two years in Den-mark working with his previous company and has remained in contact with him over the years. Wiles flew to North Dakota in February to attend the Bakken - Three Forks Shale Oil Inno-vation Conference & Expo and he knew he had found where he wanted to establish his com-pany’s North American head-quarters.

“It’s been quite strategic,” says Wiles. “Looking at REAC

and the way Kevan has inte-grated and given us the support needed to come here has been valuable.”

“When we began looking to expand our company to North Dakota, we saw the benefits to us and the benefits that would come to REAC—it has ties to UND and we offer various engi-neering design and construction capabilities,” says Wiles. “For us, it makes sense for UND to be more involved in the Bak-ken—when you look at the core sample library it has and the im-portance of that along with its premier petroleum engineering department.”

Recart has worked with ev-ery level of leadership at UND—personnel met with local, state specific leaders and government to really understand if the move to Grand Forks would makes sense. The company also took a very strategic approach to un-derstanding the feasibility of the business, says Rusk.

Recart has invested time, money and energy into doing thorough research and has com-mitted to a lease in REAC on the campus of UND, which, accord-ing to Wiles, is exactly where they need to be.

“Everybody is working to-ward the same goal,” says Wiles. “A lot of what we’re trying to do will involve more of a link between the university, research, and international focus and how that can ultimately help the state of North Dakota, which is our primary concern and goal.”

ServiceRecart offers a few different

services including resource man-

agement, manpower supply, op-erations, maintenance and train-ing, and commissioning.

Recart is able to put a 20-man team together to facilitate projects for companies, it can help companies relocate facili-ties, and can conduct consulting on project controls develop-ment, project reporting and cost and planning.

The projects Recart plans to facilitate are relatively midterm.

The team is currently work-ing to provide equipment suited to address water use in the Bak-ken.

The equipment was intro-duced at the Offshore Technol-ogy Conference in Houston in May and can concentrate the harmful water produced at well sites and process the water so it can be reused for the next drill on the same pad.

“Specifically, one of Re-cart’s partner companies has a specific piece of equipment that is designed from produced water separation,” says Rusk. “That specific piece of equipment is something that we’re hoping that Recart can partner with UND to refine and develop and ultimate-ly operate either that service or equipment to operators and dis-posal sites in Western North Da-kota with all the benefits people know about.”

Future GrowthAlthough Recart has just

announced the location of its North American headquarters, it has big plans for the future.

“When we look at the tech-nology in the REAC building and the space Kevan has as far as the administration and pos-

sibly manpower recruitment sources go, there are a few lines of expansion to investigate,” says Wiles. “This building is ab-solutely perfect for us and Kevan has done a great job.”

“We’re in such early stages, but there’s absolutely room for future growth,” says Lee Bown, director of RecartPS Energy. “Because of the nature of what we’re doing, this could get really big really quick.”

According to Rusk, there are a lot of good opportuni-ties that will be coming out of REAC within the upcoming months, not only as an entity, but as partnerships and with dif-ferent projects that Recart can bring light to.

“We’re really looking for-ward to building relationships with companies in the Bakken, to understand their needs and focus on those and hopefully offer some worth and serious solutions to the problems” says Wiles. “We’re very excited to start engaging with people.”

CALLING UND HOME: Kevin Wiles is in the process of relocating to Grand Forks where he'll direct Recart's new facility. PHOTO: RECARTPS ENERGY LTD


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The moment of truth:

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august 2014 the bakken magazine

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