September 2014 The Bakken magazine

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Unique OperationPage 40

AND Aviation’s Current,

Future RolePage 46

Q&A: ND Oil And Gas Research

ProgramPage 72

Efficiency, Safety and Cost Needs Transform Business ModelsPage 28

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THEBAKKEN.COM 5

CONTENTS SEPTEMBER 2014 VOLUME 2 ISSUE 9

Pg 28 PRODUCTS & TECHNOLOGY

Bakken Service TrendsKeeping operations moving in the Bakken creates a

bottomless demand for services. Providers—from welders to petroleum engineers—reveal the evolution and

trends for the Bakken’s many services.BY THE BAKKEN MAGAZINE STAFF

ON THE COVER: Roughnecks on a Bakken drilling rig pose for the camera. PHOTO: GAYLON WAMPLER

Pg 40 EXPLORATION & PRODUCTION

Tribal-Based ExplorationWhen Missouri River Resources produces its fi rst drop of Bakken oil, it will offi cially be the only owned and operated tribal exploration and production company in the Bakken. BY EMILY AASAND

Pg 46 PRODUCTS & TECHNOLOGY

Th e Bakken’s AirspaceUnmanned aerial technology could alleviate the shortage of private and commercial aviation services, which are at an all-time high above the Williston Basin.BY THE BAKKEN MAGAZINE STAFF

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pg 46

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The BAKKEN MAGAZINE SEPTEMBER 20146

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THEBAKKEN.COM 7

8 Editor’s NoteHow Bakken Services EvolveBY LUKE GEIVER

10 ND Petroleum CouncilEnergy Outlook and Solving Challenges BY TESSA SANDSTROM

12 Events Calendar

16 Bakken NewsBakken News and Trends

DEPARTMENTSIN PLAY

66 Understanding the State of ShaleFrom its WellIQ report to its outlook on the proppant supply industry, PacWest Consulting Partners has transformed into an oilfi eld barometer.BY LUKE GEIVER

IN PLAY72 Q&A with Brent Brannan

The director of the North Dakota Oil and Gas Research Program, talks about the past, present and future of the OGRP, an entity designed to link the state with private oil and gas research eff orts. BY LUKE GEIVER

IN PLAY70 Engineering the Future Workforce

Hess Corp. is the latest major Bakken operator to partner with the University of North Dakota’s College of Engineering & Mines, linking the E&P to an employee pipeline like no other. BY EMILY AASAND

MAKING IT74 Automating Crude Movement

JDP Automation has gained a Bakken foothold by automating the crude-by-pipeline process. Using advanced software and experience from other industries, it is looking to expand. BY PATRICK C. MILLER

CONTENTS SEPTEMBER 2014 VOLUME 2 ISSUE 9

pg 70 pg 72 pg 74


Th e move to multiwell pads and full fi eld development in the Bakken has created a trickledown eff ect for every service linked to oil and gas production. In a play that demands effi ciency in every process today more than ever, service models acceptable fi ve years ago have changed. In some cases, the change has come through the addition of new offerings or products and can best be described with the common industry term we all know as a one-stop shop. In other instances, businesses have reigned in their scope, and of course, some service providers have simply turned to innovative new products or approaches.

This month, our team covered the evolution and expansion of several services in the feature article Bakken Service Trends. With the understanding that writing about ev-ery Bakken staple service would require a book-length piece, we chose unique service providers who highlight the industry’s changing needs, demand for innovation and acceptance of anything that can be done cheaper, faster or safer.

From the companies mentioned in the proppant-in-a-box section of the story, to the welding gas supplier, world-renowned energy service provider or nationally known equipment and tool source, the piece created a diffi cult situation for our team during its creation. Before we started, we had to ask ourselves: how do you write about a welding gas supplier and a completion consultant in a single piece? Our answer came quickly: you don’t. Instead of weaving every service provider’s story into one long piece, we included only the main elements of each provider’s story and let the combination of all the ministories speak for themselves. The theme and connec-tive thread between every story is easy to recognize.

In The Bakken’s Airspace, an article detailing the current demand and use of avia-tion services and the future of the Williston Basin region’s skies, we took a similar ap-proach. Emily Aasand covered the present need for private fl ight services to move oil executives and well services teams into and out of the region. Patrick C. Miller tackled the future of the Bakken, writing about the not-so-far-off reality of unmanned aerial systems as a Bakken service used to monitor pipelines, infrastructure and road condi-tions at the push of a button.

In the near-term reality category, check out what Dave Williams is doing on the Fort Berthold Indian Reservation. Through the formation of Missouri River Resources, Williams and his team will soon become the fi rst ever tribally owned and operated exploration and production company in the Bakken. Like the many unique services mentioned in this issue, the Missouri River Resources team is just one more reason for the Bakken’s many industry members to be proud about the evolution of the play. The unoffi cial theme of the Bakken continues to include a push for effi -ciency, innovation, safety and positive change. Why else would a proppant-in-a-box supplier, national equipment supplier focused on safety or a tribal-based exploration and production company exist in Western North Dakota?

How Bakken Services Evolve

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 9

www.THEBAKKEN.com

VOLUME 2 ISSUE 9EDITORIAL

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]

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Vice President of Content Tim Portz [email protected]

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Marketing Director John Nelson [email protected]

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Traffi c & Marketing Coordinator Marla DeFoe [email protected]

ART

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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].

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COPYRIGHT © 2014by BBI International

ADVERTISER INDEX53 AE2S

32 Allied Oil & Gas Services, LLC

68 American Hospitality Management Inc.

20 Andrea Booher Photography

62 Appam Water Depot Inc.

78 Bakken Directory

33 Bartlett & West

42 Braun Intertec

34 Brock White Company

79 Capital Lodge

44 CHS, Inc.

52 Convey-All USA

19 Dakota Fence

36 Eide Ford Diesel Services

14-15 Energy Effi cient Group

50 Entech Industries

18 Environmental Materials, Inc.

48 FMC Technologies Inc.

77 Gamajet Cleaning Systems, Inc.

38 Golight Inc.

59 Granite Seed Company

12 Hotsy Water Blast Manufacturing LP

37 International Road Dynamics

60 J-W Energy Company

64 Mainstream Investors

3 MBI Energy Services

39 Miller Insulation

6 National Oilwell Varco

43 NCS Energy Services, Inc.

51 New Prospect Company

25 Nordak Properties LLC

57 North Dakota Association of Counties

54 Pentair Flow Technologies

26 & 65 PretroSkills, LLC

27 Port of Vancouver USA

24 Presto Geosystems

75 Protego USA, Inc.

56 Pumpco Energy Services

13 Quality Mat Company

2 Rossco Crane

23 Steff es Corporation

45 Steptoe & Johnson

80 Summit Casing

35 2015 The Bakken | Three Forks Shale Oil Innovation Conference & Expo

22 Taylor Power Systems

63 Tempus Aircraft Sales & Service

4 Tyco Fire Protection Products

58 Watford City Homes Inc.

21 Wells Concrete

69 Wood Group PSN


NORTH DAKOTA PETROLEUM COUNCIL THE MESSAGE

To say this year has been a record-breaking year for the oil and gas industry is not news—in fact, it’s becoming rather clichéd as increasing pro-duction has reached record levels for the past 11 years and virtually skyrocketed since about 2011. This year’s production, however, is markedly different as our state has surpassed the 1 million barrel daily production mark to become a top producer in not only the nation, but the world.

This is a signifi cant mile-stone that I touched on in an earlier column, but the mile-stone and its signifi cance in national and global production and politics will be a topic that will continue to be discussed at the North Dakota Petroleum Council’s 33rd Annual Meet-ing later this month. Adam Sieminski, administrator for the U.S. Energy Information Administration, will join other industry leaders and experts at

the meeting to share his views on the role North Dakota has played in the resurgence of U.S. oil and gas production and the EIA’s outlook for North Dakota’s future production.

As North Dakota’s oil production continues to grow, the state has seen many positive benefi ts, but it has also brought forth some challenges. This year’s annual meeting will also look at how we can address these challenges and make the Bakken the most

Energy Outlook and Solving Challenges By Tessa Sandstrom

PREVIOUS MEETING: The 2013 version of the NDPC's annual meeting took place in Grand Forks, N.D., at the Alerus Center.

THE HEAD OF HALLIBURTON: Jeff Miller, president of Halliburton, will keynote the 2014 annual meeting. PHOTO: HALLIBURTON

THEBAKKEN.COM 11

NORTH DAKOTA PETROLEUM COUNCIL

effi cient, clean and modern oilfi eld in the world.

Jeff Miller, president of Halliburton, will be the keynote speaker. Halliburton is one of many companies operating in the Bakken that are focused on developing solutions and new technologies to increase ef-fi ciencies and enhance produc-tion. Other speakers will focus on other key issues, including the proper treatment and dis-posal of waste, building more infrastructure, and properly characterizing and handling Bakken crude.

Other challenges to be discussed at this year’s meeting are impacts to communities. A panel of industry experts will explore some of these issues, including impacts to roads

and infrastructure and the rapid growth of communities that has resulted in shortages of housing and services. The NDPC will specifi cally be look-ing at ways we can inform and activate members to support more oil tax revenues being returned to western communi-ties to help them address some of these issues.

One of the biggest deter-mining factors in being able to help communities with some of these challenges, however, will be a constitutional mea-sure that seeks to divert more than $150 million per year (or nearly $3 million per week) to a special fund for conservation projects. A non-elected board would decide what projects would receive funding, and

75 percent of the fund would be required to be spent per year—whether or not there are worthy projects. With many un-funded roads, schools and ser-vices in western North Dakota, the measure, if passed, would introduce even more challenges for communities.

In addition to informing NDPC members and Annual Meeting on these and other issues, there will also be a free education session that will be open to the public. Ron Ness, president of the NDPC, Lynn Helms from the North Dakota Department of Mineral Resources, and Kathy Neset, president of Neset Consulting Service will provide insight into the oil and gas industry, hy-draulic fracturing and horizon-

tal drilling, oil and gas regula-tions, and impacts. The session will be held from 3:30-5:00 p.m. MDT on Tuesday, Sept. 24 in the Stark Ballroom at the Astoria Event Center.

This year’s annual meeting promises to be another great opportunity for learning and networking and we hope you will join us in Dickinson this year.

ON THE WEBRegistration is open at https://annualmeeting.risprojects.org/Default.aspx.

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

0

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thousand barrels/daymonth over month

Oil +27

SOURCE: U. S. ENERGY INFORMATION ADMINISTRATION | DRILLING PRODUCTIVITY REPORT

Bakken Region Oil Productionthousand barrels/day


EVENTS CALENDAR

The Bakken magazine will be distributed at the following events:

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

The Bakken magazine

Facilities Design Onshore Summit 2014September 30-October 1, 2014Houston, TexasIssue: September 2014

The Bakken magazine

Produced Water Reuse Initiative: Rocky Mountains Tight Oil & Shale Gas PlaysOctober 29-30, 2014Denver, ColoradoIssue: October 2014

The Bakken magazine

Crude By Rail 2014October 29-30, 2014Houston, TexasIssue: October 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

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Oil production numbers and second quarter earnings totals have been released by most Bakken operators, with nearly all reporting production increases.

Oasis Petroleum had an-other record-breaking quarter, producing 43,668 barrels of oil equivalent per day, a 45 percent increase over Q2 2013. MDU Resources announced its stron-gest fi rst half since 2008 for its construction division, with its oil exploration and production sector, Fidelity Exploration & Production, reporting a 14 percent oil production growth. Whiting Petroleum Corp. in-creased its overall 2014 produc-tion guidance after releasing its Q2 results, showing a record 109,760 barrels of oil equivalent

per day, from a combination of all its plays, led by production in the Williston Basin, however.

For several operators, who reported increases in oil pro-duction in Q2, tweaks to com-pletion designs were typically cited. QEP’s second-quarter net income loss, however, also shows that strong production doesn’t necessarily correlate to reported net income.

Oasis Petroleum Like most exploration

and production companies in Western North Dakota, Oasis saw a successful second quarter, recording 43,668 barrels of oil equivalent per day, a 6 percent increase over the fi rst quarter of 2014. The increased produc-tion is a result of completion

tweaks that Oasis implemented, tested, and proved in time for its Q2 production updates.

“Early production results from our fi rst Three Forks slickwater well in Red Band and a slickwater Bakken well in Montana are expanding the completion technique’s ap-plicability across more of our inventory,” said Thomas Nusz, chairman and CEO of Oasis. “Both of these Oasis wells are producing 35 percent or more over comparable wells com-pleted with our base completion design.”

Oasis had 16 rigs running during the Q2 and as of the end of June, had 35 wells west of Williston, N.D., and 32 in East Nesson awaiting comple-tion services. The company

found success with increasing frack spreads from three to six, making frack jobs planned for their overall production more effective.

“We have increased both frack spreads and cleanout crews, which will support the additional work we are doing in the second half of the year,” said Nusz.

Nusz added that some completions for the second quarter were pushed back, which resulted in Oasis com-pleting six fewer wells than planned, causing third-quarter oil production projections to range between 47,000 and 49,000 barrels of oil equivalent per day.

BAKKEN NEWS BAKKEN NEWS & TRENDS

Record Q2 For E&Ps

EMERALD OIL MARATHON OIL OASIS PETROLEUM WPX ENERGYQ2 2014 YIELDS IMPRESSIVE RESULTS

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BOEPD+45% BOEPD

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2013 Q2 BOEPD

1,410

2014 Q2 BOEPD

3,781

2013 Q2 BOEPD

39,062

2014 Q2 BOEPD

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2013 Q2 BOEPD

30,171

2014 Q2 BOEPD

43,668

2013 Q2 BOEPD

12.3

2014 Q2 BOEPD

18.8

THEBAKKEN.COM 17

BAKKEN NEWS

WPX EnergyWell-density testing and

analysis efforts have paid off for WPX Energy. The com-pany has increased its well inventory in Western North Dakota by roughly 200 loca-tions and announced it would start developing multiwell pads with an 11-well design.

WPX Energy has 83 11-well pads that will target the Middle Bakken with another 198 seven-well patterns target-ing the same formation. In the Three Forks, the company has planned for 116 11-well pads in the fi rst bench and another 203 seven-well pads in the same formation.

In its Q2 earnings report, WPX Energy disclosed its plans to increase proppant

use in the Middle Bakken and Three Forks.

“A completion using 6 million pounds of sand on the Ruby multiwell pad was fi nished at the end of July,” the company reported. “This is twice the size of WPX’s his-torical Williston completions and is expected to become its new standard in the basin.”

EOG ResourcesEOG Resources reported

a year-over-year 33 percent U.S. oil growth increase and saw a company income of $706.4 million in the second quarter, compared to a $659.7 million for the same time last year in both its on- and off-shore plays. In the fi rst half of the year, EOG shifted to

multi-pad drilling in the Bak-ken.

EOG 75 reported produc-tion results for three wells brought online in Q2. The total initial production rate from the three wells equaled 6,605 bopd.

According to Billy Helms, EOG’s executive vice president of exploration and production, the wells were completed with larger fracks that took longer to fl ow back. But, due to the extended fl owback period, results from the wells were not yet ready.

“EOG’s assets in the Eagle Ford and Bakken con-tinue to meet or, in most cases, exceed our high expectations,” said Bill Thomas, CEO of EOG. “Although we’ve been in

the Bakken since 2006, we are steadily improving individual well results through continuing advancements in completion designs.”

In the Q2 earnings report, EOG disclosed its plans to test various benches of the Three Forks wells on both its core and Antelope Extension acreage during the remainder of the year.

QEP Resources

QEP Resources’ Williston Basin’s daily total oil produc-tion reached 35,600 barrels of oil equivalent during the second quarter, a 75 percent increase over the second quar-ter of 2013. The Denver-based company specifi cally highlight-ed its new record drilling time

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BAKKEN NEWS

of 14.9 days from the start of drilling to total depth in the Williston Basin during its Q2 update.

Although QEP Resources saw an increase in oil production, it reported a net loss of $92.3 million in Q2 compared to the net income of $178.4 million in Q2 2013. Net income includes non-cash gains and losses associated with the change in the fair value of deriva-tive instruments, gains and losses from asset sales, costs associated with the early extinguishment of debt and non-cash price-related impairment charges.

“We are pursuing multiple avenues to achieve the midstream separation, rang-ing from an outright sale of the business to a straight spin-off of the business to QEP shareholders,” said Chuck Stanley, chairman, president and CEO of QEP Resources. “Our ultimate objective is the maximization of shareholder value and the continuation of profi table midstream operations as part of a viable, competi-tive midstream entity.”

The company produced 31 gross operated wells, including 25 wells in South Antelope fi eld and four wells in the Fort Berthold Reservations. The com-pany reported a 15 percent increase in oil production in the Williston Basin over 2014 Q1.

Emerald OilEmerald Oil posted the strongest

quarter in the company’s history with revenues from sales of oil and natural gas of $31.3 million compared to $10.6 million for the same period last year. The company’s acquisition of additional hold-ings in the Williston Basin makes it one of the play’s largest operators.

Emerald and Liberty Resources II LLC announced, in August, the signing of a defi nitive agreement to exchange a portion of Liberty’s holdings in the Wil-liston Basin for additional Emerald acre-

age in the basin and $78.4 million in cash.“The transaction with Liberty Re-

sources II further solidifi es our strategic position in both our Low Rider and Lewis & Clark focus areas, bringing our net acreage position in this core operating area to more than 108,000 net acres,” said McAndrew Rudisill, Emerald CEO.

The company reported second-quar-ter production of 340,320 boe—an aver-age of approximately 3,781 boepd—an increase of 51 percent over Q1 2014 and 168 percent increase over Q2 2013.

Marathon OilDuring the second quarter of 2014,

Marathon Oil saw its three high-quality U.S. resource plays average a net produc-tion of 170,000 barrels of oil equivalent per day. Marathon’s Bakken wells-to-sales are up 73 percent quarter-on-quarter, with 19 gross operated wells-to-sales.

The company reached total depth on 19-gross company-operated wells and brought 19-gross operated wells to sales during the second quarter. Mara-thon plans on shifting its focus to more aggressive completion designs in the Bakken.

“In the Bakken, there are two things going on: downspacing and enhanced completion designs,” said Lee Tillman, president and CEO of Marathon Oil. “Results continue to be very positive in the Bakken.”

Marathon plans to move from four-by-four well pads to six-by-six well pads in the Middle Bakken and Three Forks fi rst during the second half of 2014. The company spud its fi rst 12-well spacing pilot in July.

THEBAKKEN.COM 19

SM Energy Co. made a $330 million purchase of 61,000 net acres in the Bak-ken and Three Forks shale play located in Divide County, N.D., the largest monetary acquisition in company history.

The acquisition from Baytex Energy Corp. includes acreage adjacent to SM Energy’s currently operated block known as the Gooseneck and brings SM En-ergy’s exploration and production acreage total to 97,000 acres in the area. With this purchase, SM Energy received 126 drilling spacing units, 81 of which will be operated by the company.

The deal was completed through cash on hand and borrowings from its current revolving credit facility, and according to CEO Tony Best, the need for an asset di-vestiture is not necessary. And according to Jay Ottoson, president and chief operating offi cer the company, only needs to drill one good well per spacing unit to pay for the transaction.

In SM Energy’s second-quarter con-ference call, Ottoson said that SM’s wells in the Three Forks are getting even better over time. Current wells in that area aver-age 10,000-foot laterals and are decreasing drilling time by close to 30 percent. By in-creasing the amount of frack sand used in drilling by 40 percent, SM Energy has seen a 25 percent increase in the rate of return for its wells in the area.

“We don’t think we’ve reached the limit on operational improvements,” said Ottoson. “Given these results, it is easy to see why we are excited about the acquisi-tion. We think there is signifi cant opportu-nity in the Bakken where we are drilling.”

“If you look at our results, we stick out as an outstanding operator,” said Ottoson. He also added that SM Energy hasn’t had any issues in dealing with exces-sive produced water or in accessing water for completion. SM Energy has found it feasible to use surface water in the region for well completions due to high water cuts incurred at well sites.

Many wells in the area use sliding sleeves on a 26 to 30 discrete fracture stage process and can be found using artifi cial lift systems with long stroke lifts, a method SM believes is aggressive.

“We are drilling four Three Forks wells in our current acreage and we haven’t even gotten to the Bakken yet,” said Ottoson. The success SM Energy has in increased sand loads in the Gooseneck may alter its plans for downspacing, potentially adding more wells onto the pad.

Most of the oil produced on the pur-chased acreage is moved via truck, but SM Energy thinks there could be an opportu-nity to move the oil via pipe. The company will also look into investing in water dispos-al for the newly acquired property.

SM Energy Makes Historic $330M Purchase

BAKKEN NEWS

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SM Energy Three Forks Increased Sand Loading ResultsSOURCE: SM ENERGY


BAKKEN NEWS

The cost of shipping Bakken crude by rail will increase the price per barrel between 26 and 31 cents if regulations proposed by the U.S. Department of Trans-portation are implemented, according to a study by Cost & Capital Partners.

DOT published the proposed regulations for transporting volatile crude by rail on July 23. They will reduce the speed limit for unit trains carrying crude, particularly from the Bakken region. The regulation also calls for upgraded tank cars to better withstand damage from derailment.

Reduced speed limits for trains carrying Bakken crude will increase the time to reach destinations, which the report

said will reduce the number of tanker cars and locomo-tives available while increasing the amount of oil inventory in transit.

“What it means from a strategy perspective is that if you can take the Bakken crude via pipeline, you’re obviously not going to have the same impact,” said Tom Bokowy, Cost & Capital senior partner. “It will give a slight additional advantage to the pipelines and it will make shorter routes more economi-cally viable.”

The report said that

for major destinations from the Bakken, the impact of complying with the regula-tions will be a 2 to 4 percent increase per barrel over the current cost of shipping oil by train.

“You’re going to have

more of your rail origina-tions in North Dakota being offl oaded at barge terminals and places like that because that way, you can turn those assets more quickly and you’re less impacted by the cost of the tank car,” Bokoway said.

Proposed DOT Rail Regulations To Hike Transport Costs

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BAKKEN NEWS

According to the report: “Producers, carriers and refi neries will need to incor-

porate the impact of these changes when calculating the netbacks for transport-

ing crude from the Bakken to major consumption areas. These changes will affect the decisions for both where and how to transport crude from the Bakken to major con-sumption areas.”

The DOT proposal to upgrade the current tank car fl eet to meet new safety standards also increases costs. The report notes that there are four major companies capable of producing these tanks cars, which will create a bottleneck.

This report calculates the change in costs for com-mon destinations for Bak-ken crude. It includes cost models for tank car leasing, rail freight and a lane-by-lane analysis of the impact of the changes.

Producers, carriers and

refi ners will all be affected by the changes over the com-ing years. As these changes increase the cost, this will af-fect netbacks that producers are currently able to achieve for Bakken crude.

Cost & Capital Partners is a management consulting fi rm with offi ces in Boston, Sandpoint, Idaho, and part-ners in Shanghai, China.

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BAKKEN NEWS

Stabilizing Bakken crude for rail ship-ment might not be necessary, cost-effective or result in greater safety, according to a consultant with Turner, Mason & Co.

After the U.S. Department of Transpor-tation in July released proposed regulations to change safety requirements for trains and tank cars hauling Bakken crude, U.S. Rep. Ron Kind, D-Wisc., sent a letter to Trans-portation Secretary Anthony Foxx asking the agency to consider a requirement to stabilize the oil before shipment.

Kind said that “Bakken oil is much more volatile than most other types of heavier crude oil” and poses a signifi cant risk of fi re.

Questions Raised on Stabilizing Bakken Crude For Rail Transport

AHEAD OF THE CURVE: The call to stabilize Bakken crude prior to transport could be answered before the end of the year. PHOTO: EMILY AASAND, BBI INTERNATIONAL

THEBAKKEN.COM 23

BAKKEN NEWS

He referred to a company in south Texas that is stabilizing crude to make it safer for transport. News reports quoted Kind as saying the process was “cheap” and “easy to do.”

However, Ryan Couture, a chemical engineer and senior consultant with Turner, Mason & Co., said there’s a great deal of difference between light sweet crude from Bakken and condensates from the Eagle Ford play in Texas.

“The condensates in Texas are sub-stantially lighter and more volatile than Bakken crude,” he explained. “Their vapor pressure is high enough in Eagle Ford con-densate that it cannot be shipped via pipe-line, and stabilization is required in order to meet the specifi cations for transport.”

Based in Dallas, Turner, Mason & Co.

monitors all aspects of the crude and re-fi ned product markets, and how regulatory developments impact the industry. The fi rm was recently engaged by the North Dakota Petroleum Council to conduct a comprehensive study on Bakken crude, which was issued by the NDPC in early August.

Couture also questions the economic feasibility of stabilizing Bakken crude for rail transport and whether it would result in improved safety.

“One challenge to stabilizing Bakken crude in North Dakota before shipment is that you then end up with stabilized crude and LPGs (ethane/propane/butane),” he said. “There is no substantial market for LPGs in North Dakota, which means they would have to then be shipped. The

hazards with shipping LPGs are greater than shipping Bakken crude if an accident were to occur.”

The American Petroleum Institute criticized DOT’s rationale for the proposed rail transport regulations.

“The best science and data do not support recent speculation that crude oil from the Bakken presents greater than normal transportation risks,” said API President and CEO Jack Gerard. “Multiple studies have shown that Bakken crude is similar to other crudes.”

API plans to submit comments to DOT about the regulations before the Sept. 30 deadline of the public comment period.


BAKKEN NEWS

Scientists studying fracking compounds say their research raises concerns about several commonly used ingredients.

According to results released in August during the 248th Na-tional Meeting & Exposition of the American Chemical Society (ACS), little is known about the potential health risks on one-third of the compounds used for fracking.

“It should be a priority to try to close that data gap,” said William Stringfellow, a member of the research team from Lawrence Berkeley National Laboratory and the University of the Pacifi c. He said the study was conducted to help resolve the public debate on fracking.

Researchers found only eight substances that raised concern, not thousands as suggested by some fracking critics. The substances identifi ed as “red fl ags” included biocides and others considered “particularly toxic to mammals.”

“The industrial side was say-ing, ‘We’re just using food additives, basically making ice cream here,’” Stringfellow said. “On the other side, there’s talk about the injection of thousands of toxic chemicals. As scientists, we looked at the debate and asked, ‘What’s the real story?’”

The researchers examined databases and reports to compile a list of substances commonly used in fracking. They include gelling agents to thicken the fl uids, biocides

to prevent microbes from growing, prop-pant sand and com-pounds to prevent pipe corrosion.

Although frack-ing fl uids contain many nontoxic and food-grade materi-als, Stringfellow said being edible or bio-degradable doesn’t necessarily mean disposing of them is a simple matter.

“You can’t take a truckload of ice cream and dump it down the storm drain,” he noted. “Even ice cream manufacturers have to treat dairy wastes, which are natural and biodegradable. They must break

them down rather than releasing them directly into the environ-ment.”

The study was funded by the University of the Pacifi c, the U.S. Bureau of Land Management and the state of California.

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BAKKEN NEWS

Federal and White House leaders visited North Dakota in early August as part of a na-tional review of the country’s energy strategy.

The meeting, held on the Bismarck State College campus, was led by the U.S. Department of Energy. DOE Secretary Ernest Moniz and U.S. Department of Transpor-tation Secretary Anthony Foxx, along with U.S. Sens. Heidi Heitkamp, who proposed the meeting to be held in North Dakota, and John Hoeven, who also proposed a quadren-nial energy review, spoke dur-ing the meeting.

“To truly talk about our

nation’s energy strategy, it has to include North Dakota. That’s why I pushed for Secre-tary Moniz to hold one of the Department of Energy’s na-tional energy policy meetings in our state,” said Heitkamp. “North Dakota is on the fore-front of energy development and we’re doing it all—oil, gas, coal, wind, and biofuels. We have a great deal of insight to offer as the administration seeks input from communities across the country about en-ergy transportation, infrastruc-ture, and development.”

The review, which in-cludes a series of meetings across the nation to examine

critical energy issues, was formed to help the administra-tion develop a national policy for energy infrastructure as part of President Obama’s Quadrennial Energy Review.

The goal of the QER is to help the federal govern-ment provide affordable, clean, and secure energy services to Americans. The meeting focused on infrastructure con-straints, with a specifi c focus on Western North Dakota.

“Secretary Moniz heard fi rsthand about the vital role North Dakota’s energy re-sources and infrastructure play in our national energy strategy, and I greatly appreciate that

he agreed to visit our state as part of his meetings across the U.S.,” said Heitkamp.

Heitkamp called on the DOE to more quickly improve drilling permits on federal and Indian lands, address energy development issues facing MHA Nation, and build out roads and bridges to make them safer and accommodate the increased number of ve-hicles around the Bakken.

“Secretary Moniz has shown an openness to making sure the U.S. is using a diverse array of energy sources,” said Heitkamp.

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PRODUCTS & TECHNOLOGY

There is no single service mantra applicable to every Bakken business.

Some providers have adopted the one-stop-shop approach. Others believe the best business model is providing only a single service. In today’s Bakken business climate—from petroleum engi-neering fi rms to welding gas suppliers—there is one common thread that links nearly every service provider in every segment of the Bak-ken shale play: evolution. For some fi rms, that means simplifying the service packages offered to clients, but for most, it means adapt-ing best-practices taken from other geographic regions or industries to fi t the fast-paced, demanding nature of the Williston Basin. To highlight the theme of change, we covered a wide swath of the busi-nesses responsible for keeping the Bakken running. Each business has unique demands and challenges, and each has learned the merits of adopting a new service model for a unique situation. -Luke Geiver

By adapting to the Bakken, these businesses, consultants and services are thrivingBy The Bakken Magazine Staff

THE NEW

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A COMPLEX JOB: As the Bakken evolves, service providers at every level of oil production are looking for new, more efficient means of service.SOURCE: GAYLON WAMPLER

THEBAKKEN.COM 29




Not all Bakken services yield immediate results. Ty-ler Micheli, petroleum engineer and team lead for the produc-tion enhancement division of Denver-based Sigma3 Integrated Reservoir Solutions, had to en-dure roughly two years before witnessing the benefi ts of a de-tailed completion approach put to use in the Bakken. Micheli was employed by Helis Oil & Gas to produce more hydrocarbons in the South Antelope fi eld. “We made changes and two years later independently verifi ed results showed an increase in well pro-ductivity and performance,” Mi-cheli says. “We determined that an engineering workfl ow needs to look at every facet of the well’s life from before it is even drilled.”

Micheli says that his success reveals the importance of pa-tience and on taking a long-term view towards a client’s success. Micheli’s team began working with Helis at a time when op-erators were just starting to drill 2-mile laterals and use complex completion methods designed on a one-off basis. After review-ing the approach the team took to justify the longer laterals and the complex completion designs, Helis points to several elements crucial to success.

Fracturing diagnostics pre-completion are important, he says. “We would do step-rate tests and calculate near wellbore fric-tions and really understand what would happen to the frack when it goes into the formation.” Ac-cording to Micheli, the tests take

roughly 20 to 30 minutes to per-form. “They are an industry stan-dard but not everyone does them. A lot of operators push by gath-ering data and running the tests.”

To perform the tests, a pres-sure pump operator pressur-izes the pumps to 50 barrels per minute, injects a small volume of fl uid into the well and slowly de-creases the pressure from 50 bpm to 40 and repeats the step-down until there is no pressure. The fl uid pumped into the well works against the pressure of the pump and the operators can determine two things, Micheli says: perfo-ration friction and how well the fl uid moves through the wellbore.Understanding the complexity of the perforation path allowed Micheli to optimize the fracture network. “With too many cracks and corners you don’t get a real good connection for drainage,” he says. If that is the case, Micheli can deploy proppant slugs—high packs of proppant in the 500- to 1,000-pound range that are in-jected with the purpose of break-ing open certain sections of rock.

In addition to step-rate tests before the completion is per-formed, Micheli and his team also verifi ed the value of reduc-ing the use of well fl ushing—a process that involves fl ushing water through the wellbore post-completion and preproduction. “Some overfl ush, which pushes the proppant away from the heel of the well. We concluded that keeping proppant near the well-bore is absolutely critical,” he says. “This was a big operational

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change to make sure we didn’t overfl ush.”

During its time working in the South Antelope fi eld, the Sigma team also learned the val-ue of onsite engineers. There were engineers onsite every hour of every day that the Helis wells were being completed. Since reviewing their work, Mi-cheli’s team has since written a

paper on its time in south Ante-lope, and according to Micheli, their time revealed something every Bakken operator should know about individual wells. “If you have a weak link in any part of the [well] chain, then it won’t perform as well as it oth-erwise could.”-Luke Geiver

THEBAKKEN.COM 31


The rapidly growing Bak-ken play is putting a strain on the existing inventory and personal protective equip-ment (PPE) supply chain, and customers are looking for more and more options to keep their businesses run-ning safely. Grainger believes it has found the solution.

“Our presences are sup-ported by the supply chain that helps get products to custom-ers either same day or next day and allows us to provide critical product support and services that help keep their operations running and their people safe in two very important ways: making sure we have the right products and making sure we can get it to customers quickly,” says Marty Neus, district sales manager at Grainger’s Williston branch.

Grainger opened its Willis-ton branch in 2013 and plans to open a branch in Dickinson by the end of the year.

The Williston branch is unique in that it’s open and acces-sible 24 hours, seven days a week and it has a customized inventory based on its market knowledge of other oil and gas plays in order to have the correct inventory to keep customers’ businesses run-ning and to keep their employees safe.

“We will open up our branch after hours, which is a service that has been well-received by customers,” says Neus. “Having access to that inventory is critical and we’ve had multiple opportu-nities to open up our branch after

hours to help our customers.”“Our new Dickinson

branch, in addition to locations in Williston and Fargo, will help more customers get the products they need, when they need them, to keep their operations running effi ciently and their people safe,” said Cassandra Dye, regional vice president of customer service for Grainger.

Providing tools and equip-ment for safety is where Neus and his team focus most of their efforts within the Williston Basin.

“We supply things such as personal productive equip-ment—specifi cally Lockout/Ta-gout, electrical safety equipment, medical fi rst aid supplies, temper-ature stress tools and equipment for confi ned spaces,” says Neus. “Some of those workers have to go inside tanks, go inside re-ally small, cramped spaces so we make sure that they can enter and exit those spaces safely.”

Grainger also offers antislip products for oil rigs, fall protec-tion equipment, signage, fi re pro-tection, and a handful of other service equipment that it says has been in high demand.

The company helps its cus-tomers manage inventory in two different ways. The Grainger manage solution—KeepStock—allows its employees to go out to sites and manage the inventory for customers. According to Neus, this puts time back into the cus-tomer’s day because Grainger is providing an onsite labor source. Grainger also offers a customer-manager inventory solution, by

which the customer can track and order as they please.

“In the Bakken, managing inventory, especially safety inven-tory, is one of the best ways a company can remove costs,” Dye adds. “Grainger’s KeepStock in-ventory management solutions help customers save money and space, while increasing produc-tivity and freeing up time to do more important things on the job.”

According to Neus, the oil and gas services companies have been some of Grainger’s pre-dominant customers. “For the fracking and wireline companies, it’s really critical to have PPE available 24 hours, seven days a week. We’ve seen a positive re-sponse from our availability and with how we provide inventory management solutions to those customers.”

Grainger offers more than 135,000 safety products, almost always having the products cus-tomers are looking for, but they also partner with their strategic

vendors to perform audits and other safety services.

“One of the services we partner up to provide is hand pro-tection audits,” says Neus. “We’ll partner with one of our strategic suppliers and look at what the customer is doing, look at areas for improvement or point out ar-eas where injury could occur, and then come back and provide solu-tion samples. This helps custom-ers really stay on the cutting edge of their safety program.”

With the maturation of the Bakken, Grainger’s role in West-ern North Dakota is more impor-tant than ever.

“Customer safety, especially to keep people safe in being more productive all while reducing ex-penses, is becoming more and more of a focus for our custom-ers. Grainger can provide solu-tions to help customers manage their inventory, to keep their facil-ities up and running, and to help them save time and money.”-Emily Aasand

Meeting the Safety Demand

ON-SITE EXPERIENCE: With storefronts in two major Bakken hub cities, the Grainger team makes supply decisions based on the region's needs. PHOTO: GRAINGER



Extended reach later-als—those drilled past the 2-mile mark—come with a price. In some cases, coiled tubing cannot reach the end of the well to mill out wellbore plugs inserted during the pres-sure pumping process, leaving hydrocarbons freed near the toe area of the well unrecover-able. Renee Supplee, sales en-gineer for Baker Hughes, has a solution: the SHADOW series frack plug.

The plug was designed to provide a larger inner diameter than other composite plugs and to stay in place for the

life of the well as opposed to composite plugs that must be drilled out before production can commence. “For longer laterals, this plug offers a huge advantage,” Supplee says. In an extended reach lateral, an operator can place the SHAD-OW plugs near the toe of the well and use composite plugs at depths reachable by coiled tubing.

Although most composite plugs are not strong enough to feature an internal diameter (ID) of more than an 1.5 inch-es, the SHADOW series plug is made of steel. The ID of

the SHADOW series can go as wide or wider than 2 inches because of the stronger ma-terial, Supplee says, a feature that doesn’t require operators to drill out the plugs in order to bring them on production. The steel design, along with a dissolvable ball, makes the whole system work. After the plug is set via wireline, dis-solvable balls are dropped to portion off a given section of well. Eventually, the balls dis-solve, allowing the well to start fl owing.

“The purpose of the plug is not new to people. What

is intriguing to people is its potential of what it could do to avoid drill out and still have a nice ID,” she says. The SHADOW plug has been in testing and use phase for more than six months. The main hesitancy from potential cli-ents has to do with time and effi ciency in the event the balls do not dissolve properly, Sup-plee says. “If you are going to have to drill something out, you wouldn’t prefer to drill out steel.”

To date, Baker Hughes has already created a Willis-ton Basin case study for the

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THEBAKKEN.COM 33

technology using the SHAD-OW series frack plug and in-tallic dissolvable balls. In a well drilled to a total depth of 25,400 feet and a kick-off point at 10,589 feet, the use of Baker Hughes SHADOW plugs eliminated milling, saved two days of drillout-related time and roughly $50,000 for the operator. Without the use of the Baker Hughes plugs, the use of coiled tubing to mill out composite plugs inserted near the toe of the well would not have been possible.-Luke Geiver SHADOW SECRET: The pipe ID allows for hydrocarbons to flow through the frack plug

at an acceptable rate after the ball disappears. SOURCE: BAKER HUGHES




Praxair Inc. offers unique gases and field ser-vices for customers in the Bakken. The company is one of many that has performed equipment upgrades for fast-er in-and-out service times. The global company recently opened a new packaged gas fill plant in Bismarck, N.D., which will significantly increase the cylinder gases capacity in the Bakken oil play. The automatic facility has been designed to quickly and efficiently fill pack-aged gases from single cylin-ders and packs to liquid vessels and tube trailers.

According to Robert Crew, general manager of the U.S. central region of Praxair, the biggest benefi t of this plant and the services it provides is the ability to turn products around quickly for customers.

“We’re at approximately double the capacity that we had before and that’s just on the fi lling side,” says Crew. “We built a plant that was de-signed to be loaded and un-loaded quickly.”

Praxair has been present in the Williston Basin since the late '70s and the com-

pany has been expanding in the region ever since to keep up with the demands of their customers.

“We’ve managed to ex-pand our route sales cover-age out there and our staffi ng levels to accommodate the increased demand of all the customers moving into the area,” says Crew. “The guys who are out working in the fi eld in the Bakken need to be able to get in and out quickly, so we’ve remodeled all of our locations to fi t that need,” says Crew.

Praxair’s newest facility

is responsible for fi lling ar-gon and argon carbon dioxide mixes that are used for weld-ing applications. Those weld-ing applications—welding rods, welding wires and safety products— are out in the fi eld for repair and maintenance on rigs, but they’re also used in the construction products, pipelines, gas plant construc-tion and for refi neries, which help accommodate the rapid Bakken expansion.-Emily Aasand

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The proppant supply industry is approaching unchartered terri-tory, which in the Bakken, is both good and bad. As operators move to longer laterals, increased fracture stages per well and deploy nearly double the amount of sand used over base com-pletion designs established only four years ago, demand for proppant has been pushed to an all-time high. But, transportation issues related to rail bot-tlenecks and rail network congestion have made proppant buyers and sup-pliers rethink their distribution models in order to seize the Bakken’s unprec-edented thirst for proppant.

Sandbox Logistics LLC, a Hous-

ton-based proppant distribu-tor, has earned respect, and business, for its innovative tweak to the proppant sup-ply business. The company—formed by several logistics veterans—has designed a cube-shaped shipping and storage container that can hold the amount of sand typi-cally delivered by truck trailer. Sandbox has already received three orders from RockPile Energy Services and more from Liberty Oilfield Services to use the patent-pro-tected system. The design of the cube is meant to eliminate equipment such

as sand movers, silos, pneumatic trucks and some conveying equipment while improving the economics of logistics.

Because the boxes are equipped with pneumatics, the need for powered blowers on the well site to remove the

sand from the truck hopper is gone. The units can be prepackaged with various proppant types or sizes, al-lowing completion companies the assurance that when they show up to a well site, the sand will be there. According to Peter Glynn, senior vice president of strategy and com-mercial development, the boxes can be stacked and unloaded in any order. “We have filed a substantial amount of intellectual property around the system to address the entire logistics chain,” he says. “The system is a true process innovation.”

The main draw of Sandbox’s system to its Bakken clients is the assurance that the proppant will be onsite. “It alleviates a lot of schedul-ing problems,” Glynn says. The boxes can be predelivered to a site via rail or specifically designed truck trailers. The stackable nature of the boxes re-quires roughly one-third less space on the well pad as pneumatic truck trail-ers would need.

Use of the Sandbox product first happened in the Bakken, a factor that


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insured the product was well-suited for harsh weather conditions, Glynn adds. Although the goal of Sandbox is to develop regional distribution hubs, it currently works on a one-off basis with its clients.

Portare, like Sandbox, also offers a shippable containerized option to move frack sand and ceramics. The system benefits the user by eliminat-ing transload handling damages and railroad wait time, according to the company. Current rail wait times can range from six to 18 months. The units can be filled with sand at the frack sand site and be shipped via truck directly to the well site. Portare offers a 700-cubic-foot and 1,400-cu-bic-foot box. When shipped via rail the boxes can sit two units high. On a shipping vessel, the boxes can be stacked as many as eight units high. A truck trailer can carry roughly 23 tons of material over the road. -Luke Geiver

PROPPANT BOX: Both Sandbox Logistics and Portare have commercialized storage and dispersal systems that offer alternatives to truck-based transport and storage.


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Entro Industries specializes in figuring out how to move large, heavy equipment that people never intended to be mobile, says Shawn Smith, president of the Oregon-based engineering and design firm. Entro has serviced the heavy haul, air-craft and drilling industry since ’94, led by Smith’s father Harlan, founder of the firm. Shawn joined his father in 2010. “We decided to change the focus of the business. We decided to take the lead position on contracts.” With the help of Western Fabrication, a custom welding and machine shop, the Smith’s applied their new ideas to the drilling rig indus-try. The team now designs and fabri-

cates custom and bolt-on systems capa-ble of changing a stationary drilling rig into a walking unit. Since 2010, Smith estimates the team has been directly in-volved with 180 to 200 rigs, performing either a retrofit of an existing unit or the design of a newly built rig. “We’ve been at it one a week for at least the last year,” Smith says.

In addition to the drilling firms heavily leveraged in the Bakken, such as Nabors Drilling and Precision Drilling, Entro has also provided its services for rig operators working in Alaska, Cana-da, South America, the Middle East and the entire Lower 48.

“When you install one of our units, it isn’t just about designing and install-ing equipment,” Smith says. “It is about taking an existing asset, like a 30-year old drilling rig and figuring out how to safely mobilize that rig and give it ad-ditional service life,” adding that, “it is the combination of the machine design and the structural analysis that is our specialty. We kind of do the things that other people don’t know how to do.”

Entro's main product is called the Kingpin system. The Kingpin com-bines a high-capacity jack and a walking foot into a singular space. The equip-ment package can be installed directly onto a rig. Using a ratchet or a remote control, an operator can move an en-tire drilling rig in any direction once the Kingpin system is installed. “We have actually removed other walking systems from rigs and replaced them with ours,” Smith says.

The system is a walk-and-roll set-up, utilizing a large stomper foot di-rectly under a hydraulic jack. Because the stomper foot can shift positions, by roughly 2 feet, in any direction from where the base of the hydraulic jack is attatched to the top of the stomper,


Walking Rig Designers

PROVEN WORK: Western Fabrication has gone through an American Petroleum Institute certification process to ensure its work on walking rigs is done safely. PHOTO: ENTRO INDUSTRIES

THEBAKKEN.COM 39


the system can move a rig. The jack deploys, lifting the entire rig off the surface, a rolling mechanism rolls the rig to follow the placement of the stomper while the rig is still in the air and then the jack lowers the rig di-rectly above the position of the stom-per. The process is repeated until the destination has been reached. “You can actually spin it in a circle,” Smith says. The beauty of the system is of-ten seen in difficult well-site layouts or when settling under a rig mat occurs, he says.

Entro’s success with the walking systems has required Western Fab-rication to update its abilities and its approach towards safety and qual-ity. The company recently completed the American Petroleum Institute’s 4F Monogram certification program. The certification is the result of a yearlong audit to ensure the facility and its employees—from designers to fabricators—meet the stringent re-quirements of the API. In 2014, En-tro's sales will increase by 75 percent over the previous year.-Luke Geiver

TEAM OPERATIONS: Entro has designed a bolt-on equipment package that allows a user to move a rig via hand lever or remote control. PHOTO: ENTRO INDUSTRIES

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THEBAKKEN.COM 41

Missouri River Resources, the only Indian reservation oil exploration and production company in North Dakota, is taking full advantage of the Bakken oil play.

David Williams, a member of the Three Affiliated Tribes located in Western North Dakota, has 20 years of experience in the oil field and is heading the production and exploration efforts. Williams began working for Gulf Oil in the early 1980s and split 12 years working for Gulf Oil and Chevron, before moving back to North Dakota to work in education.

A graduate of New Town High School, was teaching and coaching in New Town, N.D., just before the Bakken came to flourish. With his experience working on oil rigs, he knew he needed to take advantage of the opportunity to start an oil and gas production company on the Berthold Reservation.

“I thought it’d be more valuable to help our people with this oil and gas issue and see what I could do,” says Williams, president and CEO of Missouri River Resources. “I started looking for experts and I actually went down to Colorado to visit the Red Willow Production Company—a very suc-cessful oil and gas company on an Indian reservation—and asked for their business plan of how they created their com-pany and they gave me it.”

Williams used that business plan as a model for his own but he knew it’d be a challenge without having easy access to petroleum engineers or tenured geologists.

“First you need resources, but you also need expertise,” says Williams. “That’s been my primary objective—to hire as many experts as I can find from attorneys and petroleum engineers to geologists and landmen. Five years ago there wasn’t a petroleum engineer line. Opportunity only comes where you look, and I actually went to Calgary for a petro-

leum conference and found my first board member and ex-pert in Regina in 2009.”

After adding another expert from Calgary to the team, the three of them created a business plan in 2010 and Mis-souri River Resources was officially formed in 2011.

“We have four petroleum engineers that are working for us,” says Williams. “Three in the midstream, and then one in exploration and production. We have our COO Bill Mc-Cabe, and we have John Kingsley who is our lead petroleum engineer in the midstream and one of the original founding guys.”

“We’re spending $10 million a well, so we’re very frugal and we want to make sure we do this right,” says Williams. “We want to be quick here, but we’re not going to hurry. We want to make sure that we do this right so that we have the ability to show the people—the industry—that the Three Affiliated Tribes can operate its own wells.”

Overcomers Two of the hardest obstacles for the company to over-

come were finding land to drill on and getting capital. Mis-souri River Resources has about 30 wells they have working interest on, but are getting ready to drill their first wells as an operator.

“Finding land that wasn’t leased out in 2007 has been difficult, but we do have a 300 acre parcel and we’re working on drilling our first four wells,” says Williams. “We’re work-ing with service company Baker Hughes out of Texas.”

With a limited supply of unclaimed land, Missouri River Resources is focusing on looking for ‘flips’ in the area. Flips are when oil companies look to sell the land that they’re pro-ducing on.

“We’re looking for someone reselling their land so that we can buy it and drill our own wells,” says Williams. “The greatest value of this oil is at the wellhead and, sure, working


TRIBAL-BASED EXPLORATIONMissouri River Resources looks to become the first tribal-owned and operated Bakken E&P companyBy Emily Aasand


value is nice, but it’s nice to get 100 percent of the profits too.”

The other issue Missouri River Resources has faced is acquiring enough capital, but they do have the tribe’s support behind them.

“We had to overcome a huge credibility hurdle and prove that we could do this first and foremost, so we went to our investors and with the tribe, and they had faith in us to help us move forward,” says Williams.

All of Western North Dakota ––includ-ing Missouri River Resources–– has faced a battle with having enough infrastructure to keep up with the increased traffic that comes with oil production.

“We’re working on a truck route around New Town,” says Williams. “There’s been a lot of good work as far as roads, but we’re battling housing and traffic, so it’s a process, but it takes leadership from our side to initiate stuff. Our leadership is doing a good job and we just have to keep it up.”

FlaringThe North Dakota Department of Min-

eral Resources recently issued restrictions re-garding flaring and the tribe has to have a gas and oil take-away plan before they can start drilling.

“We’re working on creating more pipe-line on the reservation with a group called Paradigm Midstream Partners,” says Williams. “We’re focused on pipeline and eventually get-ting that oil to a refinery.”

Impacting the futureHaving worked on wells for 15 years, Wil-

liams decided to start teaching classes on oil and gas at the Fort Berthold Community Col-lege to help educate people about the oil and gas industry.

“For the last three years, I’ve been teach-ing there and we’ve incorporated a workforce development program within our company,” says Williams. “We want to be an overall com-


WELCOME RETURN: Dave Williams came to the Fort Berthold Indian Reservation with an education and industry experience in the petroleum business.

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pany for our people and we’re looking to get that program off the ground.”

There has been an increased interest in the oil field, and Mis-souri River Resources wants to properly train those interested.

“We’re taking the TrainND program the state colleges have cre-ated and tweaking it to be the TrainIndian program,” says Williams. “There’s a lot of interest and people really want to know what’s go-ing on. The next step, the huge step, people have to take is getting out there. I think we have a responsibility to our own people to train them. We want to make sure that we start this workforce training development from square one and we want to include, not just our tribe, but all of the reservations.”

Williams and his team wants to create a place where people can come and have the ability to make a great living for themselves and their families.

“We want all of the tribal members to come and have a place to stay and to make a good living so they can go back to their families and take care of them,” says Williams. “I’ve been in the business for 20 years and it’s a great, honest living, but it is hard work.”

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


Fort Berthold Indian Reservation Production Numbers

May-14

Apr-14

Mar-14

Feb-14

Jan-14

Dec-13

Nov-13

Oct-13

Sep-13

Aug-13

Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Jun-12

300,874

300,770

300,770

271,121

289,041

294,269

295,587

309,707

289,330

299,705

291,726

256,726

155,332

148,259

150,959

127,183

129,460

140,869

135,380

136,096

122,369

119,644

113,200

109,500

22

20

24

24

27

23

22

20

24

23

22

22

21

25

26

27

28

28

28

25

26

27

29

30

1,220

1,174

1,174

1,163

1,139

1,129

1,099

1,076

1,055

1,035

1,004

979

935

916

875

857

830

805

793

772

741

706

691

680

Oil Production (bopd) Driling Rigs Active Wells

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The skies over the Bakken are busy. Newly created direct flights link the play’s hub cities to industry mainstays such as Houston and Denver, private jets shuttle oilfield per-sonnel in and out of the region, and even local commercial and private flight services are thriving. Yet, the growing need for air-based services could be at the beginning of a new era. In 2013, enough gathering lines were laid to stretch from Seattle to Orlando, according to the North Dakota Depart-ment of Mineral Resources––and, for the foreseeable fu-ture, roughly 2,000 miles of gathering lines will be laid every year. New rules requiring geographical information pertain-ing to all lines has made pipeline gathering infrastructure the most likely growth sector for the Bakken’s air industry. Although it may appear as a futuristic notion today, the use of unmanned aerial systems (UAS) in the Bakken could be the next type of air service adopted in the play.

The view from above reveals the role of private jet services and Unmanned Aerial SystemsBy The Bakken Magazine Staff

THE BAKKEN'S

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OPPORTUNITIES ABOVEFor energy fi rms under the clock, fl ight services can cut travel time for executives, geologists and oilfi led crews.

To accomplish more on land, some Bakken fi rms are taking to the air. Flight services are in high demand currently, experiencing an increase in sales, rentals and chartering services created for companies doing business in the Williston Basin.

Company executives, geolo-gists and work crews in need of quick and effective access to the Bakken are relying on service jet companies such as Solaeris Avia-tion and Tempus Aircraft.

Solaeris began chartering fl ights to the Bakken in 2006. The Houston-based company originated as a small provider for an energy company and has since continued and grown with the energy market.

“We’ve only fl own energy companies,” says Richard Zis-kind, vice president of Solaeris Aviation. “We know their needs, we know their concerns, we know they’re very focused on safety and we know that they

need fl exibility and to be able to save time.”

Companies are taking advan-tage of jet services up the Bakken to fl y executives for meetings, to fl y geologists to their well sites and to deliver workers in to ser-vice wells. In the energy business, the biggest component is time, ac-cording to Solaeris. The company has designed its services to ac-commodate time management is-sues by offering fl ights to western North Dakota at any time of day.

“A lot of the companies like our fl exibility, to be able to put their executives on a fl ight, or their geologists on, and some-times they even need us to help switch teams out between differ-ent oil plays,” says Ziskind.

Tempus, another fl ight ser-vices fi rm, is experiencing similar demands from clients working in the Bakken.

“We do trips of engineers and geologists. We also swap out crews—which is probably more

By Emily Aasand



of the contract stuff that we do,” said Phil Jordan, managing director of Tempus Aircraft Sales and Ser-vice. “You’ll have a crew that’s up in the Bakken that doesn’t live there. We’ll bring those six guys home and we’ll take six guys back up.”

Unique Service OptionsSolaeris and Tempus both pro-

vide airplanes to companies under charter. Solaeris provides fractional ownership. Under the system, based on a company’s needs, a client can invest in a fraction of an airplane in-stead of buying the whole airplane. According to Ziskind, they also sell jet cards for companies that can’t af-ford to buy an airplane or do frac-tional ownership, in which they are able to buy a block of hours to use the aircraft.

“Fractional ownership is almost like a timeshare,” says Ziskind. “We

CIRRUS HELPS INVESTORS Cirrus Aircraft entered the airplane industry, in the early 1980s, as a kit manufac-

turer, and it has kept its business strategy in that area. While the company does not provide charter services to customers, it builds airplanes that oil companies and others can lease for their personal use. According to the company, a Cirrus SR22 can transport four adults to over 90 airports in North Dakota at 180 miles per hour.

“We save them time, stress and money and greatly increase their productivity and time on station,” said Todd Simmonds, executive vice president and chief customer offi cer of Cirrus. “Cirrus Aircraft can service a business with a new or preowned air-craft, with full or part-time pilots and also direct them to charter services on a four seat SR22.”

According to the company, chartered services are available with a Cirrus aircraft out of Minneapolis, Minnesota, and will soon be out of Tioga, N.D., with Twin Cities Aviation.

The fi rst aircraft sold directly tied to the Bakken area was for the transportation of a geologist and her company.

“One Cirrus owner is a geologist who needs to travel frequently to talk to inves-tors who want her analysis of well potential,” said Simmonds. “Having the Cirrus with a corporate pilot allows her more time in front of the customers and with family instead of behind semi-trucks.”

//////////////////////////////////////////////////////////////////////////////

//////////////////////////////////////////////////////////////////////////////

THEBAKKEN.COM 51

guarantee them the use of a cer-tain tail number whenever they need it based on the ownership they have of that airplane and they also get the advantage of the tax write-off of the airplane along with all of the other advantages of airplane ownership.”

With fractional ownership, companies can buy a quarter of an airplane or half of an airplane, and if they wish, they can even-tually move up into owning their own airplane.

“What we usually see happen is one company will take it and another service provider splits it with them,” says Ziskind. “That's what we’re fi nding with the Bak-ken. A lot of the folks work hand-in-hand together so word about our services gets out.”

According to Jordan, when it

comes to chartering fl ights, Tem-pus has a pretty standard service.

“We’re with the 24 hours, 7 days a week operation and we have crews standing by all the time,” said Jordan. “When we talk to an oil company or an oil ser-vices company, we try to look at their entire operation and deter-mine what kind of airplane would be best that would suit 75 percent of their missions and recommend charter, fractional, any of those things that would complement what they need to do.”

For Jordan and his team, en-ergy fi rms or others from the Bak-ken have a general set of questions that all start with how one should get into commercial aviation use. The team goes beyond helping them determine the best airplane. “We help them make those deci-

sions based not only what the airplane costs,” he says. The team also looks at passenger type and potential changes to the airplane that could make the fl ight experi-ence better, “for their people who are on the road all the time.”

Designated CrewsUnlike Tempus, Solaeris is a

one of the smaller-sized jet com-panies that charters to the Bakken. Running a smaller company cre-ates the ability to focus on detail such as assigning specifi c crews to fl y energy executives.


‘Th e energy business is very, very competitive, and everything has to be kept confi dential so we try to maintain a high level of security and confi dentiality with all the energy companies. If customers go with a larger jet service provider, other people [competitors] notice them more.’Richard Ziskind, vice president of Solaeris Aviation

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“Our pilots know the cus-tomers, and vice versa,” says Zis-kind. “Our pilots take note of customer’s preferences too. If they know they’re carrying a cer-tain individual and they know he likes to have a bag of chips on the seatback, they’ll put them there for him. We keep profi les of all of our customers—we’re aware of where they like to sit and what their food preferences are and we give that information to our pi-lots.”

Paying attention to detail in the jet services industry is cru-cial, with that knowledge, Solaeris also provides a help desk that’s available 24 hours, seven days a week—a service that is provided free of charge.

If a company asks Tempus about purchasing an airplane, the company can help manage and coordinate its entire transporta-tion. Tempus can also designate a specifi c crew to that client. For on-demand charters, companies fl y with the crews that are on call.

Although each jet company offers a different service, they all have a common mission: offering the best customer service.

“We want to exceed their expectations,” says Ziskind. “We want to give them such good service that they won’t envision themselves doing business with anyone else.”

A Booming BusinessSolaeris is witnessing fi rst-

hand how the competitive energy market is impacting the aviation business.

“As a company, we try to look at what the other compa-nies do not provide and then we work to provide those services,” says Ziskind. “A lot of times, our biggest hurdle has been acquir-ing aircraft fast enough to ser-vice these companies. It’s good in business to have more custom-ers than product, but we need to catch up and grow a little bit more as a company.”

Tempus has also found itself


DOWN TO DETAIL: Private flight providers track which amenities frequent fliers enjoy and which seats they prefer as a way to keep customers returning.PHOTO: SOLAERIS

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in higher demand within the past couple years.

“We’ve defi nitely seen an increase in the demand for trips into that area,” said Jordan. “The airports and the infrastructure in the area has really grown to try to help accommodate the growth.”

For Solaeris, growing its fl eet to meet the needs of customers and having a larger presence with an offi ce is in the future.

“A lot of companies in the Bakken area are coming to us to contract us to be their fl ight department,” says Ziskind. “We professionally manage their fl ight department from pilot training to dispatching the airplanes for them to handing all the FAA re-cords and safety audits.”

“Most of the airplanes we use aren’t 100 percent owned by us, there are only a couple that are,” says Jordan. “Most of them are people who have bought air-planes and have access capacity on it. It’s kind of like a vacation home, you lend out extra time

when you’re not there. People do the exact same thing with air-planes. They’ll buy an airplane thinking they’ll need it 200 hours a year but an airplane, realistically, can fl y 400 to 500 hours a year, so we’ll charter it when they’re not using it to people like oil compa-nies and transportation compa-nies.”

“Our customers really like not having branded planes be-cause it’s private, you don’t know who’s coming in,” says Ziskind. “The energy business is very, very competitive, and everything has to be kept confi dential so we try to maintain a high level of secu-rity and confi dentiality with all the energy companies. If customers go with a larger jet service pro-vider, other people [competitors] notice them more.”

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



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THE FUTURE OF PIPELINE MONITORING Unmanned aerial systems could become a Bakken standard

An early spring blizzard—proceeded by freezing rain that brought down trees and power poles—blasts through central and western North Dakota. The ice-covered roads drift shut and the wind chill falls below zero.

Somewhere on the barren prairie stands what resembles a large mail box on top of a high pole. As ground blizzard condi-tions begin to lessen, a door on the box pops open.

A multi-rotored, un-manned aerial vehicle (UAV) responds to orders given from hundreds of miles away. It launches and begins following a preprogrammed fl ight plan along the right-of-way of a pipeline carrying Bakken crude to the East.

A GPS transmitter feeding constant coordinates prevents the UAV from being blown off course. As it fl ies, onboard sen-

sors sniff the air for any telltale sign of leaking hydrocarbons.

A video camera streams images back to a computer which analyzes the data for any changes along the right of way. Other sensors check for tem-perature variations and vegeta-tion anomalies.

A large tree that fell during the storm catches the comput-er’s attention. It orders the UAV back to the precise GPS coor-

dinates to take high-resolution photos and additional video of the scene from different heights and angles.

In Denver, a pipeline company engineer answers his smartphone and receives GPS coordinates of a potential problem. He’s soon looking at the photos, video and data col-lected by the sensors. Nothing indicates damage to the pipe-line, but he sends instructions

By Patrick C. Miller


to have the problem investigated more close-ly as soon as the weather permits.

At the end of its 50-mile journey, the UAV guides itself to an empty hanger atop a pole. It lands, the door closes and the aircraft begins recharging its battery for tomorrow’s regularly scheduled inspection fl ight in the opposite direction.

If Zach Lamppa is correct, what might seem like a futuristic scenario isn’t far away from becoming standard operating proce-dure for the inspection of pipelines, trans-mission lines and other energy related infra-structure. Last spring, he received a $125,000 grant from the North Dakota Oil and Gas Research Council to study the feasibility of using unmanned aerial systems (UAS) for pipeline inspections.

“We are going to be collecting data for the protection of people and the environ-ment, and to help our clients avoid poten-tial catastrophes,” he says. “We’re detecting changes in vegetation and temperature to prevent leaks, not just to monitor the leaks that have already happened.”


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Lamppa, owner of WCE Oilfi eld Services, has been in the pipeline industry since 2008. His company has more than 275 employees and offi ces in Fargo, Dickinson and Stanley. It lays pipeline, performs maintenance and site construction in North Dakota, Montana, Wyoming and Texas.

“This isn’t conceptual any-more,” Lamppa says of the UAS project he’s spearheading. “We actually have the technology to do the pipeline monitoring. We can bring something to a pipe-line client or an energy customer who can use the proprietary in-formation we collect for their benefi t.”

It has taken three and a half years to raise funds, assemble a team of partners and get to the point where Lamppa’s ideas can be fi eld tested. The project

received a boost last December when the Federal Aviation Ad-ministration (FAA) designated northeastern North Dakota as the Northern Plains UAS Test Site, making it one of six areas in the country where UAVs can be fl own to research commercial applications.

“We have 18,000 miles of pipeline in the state of North Dakota,” Lamppa notes. “We’re in a perfect time, place and re-gion for this to be happening.”

Early on, Lamppa took his idea for the project to the Uni-versity of North Dakota School of Aerospace Sciences, which has a UAS technology program.

“I came to UND expect-ing to meet with one or two people,” Lamppa recalls. “When I showed up, there was a board-room full of people. I fi gured that if I’m going to take this to

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another level, having a boardroom full of people is a good start.”

He’s also working with North Dakota State University which is researching UAS technology for precision agriculture and operates a UAV test site near Carrington.

In the private sector, Lamppa teamed up with Jerry Johnson, CEO of Farm Intelligence in Mankato, Minnesota. His company not only has experience develop-ing software for precision agriculture appli-cations, but also manufactures UAVs and sensors.

“We’re interested in North Dakota be-cause two of the bigger industries are oil and agriculture, and these small UAVs are going to have an impact on both,” Johnson says.

Lamppa and Johnson formed Energy Intelligence specifi cally to look at the ap-plication of UAS technology in the energy industry.

“We’ve got software that allows us to take imagery, automatically analyze it and send alerts out,” Johnson says. “Somebody doesn’t have to sit down and look at every picture. The software can actually do the analysis for us.”

Sensors—the devices that enable a UAV to see or detect a potential problem—are another area in which Johnson provides expertise.

“A lot of people don’t realize in the UAV world that the sensors are the key item,” he explains. “With pipeline inspec-tions, we’re looking for things that cause problems, such as vegetation, farming that’s too close to the right of way and construction, traffi c or heavy rain that ex-poses the pipeline. There are a whole se-ries of manmade objects or acts of God or vandalism that we can detect with our sensors.”

Will Semke, associate professor in the UND School of Engineering, has been working with Lamppa from the project’s beginning and believes that pipeline moni-toring is a natural fi t for UAS technology.

“Pipelines have a right-of-way asso-ciated with them,” he explains. “Nothing

EQUIPPED WITH EXPERIENCE: Lamppa has already gained an understanding of the Bakken through his work with his own energy services company. PHOTO: ENERGY INTELLIGENCE

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can be in those locations. Just like precision agriculture, it’s an application that puts you in a safer operating environment.”

Since coming to UND in 2000, Semke has been involved with developing sensor packages for aerospace applications. In recent years, he’s used his mechanical en-gineering background to focus UAS tech-nology.

“On any aerospace application, size, weight and power are always your big en-emies,” he explains. “You don’t have enough of any of it. We’re always looking for inno-vative materials, reduced power consump-tion and making the payloads as small and compact as we can.”

UND’s electrical engineering depart-ment also assists with the development of circuits, power systems and data communi-cations links for UAVs.

Although Lamppa is optimistic that fl ight tests might be conducted as early as this fall, there are other pieces of the puzzle that need to come together. One challenge is obtaining a certifi cate of authorization (COA) from the FAA to conduct test fl ights.

“The biggest hurdle to actually go-ing out and initiating this work is the reg-ulatory issue about where you can fl y and under what conditions,” Semke explains. “Only a public entity like UND can get a COA from the FAA that allows us to oper-ate. The UND aerospace school is working with the FAA to establish the appropriate guidelines.”

In addition, Lamppa says, “We’re look-ing for an energy company that would like to step up and work directly with us on the R&D to fi nd the exact airframe, sensors and software to perform these duties. That’s go-ing to be crucial to the development.”

It could be a pipeline company, an oil or gas producer or a U.S. Department of Transportation-regulated transfer company.

“We’d be fl ying their assets and their right-of-way,” Lamppa says. “We defi nitely need their input on what they would like to see from us.”

Fortunately, Lamppa says the energy industry is beginning to understand the


potential of UAS technology and is asking more sophisticated questions about it.

“They want to know what other appli-cations they can do with UAS fl ights,” he notes. “Can we do depth of cover? Can we do GIS data and a general DOT inspection with one fl ight? The answer is yes. Those are the types of things we need to get across to potential energy clients during the proof of concept when we’re testing during the next year or two.”

Semke believes that by getting into UAS technology now and working with a university on the research and development level, Lamppa has a signifi cant advantage.

“The FAA regulations are going to come,” he stresses. “The companies get-ting involved now and doing technology

development will be the ones ahead of the game when the time comes to cash in on the commercialization component.”

Beyond that, Lamppa wants energy companies to ask: What is it worth to pre-vent a catastrophic spill?

“We want to improve asset monitor-ing. We want to increase pipeline safety. We want to become a key partner in identify-ing these risks,” he says. “If we can get one step ahead of some of the issues with older transmission or distribution lines, I think it will revolutionize the way pipelines are in-spected.”

Author: Patrick C. MillerStaff Writer, The Bakken [email protected]

THEBAKKEN.COM 61

LW SURVEY PLANS FOR UAS USE IN BAKKENCanadian experience will translate south of the border

As with many businesses, LW Survey Co. has a website listing the services it provides potential customers in the oil and gas industry.

However, there’s one signifi cant difference between its U.S. site and its Canadian counterpart: north of the border, LWS in-cludes unmanned aerial system (UAS) among its services.

“The Canadian group is actually fl ying UAS up there,” says Eric Harnisch, vice president of corporate development for Pulsar International Boundary Inc. based in Duluth, Min-nesota. Pulsar is the holding company for LWS and Spartan Engineering.

LWS, a 300-person, full-service surveying company, has an offi ce in Minot to serve the Bakken. It specializes in oil and gas pipeline planning and route assessment. Spartan Engineering, Pulsar’s other branded entity, is its engineering arm.

In the U.S., the Federal Aviation Administration (FAA) won’t be approving regulations for the commercial use of UAS until next year at the earliest. The agency has also been re-luctant to grant certifi cates of authorization (COA) for test fl ights. The Canadian government, however, has adopted a different approach.

“It is legal and a fairly straightforward process to get permission to fl y,” Harnisch says. “You fi ll out the paper-work, and typically within a week and a half, we’re allowed to do it on behalf of a client.”

LWS currently operates the Trimble UX5 and the Trim-ble X100 unmanned aerial vehicles (UAV) on its Canadian oil and gas projects. Data collected from the fl ights is used for site assessment, 4-D construction monitoring, topo-graphical surveying and volume calculations.


PROVEN LAUNCH: UAVs are already launched and used in the Canadian oil and gas industry.PHOTO: LW SURVEY




The UAVs can carry a modifi ed camera capable of acquiring near-infrared imagery. It’s combined with standard imagery and used for environmental assessment, spill de-lineation and vegetation health assessment.

According to LWS, UAS greatly reduces costs because it captures topographic data in a matter of hours compared to a matter of days for a survey crew. This not only decreases sur-vey time, but also improves safety by eliminat-ing the need for surveyors to operate in haz-ardous areas.

“Typically, our projects in Canada are in very remote areas where our clients want to look at the routing of a pipeline for a hundred miles,” Harnisch says. “It can get fairly expen-sive and diffi cult to get people out there.”

Using UAS to survey, LWS customers can fi nd the best route for their pipelines by exam-ining the topography and minimizing elevation

along the route. Harnisch sees many different possibilities for the future use of UAS in the Bakken.

“What I see happening in North Dakota is that when a pipeline goes across some-body’s land, there’s a lot of discussion about what it looked like before and what it looked like after,” he says.

“Did the contractors put it back to what was promised? Did they seed it properly? UAS serves to document the construction and the reclamation of the property,” he explains. “We’re seeing a lot of interest for that in the construction side of the oil and gas.”

Harnisch also believes that UAS will be-come part of quality control in well pad con-struction. For example, “When you get done building, somebody has to go out there and make sure that the berms were built cor-rectly.”

As for LWS, Harnisch says, “We will plan to use UASs commercially in the United States--specifi cally the Bakken with direct support from our Minot offi ce—when the FAA approves and provides guidelines for their commercial use.”

Harnisch believes UAS technology will evolve in stages over the next 10 years. In the next three years, he expects the FAA to approve the use of small, lightweight UAVs, which have limited capabilities and must be operated within line of sight.

“What will probably happen within three to fi ve years is that manufacturers will convince the FAA that they have good sense-and-avoid systems, which means that they can actually see oncoming interference and make adjustments for it,” he says.

“In the fi ve- to 10-year year range, you’ll start seeing gas-powered UAVs that can fl y for eight hours to cover a signifi cant pipeline in North Dakota,” Harnisch predicts.

Unresolved regulatory issues continue to create uncertainty about when and how UAS can be used for commercial purposes in the national airspace. Some question why the FAA can’t follow Canada’s example and make an exception for the oil and gas indus-

‘In the fi ve- to 10-year year range, you’ll start seeinggas-powered UAVs that can fl y for eight hours to cover a signifi cant pipeline in North Dakota.’Eric Harnisch, vice president of corporate development for Pulsar International Boundary Inc.

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AERIAL COMPILATION: UAVs used to capture aerial images is one of the most common requests by clients. PHOTO: LW SURVEY

try to operate UAVs in remote, low-popu-lation areas.

“There is a frustration with trying to get the necessary approvals,” Harnisch notes. “I’ve heard comments from a lot of folks who feel that the UAS industry is want-ing to move much faster than the FAA.”

But Harnisch also says there’s a grow-ing realization of the diffi culty in developing regulations that safely incorporate the new technology into the airspace on a national level.

“There’s a little more empathy that the FAA has only so much staff to process this at the same time they’re trying to take care of the entire airspace,” he adds.

So when can the U.S. oil and gas in-dustry expect to use UAS technology to its advantage?

“It’s not a question of the technology being there,” Harnisch says. “It’s actually a matter of when it will get approved.”

Author: Patrick C. MillerStaff Writer, The Bakken [email protected]

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Understanding the State of Shale


Chris Robart’s link to the North American shale oil and gas industries didn’t begin in the Bakken, the Eagle Ford or the Marcellus. It started in Poland. In 2010, Robart and the small team at PacWest Consulting Partners were con-tracted by a private equity firm interest-ed in understanding the shale market in Poland. According to Robart, the client didn’t know enough about the oil pro-duction segment of the play to consider exploration and production. “They were interested in looking at opportunities in the services industry,” he says. “We high-

lighted some of the industries they could get into.”

The team’s work in Poland led to a company-wide epiphany: service com-pany data for the shale industry was inad-equate. “We were shocked about the lack of good data on the hydraulic fracturing market,” he says.

That was 2010, when the Houston-based firm had roughly 10 employees. Today, the firm has tripled in size and is now considered one of the leading shale play data providers. The company provides quarterly updates on the fol-lowing industry service segments: pres-

sure pumping, frack activity, well activity, proppants, chemicals, suppliers and sev-eral shale plays. To create its reports, the company collects a significant amount of state and federal data along with compa-ny specific insight from the companies in the industry. “We spend a lot of time and money on tools that help us understand that data,” he says. The reports are used from business types ranging from private equity firms to small-time service provid-ers.

Of all the reports issued by the team, Robart believes its WellIQ data highlights the most accurate state of North Amer-

A Houston consulting team had developed a method to track shale activity in the U.S. By Luke Geiver

Well Spuds, Wells Fracked, Frack Stages Comments

SOURCES: PACWEST ANALYSIS; STATE REGULATORY AGENCIES; RIGDATA; GEOSCOUT

30.4

35.5 36.3 35.8 38.3 40.7

200

300

400

500

600

700

800

0

5

10

15

20

25

30

35

40

45

2011 2012 2013 2014 2015 2016

Frac

Sta

ges

(‘000

s)

Wel

ls (‘

000s

)

HZ Wells Fracked VT/DR Wells FrackedSpuds Frack Stages

35.35.5.5.8838.3 40.7Forecast

North America Will Experience Robust D&C Growth Through 2016;HZ Wells Will Drive Activity Executive Summary: North America

Despite only moderate growth in total well spuds and wells fracked, HZ D&C activity growth is expected to be strong, driving well service intensity higher

-HZ wells will increase from 48% of wells fracked in 2011 to 66% in 2014 to 73% in 2016

The number of frack stages in North America will continue to grow, driven by:

-More HZ wells-Increased lateral lengths, driving more stages/well-Decreasing stage widths, driving more stages/well

Metric Values (‘000s) Percent Change (%)

2012 2013 2014 2015 2016 2013Δ 2014Δ 2015Δ 2016Δ Well Spuds 49.2 48.3 51.5 53.3 56.1 -2% +6% +4% +5% Wells Fracked 35.5 36.3 35.8 38.4 40.8 +2% -1% +7% +6% HZ Wells Fracked 18.9 21.7 23.7 27.0 30.0 +15% +9% +14% +11% Frack Stages 395.2 473.1 541.9 634.7 726.3 +20% +15% +17% +14% HZ Frack Stages 325.5 412.7 492.7 587.8 680.7 +27% +19% +19% +16%

THEBAKKEN.COM 67

Frack Cost Breakdown Comments To ensure valid comparisons, we assume in everyplay, the typical wells analyzed include 300,000 lbsof sand/stage

Fuel represents 20% of Marcellus well costs, where the slickwater fracks require greater pumping horsepower

Proppant comprises a larger portion of Permian and Bakken frac costs where other costs per stage are, lower These figures should be viewed as illustrative, as actual costs can vary significantly

12%

13%

14%

12%

8%

14%

15%

12%

33%

25%

23%

31%

17%

13%

12%

16%

18%

17%

16%

14%

12%

18%

20%

15%

0% 20% 40% 60% 80% 100%

Bakken

Eagle Ford

Marcellus

Permian

Labor Equipment Proppant SourcingProppant Logistics Chemicals Fuel

Frack Cost Breakdowns for a “Typical” Well

SOURCE: PACWEST ANALYSIS, PACWEST FRACDB / FRACFOCUS.ORG

Play Frack Type Stages Bakken XL/SW 30

Eagle Ford XL/SW 24 Marcellus SW 18 Permian XL/SW 30

Notes: Labor and equipment are typically billed as one collective day rate


2013 14H1

SOURCE: PACWEST ANALYSIS, RIG DATA

Notes: Analysis includes the entire population of horizontal wells from each time period. Drilling days was calculated based upon the reported well spud and reported rig release dates. Haynesville and Eagle Ford figures include Brown Dense and Woodbine, respectively, using a weighted average based on wells drilled.

0 5 10 15 20 25 30 35 40 45

US Land

Utica

Uinta

Permian

Mississippian

MidCon Sands

Marcellus

Haynesville

Green River

Fayetteville

Eagle Ford

DJ Basin

California

Barnett

Bakken

A. Woodford/SCOOP

% Change -14%

-25%

-13%

-24%

-7%

-24%

-26%

-52%

-16%

-14%

-10%

-4%

-24%

+6%

-22%

-23%

U.S. Land Average Drilling Days Per Horizontal Well


ica’s shale plays. The report includes rig counts, well spuds, wells fracked, frack stag-es, drilling days per well and multi-well pad adoption by play. The current report shows that both the drilling and completion mar-kets will experience robust activity through 2016. Wells drilled this year will rise by 6 percent more than the previous year, and, horizontally fractured wells will increase by 9 percent. Frack stages per well will also show

a 20 percent increase this year more than the previous year.

The number of horizontally fracked wells and horizontal frack stages per well is a crucial indicator for the activity level of a given shale play, Robart believes. “Looking at rig count in real-time allows you to get a snapshot of what the market is doing but it doesn’t really give you a lot of actual guid-ance of where the market is heading,” he


PARTNER: Chris Robart

PARTNER: Alex Robart

FOUNDER: Nilesh Daval

THEBAKKEN.COM 69


says. The Bakken’s fluctuating rig count offers a perfect example of his point. Although the rig count has not been near the all-time high of 223 for several months, activity in the play is as strong as ever, he says. “There is still an incredible amount of activity going on despite what rig count shows.”

To truly understand a play’s activity level, Robart has learned to look at frack stages. “More stages equals more demand for hydraulic services and more pumping time needed per well.” Although several U.S. shale plays are experiencing growth, Robart believes the companies that can find success in the supply chain will fully capitalize on any investment in those plays.

“The next several years are forecast to be strong for most all oilfield servic-es and equipment players, however, the challenge will be within the supply chain. The winners will be the companies that can manage the logistics and risks around having the right personnel, services, ma-terials and equipment at the right place, when it is needed on-site by their explo-ration and production customers.”

As the shale industry continues to grow, Robart will have a familiar team to expand with at his Houston office. Alex Robart, brother to Chris, and Nilesh Daval, managing partner (and PacWest founder) are on the team. For 2014, the team predicts that four main shale plays will account for 77 percent of all hori-zontal frack stage growth: the Bakken, D.J. Basin, Eagle Ford and Permian. For the full year, the Bakken will experience an increase of nearly 10,000 horizontal frack stages compared to the previous year. “The operators have hit their stride and are focused on efficiency,” Robart says of the play.

The Permian Basin is growing in-credibly fast, he adds. “It is a unique place. There is an exceptional diver-sity of operators and service providers there.”

PacWest will continue its focus on North America, but it has also added offices in China. Prior to the team’s commitment to the shale energy industries of the U.S., Robart says the company was in the general strategy consultant business. Now, the com-pany has learned that is can grow with the shale industry by providing detailed reports that dig deep into the market. For Robart and Daval, that should bode well for the fu-

ture. “One of the main mantras we’ve had since forming,” Robart says, “is that we are only as good as we are deep.”

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

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UND’s Collaborative Energy Complex Receives $5 Million from Hess

INNOVATORS

Hess Corp. announced a $5 million gift to the University of North Dakota’s College of En-gineering & Mines. With an addi-tional $2.5 million match from the North Dakota Higher Education Challenge Fund, the total impact of the Hess gift will equal $7.5 million to help fund UND’s Collaborative Energy Complex.

“This grant will help grow an already strong and innovative program that will continue to train the workforce to meet the demands of the growing diverse ener-gy sector in this state,” said Steve McNally, general manager of Hess Corp. in North Dakota. “We think that education is the backbone of North Dakota’s future and we all win when that backbone is strength-ened by collaboration of the public and private sector.”

By Emily Aasand

THEBAKKEN.COM 71

The $5 million gift will be used to advance UND’s Pe-troleum Engineering program and to create several important features in the new building in-cluding a Hess Innovation Lab, Hess 3-D Visualization and Reservoir Simulation Lab, Hess Drilling Simulation Lab, and a history of oil and gas atrium display.

“More than just the build-ings to house programs, the Collaborative Energy Complex is about people, about col-laboration, about innovation, about building bridges between industries,” said Hesham El-Rewini, dean of the UND Col-lege of Engineering & Mines. “Thanks to the generosity of our partners, we will be able to better educate and produce generations of engineers who will contribute to the econom-ic growth and prosperity of North Dakota, the region and the nation.”

In the four years of its exis-tence, UND’s College of Engi-neering and Mines Department of Petroleum Engineering has seen a huge increase in enroll-ment, growing from just four students to more than 200.

Hess has been operating in North Dakota for more than 60 years. The commitment to UND is the company’s latest citizenship effort in the state. In addition, Hess is providing

$25 million through Succeed 2020, a multi-stakeholder initia-tive to improve the transition to higher education and careers for North Dakota students.

“Investing in our students means investing in our future, and it’s one of the best deci-sions one could possibly make,” said El-Rewini.

This gift is among the largest from a corporation to UND. The university currently has pledges and commitments of $11.8 million toward the $15.5 million needed for the new complex.

“The partnership being demonstrated–between the Hess Corporation, the state of North Dakota through Gov. Dalrymple and the Higher Education Challenge Fund, the UND Alumni Association and Foundation, and the UND Col-

lege of Engineering & Mines–is exactly the kind of private-public collaboration which will help us advance the University and achieve our goals related to serving North Dakota,” said UND President Robert Kelley.

Along with donating money to UND, Hess Corp., a leading global independent en-ergy company engaged in the exploration and production of crude oil and natural gas, has also been on the radar for its recently completed expansion of its Tioga Gas Plant, which more than doubles the capacity of the facility.

According to Hess, the fa-cility has significantly increased production of propane, meth-ane, butane and natural gaso-line, and of ethane. The expan-sion reduces the amount of natural gas flared at Hess’s op-

erations, which has been a huge issue in North Dakota.

“Hess has a long history in North Dakota, and it’s great news the company is continu-ing to invest in our state and build on its current facilities,” said U.S. Sen. Heidi Heitkamp. “With natural gas, North Dako-ta has an excellent opportunity to greatly expand its already incredible energy production and move toward fully using our vast natural resources. To make this a reality, we need to make significant infrastructure investments, which is why the Tioga Gas Plant expansion is so important.”

INNOVATORS

BIG MONEY: The donations from Hess Corp. and the state of North Dakota brought $7.5 million to the University of North Dakota in one afternoon. PHOTO: THE UNIVERSITY OF NORTH DAKOTA


10 Questions with Brent Brannan, director of North Dakota Oil and Gas Research Program

Q&A with Brent Brannan Questions By Luke Giver

1. To start, what is the North Dakota oil and gas research program?

North Dakota's OGRP was established by the Legislature in 2003. It's a program designed to demonstrate and promote environmentally sounds exploration and production methods and technologies. It encourages wise and efficient use of energy by developing the state's oil and gas resources in partnership with the private sector through research and educational activi-ties concerning the oil and natural gas exploration and production industry.

The program is funded from the state's share of the oil and gas pro-duction tax and extraction tax revenues with up to $10 million available to the OGRP each biennium.

2. As director, what is your primary role?I'm the liaison between the applicant, the Oil and Gas Research Coun-

cil, and the North Dakota Industrial Commission. I assist the applicant through the proposal process, advising on how they might bring the best possible application to the council. I help screen the applications through a series of minimum requirements such as: does the application propose education, research, development or marketing of oil and gas natural resources? Is the project research related to issues affecting exploration, production, transportation, processing or refining? Does the project have matching funds, industry partners?

3. The OGRP has provided more than $20 million in funding to roughly 60 projects since 2003. How does the grant application and project approval process work?

Once the application is received and the minimum requirements have been met, I identify independent experts to assist in reviewing and rat-ing the application. The technical reviewer assesses the technical and fiscal merits of the application. Upon completion of its review, the technical reviewers (there are usually three) make their recommendation to me, the council, and the commission.

If the scores and recommendations are favorable, within approxi-mately 60 days, the applicant formally presents the application to the Oil

THEBAKKEN.COM 73

Q&A: Brent Brannan

and Gas Research Council. The council then considers the scores, my recommendation, and votes whether to approve. If the majority of the council votes to fund the application, it is forwarded to the N.D. In-dustrial Commission whose members are the governor, the attorney general, and the agriculture commissioner, for their consideration.

4. You recently started a quarterly newsletter detailing some of the work of OGRP. Why?

Part of the program's intent is designed to demonstrate to the general public the importance of the state oil and gas exploration and production industry and the newsletter helps tell the story of the pro-gram. This story has likely been under-told. What has the state done to inform students of career opportunities? How is the Energy Cur-riculum Program being developed enabling students to learn about the industry? What progress has been made to capture natural gas in re-mote areas? How has the industry improved in its drilling and comple-tion techniques, cost efficiencies, infrastructure, and safety? The goal of the newsletter is to shed some light on how the state strives to take a proactive approach to oil and gas development, stimulating innova-tion and partnerships, and making researchers aware of this funding opportunity.

5. OGRP has funded a wide range of projects from fire safety to directional drilling technology. Can you talk about some ongoing projects that the OGRP has funded?

The OGRP is currently involved in a project to understand the ef-fects of oil and gas development on the mule deer population and iden-tifying measures to mitigate these effects. Another study tested various products that could be used to reduce dust in western North Dakota on roads. The program, along with its industry partners, helped establish UND's Geological Petroleum Engineering Program. The Energy and Environmental Research Center was recently awarded a grant toward its Bakken Production Optimization Program. This program is investigat-ing new technologies and approaches to increase potential petroleum reserves in the Bakken - Three Forks while decreasing recovery costs in an environmentally sound manner. The anticipated results will include: less truck traffic, resulting in decreased diesel emissions, road dust, and spills; reduced road maintenance costs, wastewater production, disposal costs, and freshwater use; reduced land use impacts; and increased rev-enue for the state, royalty owners, and operators from added product streams, captured earlier in the well life cycle. It's an exciting time in the program's history and we're looking forward to providing information to the industry and the public on best practices to be used in developing oil and gas in North Dakota.

6. What are the characteristics you and the OGRP team look for in a potential project?

The mission of the OGRP is to promote the growth of the oil and gas industry through research and education. The oil and gas in-dustry presents a number of opportunities and complex challenges. The program recognizes these challenges, and harnesses relationships with the likes of Energy and Environmental Research Center in Grand Forks, North Dakota universities and colleges, exploration companies, service companies, and others. We look for projects that have reputable industry partnerships, and the ability to provide innovative solutions to complex challenges.

7. The Bakken seems to be constantly evolving. How have the projects—both submitted and approved—evolved in the past five years?

The OGRP has become increasingly competitive over the past five years and the quality of applications is improving, becoming more diverse, and specifically addressing key challenges and issues in the de-velopment phase.

8. Take us behind the scenes of the OGRP's work. What can you share about the status of its current group of projects?

Behind the scenes you'll find applications attempting to recycle drill cuttings into fertilizers, or examining additional uses or disposals for waste/byproducts. You'll find waste management and integrated waste screening demonstrations. You'll find a competitive market of natural gas projects testing commercial viability while utilizing the en-tire gas stream to capture natural gas in remote areas, not currently tied into pipelines. You'll find remote pipeline monitoring projects using un-manned aircrafts. The competitive market forces the applicant to im-prove its proposal, and oftentimes, adjust its funding request due to the variety of excellent proposals.

9. How will the next biennium impact OGRP's future success and role in the state's oil and gas industry?

Each biennium there is a constant effort to promote safety intia-tives, education, and technological innovations and efficiencies. The state emphasizes the importance of research by assisting with develop-ing the technology to more effectively produce North Dakota's oil and gas resources by tackling the key challenges facing production growth.

10. Every entity in the Bakken has a story. From your per-spective, what is the story of the OGRP?

The OGRP is led by an educated and engaged council and in-dustrial commission. The public-private partnership integrated through this program helps define the past and future success of the state.


Automating Crude Movement

MAKING IT

Whether it’s pumping Bak-ken crude through a pipeline, sending farm machinery down an assembly line or filling sin-gle-serving food containers, JDP Automation‘s focus is on quality, safety and efficiency.

“We make stuff move,” says Glenn Mitzel, JDPA systems engineer. “What makes us different is the fact that we have the software skills to get data on how well it’s moving. People call us because they know we’ll come up with good solutions.”

JDPA, based in Moorhead, Minne-sota, was formed in 2010 by combining Midstates Engineering Corp. and Invie Consulting Inc., a merger that consolidat-ed more than 30 years of industry knowl-edge under one roof. JDPA is a recog-nized systems integrator in the Rockwell Automation Partner Network Program.

In the Bakken, JDPA is proving its mettle in automated control systems by working in partnership with Enbridge, a major midstream company. The firm has provided Enbridge with controls for both its pipeline and transloading rail operations.

It’s currently developing a control system for Enbridge’s proposed Sandpiper Pipe-line.

Josh Brown, product development engineer, says the pipeline pressure control system JDPA developed for Enbridge is a good example of what the company can do for the oil and gas industry.

“It’s probably the coolest system we’ve created so far,” he notes. “It’s a proactive leak detection system. A lot of pipeline companies put in systems that tell you there’s been a leak.”

In contrast, JDPA’s system is based


FINGERTIP SUCCESS: Josh Brown, JDP Automation project development engineer, checks the rail car unloading system touch screen controls developed for Nu-Tek Food Science in Fargo.

THEBAKKEN.COM 75

MAKING IT

on how the pipeline is mechanically en-gineered and designed to operate. It spots problems before they become bigger problems.

“We program to those standards so it will shut the system down before a fail-ure occurs,” Brown explains. “When we see pressures or flows creeping outside anticipated ranges, we bring the system back down to a safe operating condition. We do that continually. It’s built into the pumping routines.”

It’s like the difference between fire-fighting and fire prevention.

“We’re working with Enbridge to do everything we can to mitigate the po-tential for leaks and spills,” Mitzel says. “Rather than saying, ‘Oops! It broke,’

you can see that it might be breaking and head off the problem by being smart and using the technology in your favor.”

The key is communicating in real time with the programmable logic con-trollers (PLC) JDPA programs to tell the system what to do and when to do it. Remote control of the PLCs not only enables adjustments on the fly, but also provides JDPA’s customers a wealth of information on where changes can be made to improve productivity and effi-ciency.

“If they really want to know why something is happening, we can give them the data they need,” says Jennifer Steiner, JDPA project manager. “Our in-house software team can provide them

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DELICATE WORK: Controls engineer Brett Ehresmann tightens wires into the terminal blocks for the circuit breaker of a PLC panel.


with those reports. We’re also able to cre-ate dashboards for them.”

It’s an approach that gives JDPA’s partners the ability to see what their systems are doing anywhere they have a wireless connection. It also enables JDPA to troubleshoot customers’ problems, no matter when they occur.

Ryan Bacon, project development engineer, remembers getting a call from an equipment manufacturer while driving down the Interstate. He used his smart-phone to view their system and solve the problem within 10 minutes.

“We can get into all systems remote-ly,” he says. “There’s been a large push from companies in the oil fields for this type of access to multiple systems. You get the high-level overview of how the system’s working and can interact with it.”

As Mitzel notes, “Nine times out of ten when we get a service call, we solve it

MAKING IT

CONTROL WORK: Kalvin Hoff, a controls engineer at JDP Automation, develops the human machine interface for the company’s automated control systems.

LUBE OIL SKID: The operating state of the lube oil system controls for an Enbridge pipeline pump, showing the ability to change from summer cooling mode to winter heating mode. The system also monitors total running hours of the pump.

THEBAKKEN.COM 77

from the office. Very rarely do we hop in a car for a service call.”

JDPA started working in North Da-kota’s energy industry in the coal mines where it developed controls to remotely monitor the draglines used to remove overburden above lignite seams. A for-mer mining company electrical engineer who went to work for Enbridge recog-nized the need for the midstream to stan-dardize its systems.

“He told them to call JDP Automa-tion, and that’s how we got in the door,” Brown says.

JDP’s work with Enbridge has it looking to expand into other areas. For example, Mitzel says there’s more man-ufacturing being done in the region to support industry in the Bakken. Those businesses could benefit from controls technology that improve efficiency, pro-ductivity and safety.

In addition, Mitzel believes JDP’s

automated controls can benefit upstream producers.

“We’re trying to get closer to the wellhead. We’re exploring relationships with other partners to do the controls for oil, oil-water separation and the natural gas liquids—the hot topic these days,” he says.

JDPA’s automated remote-control systems also can help producers deal with North Dakota’s harsh climate, too.

“There are companies that have guys who do nothing every day but hop in a truck with a clipboard, drive to well-heads and sites to write down what’s on meters—all day, every day. It doesn’t matter if it’s 110 above or 40 below,” he says. “When they realize what we can do for them, they get very interested.”

MAKING IT

PUMP CONTROL: This screen shows the detailed operating state of an Enbridge pipeline pump. Pressures, temperatures, vibration, current, valve positions, and motor speeds are all monitored.


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September 2014 The Bakken magazine