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100 Maryland Street in Bloomfield505-634-0602 www.airstarinc.com
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Basin Resources magazine is published four times ayear by Majestic Media. Material herein may not bereprinted without expressed written consent of the pub-lisher. Opinions expressed by the contributing writersare not necessarily those of the publisher, editor orBasin Resources magazine. Every effort has been madeto ensure the accuracy of this publication. However thepublisher cannot assume responsibility for errors oromissions. 2016 Basin Resources magazine.
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suMMer 2016
navajo Mine area iV cleared 9court vacates 2013 case to halt operations
real people, real jobs 16fced initiative encourages community
column 11cities facing tough financial choices
column 20low energy prices
column 26program offers internships
column 18greater diversification
family vacations will
be a little cheaper 30retail gas prices expected
to be lowest since 2004
content
6
educaTional
parTnership
23
The Trickle-down effecT
four corners oil and gas conferencecelebrating 95 years of oil and gas
14
BASIN RESOURCES6
www.basinresourcesusa.com SUMMER 2016
DOROTHY NOBIS
Basin Resources
When Norman Norvelle chaired the first
Four Corners Oil and Gas Conference in
1994, the oil and gas industry was bustling
with activity. Fruitland Coal was in a drilling
frenzy, providing jobs in the San Juan Basin
and much needed revenues to county and
state coffers.
With industry experts saying many of the
oil and gas companies who have brought
jobs and revenue to the Four Corners are
being forced to do layoffs and cut budgets,
the 2016 Four Corners Oil and Gas Confer-
ence is feeling the pinch as well.
Scheduled for May 11-12 at McGee Park,
the conference celebrates the 95th anniver-
sary of the discovery of oil in the San Juan
Basin, and will continue to provide speakers
who are leaders in the industry, a trade show
that will offer much of what is new in tech-
nology and equipment, and the opportunity
to network with industry partners.
Jan Tomko, the conference coordinator,
said people are coming from as far away as
Pennsylvania and Canada, but most of the at-
tendees are from the Four Corners and Cali-
fornia.
They either are working in the (San Juan)
Basin or trying to work in the Basin, Tomko
said. And many of them are interested in
getting established here.
With the downturn in the oil and gas in-
dustry, Tomko said sponsors that the confer-
ence which is held every other year has
enjoyed in the past arent coming in for this
conference. The sponsors help pay for con-
ference expenses and whatever proceeds re-
main are split by the six conference partners,
Tomko explained.
Most of the partners use their proceeds
for scholarships for students.
The six partners include the Four Corners
Chapter of the American Petroleum Institute
(API), the Four Corners Section of the Soci-
ety of Petroleum Engineers (SPE), the Sandia
Mountain Section of the National Associa-
tion of Corrosion Engineers (NACE), the
Four Corners Chapter of the American Soci-
ety of Safety Engineers (ASSE), the Desk and
Derrick Club of Farmington, and the Farm-
ington Chamber of Commerce.
The conference executive committee in-
cludes two representatives from each of the
six sponsoring organizations, as well as for-
mer chairs of the conference.
This years committee members include
conference chair Melissa Spencer of Cono-
coPhillips, Olivia Bommarito of BP, Eddie
Chavez of Dugan Production, Linda Dean
who is retired from ConocoPhillips, Ruth
Duval who is retired from BP, Rod Gladden
of San Juan College, Jim Holgate of Reliance
Medical Group, David Martinez of Flogistix,
Rocky Martin of Corrpro Companies, Karen
Ortega of M&R Trucking, Jan Tomko and
Audra Winters of the Farmington Chamber
of Commerce, Gavin Tweedie of BP Amer-
ica, Chris Watts of Williams, and Jo Webber
of Nelson Consulting.
Melissa Spencer, this years conference
chair, said that while the downturn in the in-
dustry has affected the number of vendors in
the trade show and the number of people at-
tending, the conference is still important.
The conference (trade show) is sold out at
this time and we have a waiting list, Spencer
said. The oil and gas conference will still
offer great speakers, who will speak on nu-
merous subjects pertaining to the industry.
Companies and employees of the oil and gas
industry still have the ability to network.
Karen Ortega is a former chairman of the
conference and remains active and involved
with this years event.
This year is definitely different than it has
been in years past, Ortega said. This is the
first time in many years that we havent
needed all of the facilities at McGee Park.
That is a sign of the times.
However, its still shaping up to be a
great conference, Ortega added. The Con-
vention Center is sold out with booth ven-
dors and all of the outdoor spaces are filled.
The program committee has some great
speakers lined up, so even though there will
be fewer exhibitors, there will be plenty to
see and great speakers to hear.
And, of course, Ortega added with a
Four Corners oil and Gas ConFerenCe
Celebrating 95 years of oil and gas in the San Juan Basin
BASIN RESOURCES8
www.basinresourcesusa.com SUMMER 2016
laugh, theres always the great
food!
Sponsors for the conference
include Wagner Equipment,
Team Industrial Services, and
Western Refining, who are lunch
sponsors; Twin Stars Compres-
sion, Red Cedar Gathering
Company, AWC Compression
Automation and Archrock, who
are Emerald Sponsors; XTO En-
ergy and Engineering Dynamics
Inc., who are Gold Sponsors;
Souder, Miller & Associates,
who is a Silver Sponsor; and
Hoergiber, PSI-Process Solu-
tions Integration, Bruckner
Truck Sales, Inc., Rush Truck
Center, MRC Global, Inland
Kenworth, ConocoPhillips and
Durango Party Rental, who are
Bronze Sponsors.
The list of guest speakers is
impressive. Expected to share
their knowledge and experience
in the industry are Dan Steel of
Xetawave, who will discuss Hy-
brid SCADA Communication
Networks Using SD Radios;
Jeff Voorhis of HY-BON Engi-
neering, who will talk about
Best Practices for Vapor Recov-
ery Systems to Reduce Venting
and Flaring with Economic Ben-
efit; Bruce Kaiser of Lightning
Master Corp., who will discuss
New API 545 Requirements for
External Floating Roof Tanks;
David A. Simpson of MuleShoe
Engineering, who will present
Facilities Selection Impacts
Reservoir Performance; and
Philip Valois of Pacer Energy
Marketing LLC, who will talk
about Setting Up A Safety
Training Program for Your
Company. Each speaker will
have about 45 minutes to share
their information.
The attendees can enjoy
these speakers, talk to vendors,
and see whats new and exciting
in the oil and gas field, Tomko
said. Its also a good opportu-
nity to network.
There is no cost to attend the
conference.
However, Tomko said, atten-
dance is limited to those who
work in the oil and gas industry.
Attendees must show proof of
being in the industry by wearing
a company uniform, having
company identification, or have
a guest pass, she said.
The conference isnt open to
the public because of the liability
issues with heavy equipment
that is on display.
Putting on the conference de-
mands countless hours of plan-
ning by the executive committee
and others, Tomko added. We
just couldnt put this event on
without the committee and the
almost 150 volunteers who
come out and help, she said.
The best part of the conference
is the networking you get to do
and the people you get to meet,
all of whom are part of the oil
and gas industry, which is our
survivability in this area.
The celebration of 95 years of
the discovery of oil in the area is
especially important to Melissa
Spencer.
Im a strong supporter of the
oil and gas industry, she said.
Ive been in the industry for 23
years and Im a third generation
industry employee in my family.
I have been involved with the
Four Corners Oil and Gas Con-
ference for many years.
The conference provides the
opportunity to collaborate, net-
work and expand ones knowl-
edge, she added. Each year, I
meet new people along the way
and I have the chance to learn
about new equipment that is
being offered to better our jobs
or quality of service. By attend-
ing different programs, I have
expanded my knowledge in this
great industry.
For more information, people
may visit the conference website,
fourcornersoilandgas.com, or
call Jan Tomko at
505.325.0279.
BASIN RESOURCES 9
SUMMER 2016 www.basinresourcesusa.com
DEBRA MAYEUXBasin Resources
The Navajo Transitional Energy Company
soon will be able to resume mining in Area
IV North of Navajo Mine after the Tenth
District Court of Appeals dismissed a lower
court ruling that halted operations at the site.
This decision furthers Navajo
sovereignty and self-determination
for the Navajo people, said Steve
Gundersen, chairman of the Man-
agement Committee at Navajo
Transitional Energy Company, or
NTEC. Our operations at Navajo
Mine demonstrate the forward
thinking of NTEC and the Navajo
Nation. We are an extension of the
Nation and we are proud of the
work we are doing to secure the
economic future of the Navajo Na-
tion and the Four Corners area.
The U.S. District Court of Colorado previ-
ously upheld a case filed in 2013 against the
U.S. Department of Interior by Din Citizens
Against Ruining Our Environment, San Juan
Citizens Alliance, Sierra Club, Centers for Bi-
ological Diversity and Amigos Bravos. In the
case, the plaintiff environmental groups al-
leged BHP Billiton, former owner of Navajo
Mine, did not comply with the procedural
requirements of the National Environmental
Policy Act, or NEPA for operations on In-
dian lands, according to court documents.
The mine was and is the primary source of
coal for the adjacent Four Corners Power
Plant, owner by Arizona Public Service. It
supplies 8.5 million tons of coal annually to
the plant.
The Area IV North portion of the mine
was part of an expansion project put forth by
BHP. It contains approximately 12.7 million
tons of coal. The lawsuit sought to halt the
expansion, claiming the company was not
under environmental compliance. The
Navajo tribe, which recently purchased
Navajo Mine from BHP, argued in favor of
the expansion, and requested the case be dis-
missed.
Upon purchase of the mine, the Navajo
Nation opened Navajo Transitional Energy
Company, or NTEC, which stated
that it lost $2 million in profit with
the inability to expand Navajo Mine
operations into Area IV.
The tribe argued that the case
should be dismissed because the
tribe is a sovereign nation.
By this logic, virtually all public
and private activity on Indian lands
would be immune from any over-
sight under the governments envi-
ronmental laws. This is neither the
intent nor the import of Indian sov-
ereign immunity, Senior U.S. District Judge
John L. Kane wrote in a 2013 opinion not to
dismiss the case.
Kane quoted previous case law regarding
tribal immunity, specifically Manygoats v.
Kleppe, which found that NEPA is con-
cerned with national environmental interests.
Navajo MiNe area iv cleared for developMeNt
Tenth Circuit Court of Appeals vacates 2013 case to halt operations
www.basinresourcesusa.com SUMMER 2016
!
Tribal interests may not coincide with national interests. We find noth-
ing in NEPA which excepts Indian lands from national environmental
policy.
Kane also stated that the challenge put forth by the Din Citizens
and other environmental groups that were party to the lawsuit had to
do with the completion of a federal environmental impact statement,
No prejudice will necessarily result to the Tribe, because the requested
relief does not call for any action by or against the Tribe, he wrote.
Kane denied the motion to dismiss the case. The case continued and
ultimately was appealed in 2015 by NTEC, sending it to the U.S.
Tenth Circuit Court of Appeals, which overturned Kanes ruling by va-
cating the case.
NTEC is very pleased with this outcome on appeal. As a company
of a sovereign nation, we can continue doing work to secure Navajo
Nations self-determined future, said Clark Moseley, chief executive
officer for NTEC. The unfortunate decision of the Colorado District
Court last year is no longer on the books, and NTEC can now move
on with its operations on behalf of the Navajo Nation.
While the case was pending appeal, Navajo Mine operated seven
days a week to provide coal to Four Corners Power Plant. I want to
thank all the Navajo Mine workers for demonstrating Navajo resiliency
by adapting to conditions to ensure we continued to meet our obliga-
tions to Four Corners Power Plant, Moseley said.
BASIN RESOURCES 11
SUMMER 2016 www.basinresourcesusa.com
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When Blake No. 1, the oldest gas well
in New Mexico, was drilled southwest of
the Miller Street Bridge in Farmington, the
oil and gas industry was in its infancy. By
1950, there were 30 producing wells in
the San Juan Basin, and in 1961 El Paso
Natural Gas completed a 24-inch natural
gas pipeline from the San Juan Basin to the
West Coast, establishing the first major
market.
In 2010, the San Juan Basin area in the
Four Corners was ranked the second
largest natural gas field in the United
States in terms of proven reserves, with
production of 1.3 trillion cubic feet in
2009, according to the naturalgasintel
website.
In August of 2011 the drilling rig count
was at 14; however, in early October of
2015, just three rigs were drilling, only
one of them in San Juan County. One of
the oldest producing areas in the United
States, the San Juan Basin can count only
two drilling rigs working out of 20 rigs
available.
The boom and bust cycle of the oil
and gas industry isnt new to the San Juan
Basin or to San Juan County. However, the
financial repercussions of a bust can mean
success or failure to any business that
counts on the industry for revenues in-
cluding local and state governments.
The oil and gas industry is suffering an-
other downturn, with reports suggesting
that about one-third of U.S. oil and gas
production companies in the United States
could face bankruptcy in 2016. San Juan
sCott
eCKstein
Mayor
City of BlooMfield
Cities faCing tough finanCial ChoiCes
Communities working together can find ways to decrease our dependency on oil and gas revenue
BASIN RESOURCES12
www.basinresourcesusa.com SUMMER 2016
County and the city of Bloomfield join
other counties and municipalities across
New Mexico that are looking at bleak fi-
nancial statements now and into the
months and possibly years ahead.
Leaders of Aztec, Bloomfield, Farming-
ton, Kirtland and San Juan County are
faced with making drastic cuts to budgets
that have little to no fat left on them. With
payroll being the biggest expense of any
government or business, elected and ap-
pointed officials are leaving positions un-
filled, reviewing employee benefits and
payroll, struggling to keep people em-
ployed, and keeping intact the quality of
living we all enjoy as we look for alterna-
tive economic development.
As a county and as cities within the
county we must deal with the challenges of
today without forgetting the tomorrows
our future will bring. We must tighten our
financial belts, saving where we can and
must but we must also be mindful that if
we are to attract new businesses to our
area, we must give them good reasons to
move to San Juan County.
The quality of life we enjoy throughout
San Juan County must be maintained if the
marketing plans we have to bring in busi-
nesses in order to counteract the highs
and lows of the oil and gas industry
move ahead. Streets and roads, parks and
medians, buildings and homes, storefronts
of businesses all must be clean and at-
tractive, which will invite visitors and new
businesses to stop and consider our county
a new place to call home.
As leaders and citizens of San Juan
County we must combine our energies, our
resources and our enthusiasm to generate
ideas for growing our area and making it
less dependent on oil and gas.
I believe we have the wisdom, the
knowledge, the energy and the desire to
think outside the box; and together we can
lift our cities and our county out of the
struggles of a challenging economy and up
and into a bright and successful future.
We must put our economic sights on al-
ternative industries telecommuting, small
manufacturing, tourism expand on them
and build them. In addition, when the
good times return and they always do
lets not forget the tough times were
going through now. As business owners, as
elected and appointed government offi-
cials, and as heads of families, we must re-
member the safety net of fiscal
responsibility. Financial reserves need to be
rebuilt to help us get through another
downturn.
But it will take all of us working to-
gether to find solutions to our economic
problems. I encourage each of you to share
your thoughts and ideas about economic
development with your community leaders.
If we start the conversation now, well be
far better prepared to meet the challenges
of our future.
SUMMER 2016 www.basinresourcesusa.com
BASIN RESOURCES 13
BASIN RESOURCES14
www.basinresourcesusa.com SUMMER 2016
A partnership between San Juan
College School of Energy and Mis-
souri River Resources has devel-
oped into a program that will
provide stellar educational opportu-
nities for American Indian Students
from three affiliated tribes in North
Dakota.
When Randy Pacheco and Dave
Williams were first introduced at a
meeting in Denver several years ago,
little did they know that this would
lead to a partnership between their
two organizations. Williams is the
CEO for Missouri River Resources
(MRR), a tribally-owned oil and
gas production company operating
in North Dakota. Pacheco is the
former Dean of the San Juan Col-
lege (SJC) School of Energy (SOE).
Together, with San Juan College
President Dr. Toni Hopper Pender-
grass, interim SOE Dean Ken John-
son, and others, a Memorandum of
Understanding was created, which
focuses on the training and devel-
opment of North Dakotas incum-
bent and future energy workforce.
Why the need for a new ap-
proach at MRR? Williams ac-
knowledges that typical oil field
education is passed from generation
to generation, a method that wont
go away. However, providing a
consistent foundation of technical
knowledge builds critical thinking
and trouble-shooting skills.
Delivery of a safe efficient
EDUCATIONAL partnership
San Juan College School of Energy expandslearning opportunities into North Dakota
Tyrell Smith, Missouri River Resources Field Technician, starts apumping unit located at San Juan College School of Energys train-ing well site.
BASIN RESOURCES 15
SUMMER 2016 www.basinresourcesusa.com
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business demands that technicians be
multi-skilled, with a clear understanding of
how oil and natural gas is produced,
Williams said. This partnership is aimed
at creating this workforce.
One program component, an Oil and
Gas Production Immersion, was delivered
to five members of MRRs incumbent
workforce in early April. SOE instructor
Jerry Huwe, whose previous career in-
cludes more than 40 years of industry ex-
perience in oil and gas production,
delivered the curriculum at the School of
Energy facility in Farmington. Through
the Immersion, MRR technicians gained
an in-depth view of the principles of oil
production, which included everything
from compression, dehydration, artificial
lift and measurement, as well as a hands-on
overview of equipment such as wellheads,
heater treaters, and separators. They had
the opportunity to earn college credit that
will apply toward a certificate or associates
degree from San Juan College.
Neil Packineau is an MRR operations
technician who attended the Immersion.
The equipment cut outs and wellheads
gave us a good look at whats actually in-
side the vessels. said Packineau. The
downhole information was also really use-
ful, He went on to praise Instructor Jerry
Huwe for going the extra mile to effec-
tively explain the material and answer
questions.
Dr. Pendergrass sees strategic partner-
ships like the one formed with MRR con-
tinuing at the School of Energy.
By seeking opportunities to expand be-
yond the San Juan Basin and serve as a
global trainer of energy education, our
school will continue to grow and students
will receive an exemplary education, she
continued. This endeavor is a win-win for
all involved. AJ Moreno, Missouri River Resources Field Techni-cian, completes a section of the final exam byidentifying various components of the natural gasmeasurement meter tube.
BASIN RESOURCES16
www.basinresourcesusa.com SUMMER 2016
RealPeople RealJobs
DEBRA MAYEUX
Basin Resources
Proposed changes to the way the Bureau
of Land Management regulates oil and gas
sites in New Mexico could result in the loss
of 9,000 jobs in San Juan County. That
number comes from Four Corners Economic
Development, which is spearheading an ef-
fort to stop changes to Onshore Oil and Gas
Orders 3, 4, 5 and 9.
The effort is called Real People, Real Jobs,
and it was an extension of a project devel-
oped to save Public Service Company of
New Mexicos San Juan Generating Station
and its adjacent coal mine from the possibil-
ity of closure in 2015.
4CED mobilizingFour Corners Economic Development is
mobilizing the community to sign a public
letter to our Washington delegation stating
the impact of these regulations on the com-
munity, said Chris Hunter of WESST. We
are asking our congressional delegation to
take a good careful look at the implications
of implementing these four regulations.
Onshore Oil and Gas Orders 3, 4, 5 and
9 have to do with the extraction of oil and
gas from public lands. In New Mexico, 63
percent of oil and gas production comes
from public lands which, Hunter pointed out
are owned by the people. He also stated that
on the surface these regulations make sense.
When you look under the hood, there are
costs that need to be carefully considered,
Hunter said.
The last time the BLM looked at these or-
ders was in 1989, and the revisions were re-
quested by the BLM to keep pace with
changing industry practices and emerging
and new technologies, according to its web-
site, www.blm.gov/live/pdfs/summary.pdf.
Order 3Revisions to Order 3 state that its purpose
is to strengthen minimum standards for en-
suring oil and gas produced on federal and
Indian land would be properly and securely
handled, so as to prevent theft and loss and
to enable accurate measurement and produc-
tion accountability, the BLM stated. It
would establish a nationwide process for
measuring the amount of oil and gas ex-
tracted and the royalties paid, as well as de-
velop new standards for commingling of
wells.
As far as commingling goes, in this area
many of the wells produce both oil and gas,
but under this new order, there would need
to be separate wells for oil or gas, according
to industry officials.
The order also would require seals, meter
bypasses, reporting of unauthorized removal
or mishandling of produce, site facility dia-
grams and off-lease measurement.
Revisions to orders 4 and 5 require new
and enhanced equipment to ensure accurate
and verifiable oil and gas measurement and
royalty payments, the BLM order stated.
Under Order 4 there would be enhanced
requirements for oil sales by tank gauging,
vapor tight tanks, Lease Automatic Custody
Transfer components and requirements, and
FCED initative encourages community to sign petition, get involved
BASIN RESOURCES 17
SUMMER 2016 www.basinresourcesusa.com
a requirement of the use of
Coriolis measurement systems,
which measure and output flow,
temperature, density and viscos-
ity, the BLM order stated.
Order 5Order 5 would require elec-
tronic gas meters and enhanced
inspections of those meters, im-
proved gas sampling and ther-
mal content determination
standards and improved testing
and review standards for the
Departments Gas and Oil
Measurement Team, which is
an interagency panel of meas-
urement experts, according to
the BLM. There also would be
set performance goals for the
measurement of gas.
The BLM added that changes
to these three orders would re-
quire better record keeping on
the part of oil and gas compa-
nies, transporters and pipeline
operators.
Order 9 is the final one up
for changes, and it has received
a great deal of attention as it
would change the venting and
flaring rules for gas sites on
public lands.
Flaring occurs for a couple
of reasons, Hunter explained.
We see flares by Counselors
and Lybrook. These are oil and
gas wells that have a lot of ni-
trogen.
The nitrogen, which is not
toxic, is flared or burned off,
Hunter said.
The BLM, however, has
stated that flaring is a waste of
valuable natural resources, so it
should be limited or stopped.
The BLM also has alleged that
the practice of venting and flar-
ing is polluting the environ-
ment. This is something most in
the industry dispute. Even the
Farmington City Council
adopted a proclamation on
March 22 in opposition to the
proposed changes to the orders.
City proclamationIn the proclamation signed
by Mayor Pro Tem Gayla Mc-
Culloch, who is the owner and
operator of Drake Well Service,
it states that the oil and gas in-
dustry has voluntarily imple-
mented equipment to its wells
that reduced methane emissions.
The emission of methane has
dropped 21 percent since 1990
without federal regulation,
even as natural gas production
has increased by 47 percent,
the proclamation stated, the in-
dustry is no longer the largest
source of U.S. anthropogenic
methane emissions.
The council went on to state
that the industry has been con-
tinuously innovating and devel-
oping new technologies to
reduce emissions; this success
along with the market incen-
tives to capture and sell as much
natural gas as possible will con-
tinue without the proposed reg-
ulations from the BLM.
$16 million in costs
The Farmington City Council
estimated the implementation of
these orders would impose up
to $161 million in costs upon
the industry in order to collect
$17 million in royalties. Costs
such as these, coupled with the
low return in profit from low oil
and gas prices, have caused a
slowdown in production in the
region, according to Hunter.
There are 20,000 oil and gas
wells in the San Juan Basin.
These wells are under signifi-
cant economic threat, Hunter
said. Twenty-five percent of the
gas wells are cash-flow negative
at $2.
If the proposed orders are
implemented, then 12.5 percent
of the other wells will be at
cash-flow negative, he said.
When wells are not produc-
ing a financial return, compa-
nies have to cut costs, and cost
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www.basinresourcesusa.com SUMMER 2016
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The ebb and flow and the ups and downs
of the oil and gas industry in San Juan
County and the San Juan Basin arent new
to us. Weve been through the boom and
bust cycle before and well likely go
through it again.
However, with this most recent and dev-
astating blow to our local economy because
of low gas prices and lack of drilling, it is
time we address the challenge of diversifying
our economy. Four Corners Economic De-
velopment an offshoot of the vision of the
e>p leadership team has continued the ef-
forts of many in our community to look be-
yond the drilling rigs and the pipelines to
find new businesses that will benefit our
economic base and bring jobs and families
to our area.
The Gulf Cooperation Council (GCC) re-
cently published a report that emphasizes
what we already know (G)reater diversifi-
cation would reduce exposure to volatility
and uncertainty in the global oil market,
help create private sector jobs, increase pro-
ductivity and sustainable growth, and estab-
lish the non-oil economy that will be
needed in the future when oil revenues start
to dwindle.
In addition, the report states that (A) sta-
ble, low-inflation economic environment has
been achieved, the business climate has been
strengthened, education has been expanded,
trade and foreign direct investment (FDI) has
been liberalized, and the financial sector
deepened when policies have been adopted
to diversify the GCC economies and reduce
their reliance on oil.
Development plans are being imple-
mented nationally, with the hope of devel-
oping new industries and services that can
employ a highly skilled labor force. Unfortu-
nately, those plans are slow to succeed.
In San Juan County, we need to reach out
to individuals, small businesses and entrepre-
neurs and encourage them to start and grow
their business here. We need to recruit ac-
tively with a full scale recruiting team to
find those businesses and people, and to
share with them all we have to offer. We
need a sales force with the primary goal of
selling San Juan County as the perfect place
for their business home.
SmallBusiness.com has several suggestions
for possible business opportunities for rural
areas such as San Juan County.
Businesses are starting to take advantage
of low-cost rural locations. Rural sourcing
took hold first in IT consulting and is
spreading to other services.
The restoring of manufacturing is mak-
ing national headlines, but it is rural areas
that are reaping the most new projects. Be-
tween the labor and energy, U.S. manufactur-
ing is again cost competitive for many
projects, if located outside of expensive
major metro areas. Supporting supplier and
services in rural areas will grow along with
randy Pacheco
Greater diversificationStriving to reduce volatility, and uncertainty in global oil market
* Pacheco 33
BASIN RESOURCES20
www.basinresourcesusa.com SUMMER 2016
Whats next for oil and gas prices? The hard truth is that no one knows
what will happen to the prices of oil and
natural gas. The future is unclear and, as
we have seen in recent years, unpre-
dictable.
The price of oil (WTI) held relatively
consistent above $100/barrel as recently
as mid-2014. By the start of 2015 the
price had dropped to $50. The current
price hovers in the $30-$40 range amid
anticipation that OPEC will come to
some kind of agreement to limit output,
but prices are volatile.
Since oil and gas markets are beholden
to different market forces and prices are
disconnected, each one must be discussed
with its varying factors and influences.
January prices $27/barrelIn January the price of oil dropped all
the way below $27/barrel. That was the
lowest price since 2003. The good news
is that since that low point, the price has
rebounded to as I write this
$40/barrel. That is an indicator that the
market is working quickly to find a sensi-
ble price point. We havent seen the end
of volatility, but $27/barrel proved un-
sustainable. The current price may not be
as high as many producers would like or
have gotten used to, but $40 is not a dis-
aster for the industry.
Further positives include the end of
the ban on crude oil exports and the po-
tential for some kind of OPEC agreement
to limit production. I wouldnt lean too
heavily on the latter, however, as OPEC
members are notorious for cheating on
their production limit agreements.
The main threats to the price of oil in-
clude Iran ramping up production and
thus driving prices down, or a further
weakening of the global and U.S.
economies.
The current bull market in the United
States is on the verge of becoming the
2nd-longest in history only the 1987-
2000 bull market was significantly
longer. The global economy, including
China, however, is not doing as well.
Low energy prices, while not good for
New Mexicos economy, are a net posi-
tive for the U.S. economy as a whole, es-
pecially if prices stabilize at todays low,
but not bargain-basement levels. This
low enerGy Prices:
While bad for New Mexicos economy, a net positive for U.S.
Paul GessinG
President
rio Grande Foundation
BASIN RESOURCES22
www.basinresourcesusa.com SUMMER 2016
makes the United States more competitive
and better able to withstand global eco-
nomic challenges.
In other words, there is no particular
reason why the U.S. economy and stock
market should suddenly weaken. This
trend should further stabilize energy
prices. Of course, significant and long-
lasting increases in the price of energy
could reverse this trend, but it appears
that for the time being cheap energy will
be a serious advantage for the U.S. econ-
omy.
Natural gas pricesThis all brings us to the price of natu-
ral gas. Gas prices have been at record
lows in real terms in recent months.
While prices approached $14 per million
cubic feet (MCF) in the late 2000s, the
current price is below $2.
According to petroleum geologist and
energy writer Arthur Berman there could
be a light at the end of the tunnel for nat-
ural gas producers who are able to stick it
out. Berman notes that gas production is
flat, imports are decreasing and exports
are increasing. Shale gas production has
stopped growing and conventional gas
has been declining for the past 15 years.
In other words, after years of oversup-
ply, supply and demand could finally be
coming into balance. Berman predicts a
doubling in natural gas prices in the next
year. Thats nowhere near the good old
days for producers, but it would be a re-
lief from record-low prices.
The best news for natural gas produc-
ers is that large quantities of liquefied
natural gas (LNG) are now being shipped
from the United States to overseas mar-
kets. Just last month, Cheniere Energy in
Louisiana shipped its first cargo of LNG
to Brazil, but more facilities are expected
to come online over the next several
years, thus opening low-cost U.S. LNG
producers to a global market, including
Japan and Eastern Europe where prices
are much higher and due to Russian po-
litical aims and market manipulation
often unstable.
LNG exports are not likely to result in
significant price increases due to the vast
supplies of natural gas now available, but
the development of new markets will be a
boon for low-cost producers. If those
markets are thriving economically, LNG
exports will grow steadily. Japan, Brazil,
and other prospective export markets
continue to experience economic chal-
lenges, but each of these nations faces se-
rious challenges. Unfortunately for
American producers, the biggest benefici-
aries of American LNG exports will be
Eastern European nations that have a reli-
able and cost-effective counterweight to
Russia.
The other significant, positive develop-
ment for natural gas is the ongoing shift
in electricity generation from coal to nat-
ural gas. According to the U.S. Energy In-
formation Administration, natural gas
started regularly surpassing coal as a
source of U.S. electricity production in
mid-2015. That trend is likely to con-
tinue as coal falls into disfavor for envi-
ronmental reasons and natural gas
* Gessing 33
BASIN RESOURCES 23
SUMMER 2016 www.basinresourcesusa.com
Dorothy Nobis
Basin Resources
With the continuing challenges facing the oil and gas industry
in san Juan County, the trickle-down effect has hit local volunteer
fire departments.
While the fire departments in san Juan County, Aztec and
bloomfield dont depend heavily on donations from the oil and
gas industry, the industry has been generous with its donations to
departments in the past.
Most of the money donated is used for training volunteers.
City of Bloomfieldthe local oil and gas industry has always supported local
emergency responders in many ways, said bloomfields Assistant
Fire Chief John Mohler. our area relies heavily on volunteers
and many of the volunteers work within the (oil and gas) indus-
try. the training they (oil and gas companies) provide their per-
sonnel benefits us as well, because these people also volunteer.
the industry as a whole helps fund local emergency drills,
shares safety training with responders and provides valuable infor-
mation on the materials and processes that the industry uses,
Mohler added.
San Juan County Fire Departmentthe lack of revenues from the oil and gas industry has im-
pacted the san Juan County Fire Department for several years,
said County Fire Chief Craig Daugherty. the county fire depart-
ment is funded through a of 1 percent gross receipts fire excise
tax.
because of the downturn of oil and gas in recent years, weve
seen a drop in those revenues, Daugherty said, which impacts us
more than the loss of donations.
the loss of revenues has forced us to be more creative and re-
prioritize our budget and rely more on grant funding, Daugherty
said, adding that the loss of revenues from the excise tax as a re-
sult of the downturn in the economy created a 50 percent de-
crease in the money the department received in the last five to six
years.
the bloomfield Fire Department has faced challenges with the
lack of donations for training. Assistant fire chief Mohler said,
Many training budgets are shrinking and only required training
is being funded. this means we are struggling to keep people
The Trickle-down effecT
Volunteer fire departments feeling the squeeze
The problem we are seeing now is that somebody
is taking longer and longer to arrive because of the lack
of volunteers. We are all being challenged to do more
with less; less responders with less training should be a
huge concern for everybody in the area.
John MohlerBloomeld Assistant Fire Chief
BASIN RESOURCES24
www.basinresourcesusa.com SUMMER 2016
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certified at their current levels and we rarely
allow new personnel to move forward into
new certifications.
Kevin Simpson, the city of Aztecs Fire
Chief, said his department doesnt rely on
donations for any part of its operational
budget.
While budgets are tight and donations
limited, it isnt just finances that cause con-
cern for local fire departments. It is the con-
stant need for volunteers.
My biggest concern is, and has been,
having enough responders to handle an
emergency, whatever that emergency might
be, said Mohler. This area has relied on
volunteers for so long, we have grown to
expect somebody will show up (in the case
of an emergency).
The problem we are seeing now is that
somebody is taking longer and longer to ar-
rive because of the lack of volunteers. We
are all being challenged to do more with
less; less responders with less training
should be a huge concern for everybody in
the area. We are challenged to get people to
give up their valuable time to help their
neighbor, he added.
Bloomfield had 41 volunteers in 2002.
In 2015, the department had just 16 volun-
teers, but had 12 firefighters, seven of
whom were paid with funding from a grant.
City of AztecThe city of Aztec has just one paid staff
member Fire Chief Kevin Simpson and
relies on 17 volunteers to respond to emer-
gencies.
This area is fairly transient; therefore, it
is always difficult to recruit and retain vol-
unteers, Simpson said. We have lost some
members due to layoffs in the past few
years. The biggest concern for the future is
that our call volume is increasing and we
are not getting many younger people to
volunteer.
The San Juan County Fire Department
has 14 paid staff four mechanics, two ad-
ministrative positions, and eight response-
capable chief officers. In addition, the
department relies primarily on about 275
volunteers who help man 24 fire stations in
14 districts throughout San Juan County,
which covers 5,500 square miles.
Across the county
San Juan County could use an additional
100 volunteers to meet the ever-increasing
call volume, Daugherty said, adding, Our
biggest recruiters are our current volunteers,
and our recruitment retention is positive.
The county regularly discusses the potential
need for additional paid firefighters, but it
always comes back to money.
A tax increase isnt something people
want right now, he added, and having
paid firefighters presents funding challenges
as well. The value of our volunteers is price-
less and often goes unrecognized by the
constituents in the county.
On October 15, 2015, the Economic De-
velopment Administration, a division of the
U.S. Department of Commerce, announced
that San Juan College was selected as the re-
cipient of a POWER (Partnerships for Op-
portunity and Workforce and Economic
Revitalization) Initiative grant. These funds
are awarded to eligible communities that his-
torically have relied on the coal economy for
good jobs and economic prosperity to assist
with economic and workforce development.
In December, San Juan College selected
me as director of the Four Corners POWER
Initiative, the name for their grant program.
Since then, we have worked fervently to de-
velop an implementation plan, establish
valuable partnerships and begin utilizing the
awarded funds. The Colleges program was
designed to promote economic development
through investment in information technol-
ogy and additional programs through the
purchase of necessary equipment. Workforce
development is also a priority with an em-
phasis on the rapid retraining of displaced
workers and the development of internships.
Internship program One of the first initiatives implemented
was an internship program created in part-
nership with International Business Ma-
chines (IBM). Six interns were selected, and
IBM sent a trainer from Malaysia to onboard
the interns and provide staff training. The
interns are working for IBMs Learning Di-
vision assisting with employee enrollment
into educational programs. However, the
benefit isnt only in the work being per-
formed. Interns are being exposed to new
computer software, an office environment,
working in a team and communicating with
individuals all over the world. This exposure
is teaching them a wide variety of skills, in-
cluding cultural sensitivity and how to com-
municate across cultures. Interns can work in
the program for up to a year, allowing them
to gain valuable experience and a chance to
apply for positions within IBM that may not
be available to the public. Through the
course of the grant, I hope to develop addi-
tional internships in a wide variety of fields
to provide unique and challenging opportu-
nities that could lead to job placement for
our students.
Education and workforce training Recently I have been able to offer funds
to assist displaced workers and their families
to train for new careers. The purpose of this
opportunity is to re-train workers who have
traditionally relied on fossil fuel industries
for employment.
Through education and workforce
BASIN RESOURCES26
www.basinresourcesusa.com SUMMER 2016
"!!"
MElIssa MEEChan
FOuR CORnERs POWER InItIatIvE DIRECtOR
POWER InitiativeProgram offers internships; retraining for displaced energy industry employees
BASIN RESOURCES 27
SUMMER 2016 www.basinresourcesusa.com
training, individuals can seek gainful em-
ployment in non-energy fields and continue
to provide for their families during difficult
economic times. To date, 25 individuals have
been approved to pursue education from a
list of programs that were selected for the
ability to offer credentials or certifications
within a year in a field that is actively hiring.
Most of the programs we selected are fo-
cused on information technology, business, or
healthcare, but other options include pursu-
ing a Commercial Drivers License or certifi-
cation in Instrumentation and Controls.
Through the grant, we can pay for tuition,
books and related school fees for those who
meet participation criteria.
Program participants not only receive edu-
cational benefits, but are required to learn
about their natural career aptitudes and pre-
pare for their future by attendance at addi-
tional trainings and utilization of services
offered on campus. These additional oppor-
tunities help workers who havent been to
school in a while. Recently, an applicant told
me he was relieved by the additional support
we offer. As I described the program to him,
he was glad to know that I am vested in his
success and will be there for him through the
process. It gave him peace of mind to know
that he isnt working through this on his
own. Due to the nature of our program, stu-
dents will make numerous contacts on cam-
pus and will know where to get help or
support when they need it, making their suc-
cess all the more likely.
Cyber center on San Juan Colleges30th Street campus
A big project on which we are working is
the development a cyber center on San Juan
Colleges 30th Street campus. The School of
Businesss Dean Dr. Bradley Purdy reports
that The center will allow San Juan College
students and the Four Corners Community
to proactively increase our understanding of
robust cyber defense technology, policy and
practices that will enable our Nation to effec-
tively prevent and respond to a catastrophic
cyber event. This program will contribute
significantly to the advancement of state-of-
the-art cyber defense knowledge and prac-
tice. The center is expected to draw students
to San Juan College and promote economic
development as businesses move to the re-
gion to hire graduates. The ultimate goal for
the program is to earn recognition as a Na-
tional Center for Academic Excellence in In-
formation Assurance/Cyber Defense.
Dr. Bradley Purdy Dr. Purdys prior experience developing
similar programs for other institutions is an
asset that will only help us succeed. During
his career, he says he had the pleasure of
working at the national and regional level to
support the development of cyber security
best practices in cooperation with various
governmental agencies as well as leading pro-
fessional organizations such as Information
BASIN RESOURCES28
www.basinresourcesusa.com SUMMER 2016
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Systems Audit and Control Association
(ISACA), ISC2, CompTIA and ASIS. His
work over the years has led to the creation
of academic programs focused on provid-
ing degrees, workforce development for
immediate employment training and com-
munity focused cyber conferences across
the country. The center is a long-term
project that will be completed as part of
the renovations to San Juan Colleges 30th
Street campus, a project funded by the
2015 San Juan College GO Bond election.
Included equipment upgrades The Four Corners POWER Initiative is
a substantial undertaking and will also in-
clude equipment upgrades to the Instru-
mentation and Controls and Commercial
Drivers License programs. School of En-
ergy personnel have met with several ven-
dors and industry stakeholders to ensure
that equipment purchased will best serve
students and employers. Upgrades to the
Instrumentation and Controls program are
being made to modernize outdated equip-
ment in order to offer the potential for
graduates to work in a wide variety of in-
dustries. It is our goal to have the new
equipment in place before students report
for the fall semester so that incoming stu-
dents receive the best possible education
on state-of-the-art equipment.
The Four Corners POWER Initiative
has three years to complete projects and
fulfill grant objectives. I feel that this is a
reasonable task and expect that much of
the work will be done sooner. We are al-
ready on-task with many of our plans. We
are actively offering internships and educa-
tional opportunities and hope to have most
of the incoming equipment purchased and
installed before the fall semester.
It is my goal to complete the projects as
quickly as possible to help meet the needs
of our students and community because
that is really what this program is about,
helping San Juan County become stronger
and more resilient to changes in the energy
industry.
Amanda Wright completes an assignment as partof her internship with IBM, which is funded throughthe Four Corners POWER Initiative.
www.basinresourcesusa.com SUMMER 2016
BASIN RESOURCES30
The U.S. Energy Information Adminis-
tration forecasts that U.S. drivers will pay
an average of $2.04 per gallon (gal) this
summer for regular gasoline, according to
EIAs Short-Term Energy and Summer
Fuels Outlook. The forecast price for
summer 2016 which runs from April
through September is 59 cents/gal
lower than the average price last summer,
and it would be the lowest average sum-
mer price since 2004.
Monthly average gasoline prices are
expected to increase to $2.08/gal in
June, and then fall to $1.93/gal in Sep-
tember.
In the United States, slightly more
than half of the vehicle-miles driven in a
year occur in the six months from April
through September.
For the full year 2016, EIA forecasts
U.S. regular gasoline prices to average
$1.94/gal. Based on this annual average
price, EIA estimates the average
Family vacations will be a little cheaper
Retail gasoline prices this summer expected to be lowest since 2004
SUMMER 2016 www.basinresourcesusa.com
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household will spend about $350 less on gasoline in 2016 than
in 2015 and about $1,000 less than in 2014, when retail gaso-
line prices averaged more than $3/gal.
Gasoline prices are based on four main components: crude oil
prices, wholesale margins, retail distribution costs, and taxes. Be-
cause the latter two are generally stable, movements in gasoline
prices are primarily the result of changes in crude oil prices and
wholesale margins.
Each dollar per barrel of sustained price change in crude oil
and/or gasoline wholesale margins results in a change of 2.4
cents/gal in product prices.
Gasoline prices in the United States typically reflect changes
in the Brent global oil benchmark. The Brent crude oil price is
forecast to average $35/barrel (83 cents/gal) this summer, about
$22/barrel (50 cents/gal) lower than last summer.
Crude oil prices are lower this year because global oil supplies
have continued to exceed consumption, leading to persistently
large inventory builds. EIA expects these inventory builds to per-
sist through 2016, keeping crude oil prices below $40/barrel.
EIA expects wholesale gasoline margins the difference be-
tween the wholesale price of gasoline and the Brent crude oil
price will average 47 cents/gal this summer, about 13
BASIN RESOURCES32
www.basinresourcesusa.com SUMMER 2016
!
cents/gal lower than
last summer. Gasoline
production has been
higher recently, and sev-
eral of the severe refin-
ery outages that caused
high prices last summer
particularly on the
West Coast have since
been resolved or accom-
modated by obtaining
supplies from other
sources. Regional differ-
ences in retail gasoline
prices can be significant,
and EIA forecasts aver-
age summer prices to
range from a low of
$1.80/gal on the Gulf
Coast to $2.51/gal on
the West Coast.
BASIN RESOURCES 33
SUMMER 2016 www.basinresourcesusa.com
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small custom manufacturing firms, the web-
site states.
Cooperatives are for more than just the
grain elevator and the electric utility, the
website article continues. Coworking, pop-
ups and combination businesses are pooling
resources and cutting costs. Community
ownership is taking over where individual
ownership cant make a go of it. Not-just-
for-profit businesses are paying attention to
their own bottom line, their people and the
community. Successful business owners are
investing back into their community. The
opportunity here is to think outside the
usual forms when creating or re-creating a
rural business.
By thinking beyond the usual business
opportunities, by partnering with others of
like mind and vision, and by promoting all
San Juan County has to offer a great qual-
ity of life, a friendly and positive business
community and the willingness to do what
we can to help every business succeed we
can take the first step to creating an eco-
nomic foundation that doesnt depend on an
industry that has served us well in the past,
but is facing its own struggles today.
Oil and gas will always play a major role
in the history of San Juan County, and the
economic benefit to our community will al-
ways be appreciated. However, as the indus-
try faces its own challenges in the future, we
must be prepared and pro-active in recruit-
ing and bringing new sources of business
revenues into our community.
The first step begins with us and as a
community and as business leaders we
must take that step to ensure the path to-
ward our future is as beneficial as the road
behind us.
Pacheco continued from 18 Gessing continued from 22becomes the go-to electricity source for
utilities.
To summarize, both oil and gas produc-
ers face a great deal of uncertainty. Given
the vast supplies of oil and natural gas that
can come online as prices go up, keeping
costs low is a must.
In terms of New Mexicos economy, low
prices seem to be the new-normal. As
some producers fall by the wayside, pro-
duction numbers will undoubtedly result in
significantly lower employment and tax
revenues for the foreseeable future.
Paul Gessing is the President of New Mexicos
Rio Grande Foundation. The Rio Grande Founda-
tion is an independent, non-partisan, tax-exempt
research and educational organization dedicated to
promoting prosperity for New Mexico based on
principles of limited government, economic freedom
and individual responsibility.
BasiN resoUrces34
www.basinresourcesusa.com sUMMer 2016
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Ziems Ford Corners...........................28
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cutting often comes in the form of layoffs.
The Basin has seen several layoffs in the past
few months as companies cut corners. If the
trend continues, Hunter estimates more jobs
will be lost. This is because there are 1.2
employees for every gas well in the basin. If
the wells are not producing, those employees
are no longer needed and we see job losses
throughout the region.
Education, quality of life suffersAs people lose their jobs, they move out
of the community, and schools and busi-
nesses suffer. Farmington Municipal Schools
saw a reduction of 150 students in the
2015-2016 school year. Fewer students
mean less money for the schools, and that
means a shrinking workforce in the school
district.
As more people lose their jobs in oil and
gas and education, businesses will suffer and
more workers could be laid off from posi-
tions that are not industry related. It is
trickle down effect that could negatively im-
pact the local economy.
The loss of jobs, however, is not the only
concern, because 40 percent of New Mex-
icos budget comes from oil and gas rev-
enues. Now the state has a potential to run
out of funds, because the industry is not pro-
ducing what it used to, according to Hunter.
Hunter and others are encouraging com-
munity members to sign the letter to Con-
gress and let the New Mexico delegation
know that oil and gas are important to this
region. We have 3,500 signatures now, and
we are looking for a lot more, Hunter said.
The oil and gas industry is important to this
community. It is filled with responsible men
and women.
For more information or to sign the letter
visit www.realpeoplerealjobsnm.com.
FCED continued from 17
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ne en you
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Bloomfield, New Mexico
Your satisfaction and safety are our priority
Bloomfield, New Mexico
Your satisfaction and safety are our priority
Bloomfield, New Mexico
Your satisfaction and safety are our priority
505-632-7007.Bloomfield, New Mexico Your satisfaction and safety are our priority
505-632-7007
Your satisfaction and safety are our priority
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