the northeast ong marketplace - july 2014

PRSRT STDU.S. POSTAGE PAIDBECKLEY, WV 25801

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CHANGE SERVICE REQUESTED

JULY 2014P.O. BOX 1441 • OAK HILL, WV 25901 | WWW.ONGMARKETPLACE.COM

HEALTH & SAFETY - Pages 10-11 Safety KickTM Safety into the Digital Age

INDUSTRY INSIGHT - Pages 16-17 Security through American Energy

ONG SPOTLIGHT - p 3

WATER MANAGEMENT - p 6-7

ENVIRONMENTAL MANAGEMENT - p 12-13

NEW TECHNOLOGY - p 18-19

LEGAL & FINANCE - p 24-25

ALTERNATIVE FUELS - p 28-29

The Northeast ONG Marketplace

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Title: Layfield ONG Marketplace adSize: 10.25 in X 9.68 inColours: 4CPPublication: ONG Marketplace Magazine

Created by: Kyle Loranger DesignContact: KylePhone: (780) 413-9237E-mail: [email protected]

New Look New Website www.ongmarketplace.com

Paradigm Shift: Scarcity to AbundanceScott Rotruck, Director of Energy & Transportation Services, Spilman Thomas & Battle

I had the great learning experience of attending The Sixth Annual Developing Unconventional Gas Conference, known as DUG East, which was held June 3-5, 2014, at the David H. Lawrence Convention Center in downtown Pittsburgh. The Conference is based around the sharing of ideas, performance updates and networking across the supply chain of the Marcellus and Utica Shale. The Conference is put on by Hart Energy, and is very well done and replicated in other Shale Plays. DUG East brought some of the best and brightest corporate leadership together to update the 3200 attendees on the innovation, continuous improvement, and execution of business plans in the 95,000 square mile Marcellus Shale and in the older, deeper and at 170,000 square miles, even geographically larger Utica Shale.

I came away from the Conference more confident than ever that the United States was in the best position it had enjoyed in the past half century, as to both its domestic and international strategic position in energy production. I hold to this position, although legislative, regulatory and policy implementation certainly pose viable threats to our new found energy abundance. The conference did a wonderful job

of highlighting the industry’s collective conquering of technical and technological hurdles, as well as innovation in corporate and management structures. However, very significant risk to the continued development of the Shale Plays is found under the heading of “Managing Non-Technical Risks”. In the Marcellus Non-Technical Risks can be easily understood by comparing Bradford County, PA with Broome County, NY, where the former is enjoying great economic revitalization, while due certain legislative, regulatory and policy approaches, Broome County, NY, although sharing much of the same geology, has not been allowed to similarly develop. The Paradigm Shift from Energy Scarcity to Energy Abundance, as the lens through which to evaluate energy policy, has developed through a unique combination of private mineral ownership, which is relatively unique to the United States, along with American entrepreneurship and the wide distribution of community and economic benefits for communities across the U.S. Shale Plays. I am a strong proponent of a true “All of the Above Energy Strategy”, based on the general strategic prudence and security conferred by a diverse portfolio of investments, whether in a mutual fund, market index, or the market-based mix of energy sources and uses. The full development of the Shale Plays across the United States fits nicely with this strategy, especially because of the incredible diversity of sources and end uses of natural gas, natural gas liquids and oil. William Gladstone, four-time Prime Minister of England, once observed that all you needed to know about a country was whether people were trying to get into or out of it. Therefore, applying a similar metric to U.S. Shale Plays, provides a powerful affirmation that the best and brightest minds in energy see the long term opportunities as being very abundant. Private investment dollars tell the story, be they small businesses finding their niche in the vast supply chain, or those of large publically traded, often international companies from around the world. Listen! Hear Opportunity Knocking.

Scott Rotruck is the Director of Energy & Transportation Services for Spilman Thomas & Battle, a full service regional law firm in the Utica and Marcellus Shale region. Scott came to Spilman after 7 plus years as Vice President of Corporate Development at Chesapeake Energy, preceded by a decade each in railroad operations, the coal industry and higher education administration and teaching.

July 2014

THE ONG SPOTLIGHT

New Look New Website www.ongmarketplace.com


ARTICLESTHE ONG SPOTLIGHT: Scott Rotruck, Director of Energy & Transportation Services, Spillman Thomas & Battle .................................................................. 3

WATER MANAGEMENT: Store, Treat and Transger: A Holistic View of Water ...................................... 6-7

HEALTH & SAFETY: Safety Kick TM Kicks Safety into the Digital Age ......................................... 10-11

ENVIRONMENTAL MANAGEMENT: Oil Field Waste Water Cooling ....................................... 12-13

INDUSTRY INSIGHT:Security through American Energy ................ 16-17

NEW TECHNOLOGY: Velocity Water Transfer Hose ............................................................... 18-19

LEGAL & FINANCE: Sound Strategies for Managing Acquired and Legacy Liabilities ...... 24-25

ALTERNATIVE FUELS: CNG vs. Propane: A Beneficial Battle .............................................. 28-29

ADVERTISER INDEXALPINE ELECTRIC .............................................. 14AMERICAN REFINING GROUP .......................... 17ARCADIA LAND SERVICES ................................ 14BLUE ROCK ENERGY PARTNERS ...................... 27BRI-CHEM ........................................................... 19CALU ................................................................... 11CHANCELLOR INSURANCE ............................... 11CST INDUSTRIES ............................................... 17D&S INDUSTRIAL PRODUCTS ............................ 7DMC DESIGN ...................................................... 27DON’S DIRECTORY .............................................. 9DR WELL SITE .................................................... 14E-FINITY.............................................................. 16ERNST SEED ....................................................... 17ETC ........................................................................ 8FAIRMONT SUPPLY ............................................ 11FISCHER - ROBERTSON .................................... 11FOSSIL ROCK SERVICES ................................... 19GOODWIN PUMPS - XYLEM ................................ 8GREENHUNTER RESOURCES ............................ 15GREER INDUSTRIES .......................................... 19INDUSTRIAL TORQUE TOOLS ........................... 19JH TOMBLIN FENCE CO ..................................... 11JM MILLER ............................................................ 8LAYFIELD .............................................................. 2LEE SUPPLY COMPANY ....................................... 5LEE REGER BUILDS ........................................... 11MACHINERY STREET ........................................... 7MANSFIELD CRANE ........................................... 11MID-ATLANTIC STORAGE ................................. 19MIDSTREAMPHOTO.COM ................................. 14MON VALLEY SAFETY GEAR ............................... 4NEW PIG ............................................................. 20NORTH AMERICAN FIELD SERVICES ............... 11“O” RING ............................................................ 27

PENNINGTON SEED ........................................... 14PPC LUBRICANTS .............................................. 14PSB ...................................................................... 11RIG GRIP INCORPORATED ................................ 13RIGMAIDS ........................................................... 27ROCKWATER ........................................................ 1SAFETY KICK ...................................................... 26SHALE MARKETS ............................................... 11SHANNON SAFETY PRODUCTS ........................ 27SKYCASTERS ...................................................... 25STEEL NATION STEEL BUILDINGS ..................... 9ST!CK .................................................................. 19TECTONIC ........................................................... 27TRUSS TANK....................................................... 32UNIT LINER ......................................................... 15WATER STORAGE SOLUTIONS ........................... 5WEAVERTOWN ENVIRONMENTAL ................... 19

CALENDARSASSOCIATION MEETINGS ............................... 4TRAINING & WORKSHOPS .......................... 14UPCOMING EVENTS ...................................... 21NETWORKING EVENTS ................................... 8

EVENTSEUOGS ................................................................ 26IOGAWV .............................................................. 27NAPE SOUTH ...................................................... 17NGL GOLD RUSH ................................................ 9SHALE INSIGHT ................................................. 30WVOGE ............................................................... 23YOUNG ................................................................ 22PIOGA ................................................................. 26

CONTACT US FOR ADVERTISING,INFORMATION OR MAILING LIST CHANGES:


P. O. Box 1441 • Oak Hill, WV 25901855-269-1188

Fax: 304-465-5065E-mail: [email protected]

The Northeast ONG Marketplace will not be liable for any misprint in advertising copy which is not the fault of The Northeast ONG Marketplace. If a misprint should occur, the limits of our liability will be the amount charged for the advertisement.

We do not assume responsibility for the content of advertising or articles herein. Any warranties or representations made in the advertisements are those of the advertisers and not The Northeast ONG Marketplace.

ASSOCIATION MEETINGS

KOGA Annual Meeting | July 15 - 18, 2014Louisville, KY - www.kyoilgas.org

IOGANY Summer Meeting | July 16 - 17, 2014Findley Lake, NY - www.iogany.org

IOGAWV Summer Meeting | August 3 - 5, 2014White Sulphur Springs, WV - www.iogawv.com

OGA Annual Meeting | July 14 - 15, 2014Columbus, OH - www.ohiogasassoc.org

Tuscarawas Valley Desk and Derricks Club | July 9, 2014 TBA - www.wvonga.org - www.ooga.org

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By: Jocelyn Grecko, Marketing Coordinator, Comtech Industries, Inc.

Water – our world’s most abundant resource and undoubtedly an essential commodity in the hydraulic fracturing process. From a distance, water may seem to be ever-abundant; but, a closer look at the traditional well pad causes operators to consider how they manage and maximize their use of this resource.

The management of water in shale play comes down to three simple words: store, treat, and transfer – each greatly impact the productivity and life cycle of a well – from drilling to completions. With a holistic view, Comtech Industries has developed cradle to grave solutions for safe and sustainable water management – from pad to pad – or tank farm to pad. By engineering diverse offerings, the company has combined water storage and treatment to successfully manage all water on each well pad serviced.

The concept lies in the DYNA Tank, a patented aboveground water storage tank that is the only tank of its type. Meeting AWWA 103-9 specifications, the DYNA Tank’s steel infrastructure is bolted together to hold 1 Million gallons (25,000 bbls) of either fresh or produced water. The tank’s construction allows for durability, reliability, and greater production rates. Standing 36 feet tall and 72 feet in diameter, the environmental footprint of the DYNA Tank offers a significant savings. Three DYNA Tanks can fit into one standard 150’ x 300’ impoundment. The tank offers 33,500 ft2 footprint reductions (based on the average pit size) and has substantially saved operators pad design and excavation costs.

Even with these statistics, this innovative design steps further outside the conventional box to address safety, environmental, and economic concerns. The tank’s dimensions and capacity have helped eliminate the needs for pits and impoundments. In the past three years, the tanks’ 0% spill rates have contributed to the high environmental standards set forth by operators and regulatory agencies. While the DYNA Tank remains the focal point of Comtech’s operations, the entire life cycle of the pad is a critical part of Comtech’s operations. What occurs within and around the unique storage system have created opportunities for operators to maximize the use of their water (fresh and produced). A holistic view of water looks at the pad from cradle to grave. Comtech has achieved this through the development of Drilling Services, Pad Construction, Water Storage and Treatment, and NORM Surveying Work.

From the early stages of the pad’s life cycle and during the drilling process, solids change in both composition and quantity. Adapting operation and chemistry that complement the consistency of the drill cuttings generated from the drilling rig is one way in which Comtech focuses on managing water. Through the engineered implementation of shakers, centrifuges, and fluid processing systems, the need for solidification materials has been eliminated. By recycling water produced from the cuttings, trucking water for treatment or disposal has also been eliminated – ultimately reducing operational costs.

As the life cycle of the pad continues, DYNA Tanks are constructed to hold water pre and post-frac. Using a unique manifold, Comtech has engineered a turn-key solution to direct the fluid needed for hydraulically fracturing the earth. Across the Marcellus and Utica plays, as regulations become increasingly stringent and prominent within each shale play, it is important to forecast operations that abide by regulatory standards. Being mindful of the storage, treatment, and transfer process is a critical component to this proactive approach.

Post-frac, during the flowback stage, Comtech utilizes a patented treatment technology that allows for 100% of flowback to be recycled and reused. During a typical flowback period, 10%-40% of water is returned from each well. Multiple wells on a single pad create the need for treatment and management of what can easily exceed 1 million gallons (25,000 bbls) of flowback. As water becomes increasingly scarce and environmental regulations tighten, Comtech continues to offer the technology and expertise required to manage and treat flowback. Consequently, Comtech has found that this step in the process has helped lessen operators’ dependence on freshwater.

A diverse approach to water treatment means: removal of suspended solids, inorganic scale forming compounds, petroleum hydrocarbons/organics, and friction reducers and other polymer additives. In addition to this, sterilization is achieved and water is treated to the operator’s desired specification.

Store, treat, and transfer: three very important words facing the unique water challenges within the industry. By using engineered systems to maximize use of the world’s (and the industry’s) most valuable natural resource, natural gas exploration is becoming increasingly safe, efficient, and effective for all members of the shale play.

For more information on Comtech, please contact:Jocelyn GreckoComtech Industries, Inc.1301 Ashwood DriveCanonsburg, PA 15317724-884-0101 [email protected]


STORE, TREAT, AND TRANSFER: A HOLISTIC VIEW OF WATER

WATERMANAGEMENT

July 2014

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July 22-23PIOGA Pig RoastSeven Springs, PA | www.pioga.org

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to maintain distribution to the most current industry professionals working throughout the region.

ONG Marketplace [email protected] 855-269-1188

APPROXIMATE DEMOGRAPHICS:

By: Stacy Wheeler, Safety Kick

Safety forms and compliance documentation have been slow to evolve into the digital age. Company forms are typically completed in the field and on job sites where traditional computers are few and far between. Safety Kick, with its patent pending technology, is bringing safety reporting and compliance into the 21st Century.

Industry provided the initial idea for this revolutionary service when a Safety Manager for a large chemical company watched four employees spend their month pouring through stacks of paper safety documents from company employees. They sorted, prioritized, manually entered the data into the computer and lastly, filed them into cumbersome file cabinets. James Ehrlich, President of Safety Kick, created the Safety Kick application to streamline this process from start to finish with the data being entered on a mobile device, in the field, and submitted to the office in real time. The collected data is then easily managed through a simple web administration interface.

Safety Kick designed and built a web site to allow managers to create and assign almost any company form to their employees and contractors. To collect the information from the field they created a mobile application that is downloaded to the employee’s smart phone or tablet. Once the app is installed and the field worker securely logs in, they can pull up any of the forms assigned to them and start filling them out directly from the field or job site eliminating the need for paper forms and the “lost” form in transit back to the office. Most importantly, all information is in digital form from start to finish and in the office in virtually real time. No connection at the job site? The application stores all completed forms until the device gets

service again. Users can also include photos, GPS location stamps and on-screen signatures.

The mobile application is extremely simple to use. It utilizes drop down lists, big checklist buttons and picker wheels to minimize typing. Information that is always the same such as names and

employee numbers can be set to auto-fill, saving time and effort. Once a form is completed on the device, it can be saved or submitted for approval to a supervisor.

On the administration side, custom forms can be created or a group of standard templates is available for use or modification. Templates include incident forms, JSA’s, vehicle inspections, BBO’s, near miss forms and checklists. Once reports are submitted by employees, office staff can keep the report processes flowing through a defined system of review, approval and finalization allowing personnel in the field to receive real time notifications, with comments, regarding the status of their report. The data can then be easily uploaded to other trend analysis software, analyzed, distributed to internal and external parties and archived.

“The ability to gather information from the field in real time is huge,” says Ehrlich. During his tenure as chairman and CEO at Alcoa, former Treasury Secretary Paul O’Neill instituted real time reporting of incidences and illnesses. The information helped Alcoa achieve a near-zero injury rate because “we didn’t have to learn the same lesson over and over again,” according to O’Neill (Kent Hoover, www.businessjournal.com 11/15/2013). Ehrlich agrees and points out that real time information also allows management to respond more quickly to potential issues before they become problems.

While the system is built around safety forms, almost any data that is captured manually can be collected from the field with the system. Safety Kick has worked with several clients who also wanted to reap the efficiencies of the service by replacing other paper-based processes. A few examples include oil well production data, employee expense reports, product delivery confirmations, and equipment inspections and tracking.

Safety Kick’s ability to capture safety data electronically in real time streamlines the safety reporting process, increases employee accountability to complete reports in a timely manner, improves accuracy and timeliness of data received, makes the safety reporting process more efficient, positively impacts companies bottom lines, eliminates redundant data entry, and ultimately allows companies to respond to safety issues and concerns more quickly and be better informed.

Ehrlich says the most exciting part of introducing potential clients to the service is watching the proverbial light bulb turn on when they realize how much easier the service is going to make their world. “We’ll be sitting there talking through the product features and all of a sudden we get bombarded with questions. Will it do this? Will it do that? WOW! is a pretty common response that we get as well.”

Safety Kick is currently available for Apple devices for a low cost subscription with sliding monthly fees based on the number of users. The company is seeing steady growth in its customer base and is planning to include Android and other device platforms with future version releases. Expect to see more from this dynamic innovative Austin company and its revolutionary product as word gets out about Safety Kick.

For more information, contact James Ehrlich, President, Safety Kick, [email protected], (512) 419-9052


SAFETY KICK™ KICKS SAFETY INTO THE DIGITAL AGE

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By: Forrest Marsh, Business Development Manager-Oil and Gas, Aggreko North America

The boom in shale play activity has brought a number of new challenges for the oil and gas industry to address, including the proper management of water resources, a critical component throughout the drilling and production phases. The rise in activity has also resulted in higher volumes of produced and flow-back water, causing a need for more efficient and reliable water management services to keep pace with demands.

Additionally, in order to abide by safety standards for handling high temperature produced and flow-back water, operators must employ cooling applications to lower the temperature to safe levels. Any cooling application must therefore be engineered to suit the specific parameters of the operator’s needs for water management.

Oil Field Waste Water CoolingHydraulic fracturing and horizontal drilling on single and multi-well pad sites yield large volumes of produced and flow-back water. The traditional method of using disposal wells is often times too costly, unavailable, or even prohibited under environmental regulations. Increasingly, produced water must be sent through a water treatment process for cleaning and conservation of valuable water resources. In the following case, one U.S. oil and gas facility needed a solution to cool process water before discharging it to a third-party separations and purification process.

In order to avoid financial penalties and the potential shutdown of a 13,000 barrels per day waste water processing facility, the operator needed to provide sufficiently cooled process water that met required temperature specifications, or be forced to transport water to distant disposal wells. Therefore, an alternative cooling solution

was needed to operate during extreme heat in the summer months as well as during severe winter conditions.

The operator retained Aggreko Process Services (APS), an engineering team within Aggreko that designs solutions for customers to help improve operations and address environmental concerns.

The objective of this project was to cool 13,000BPD (380 gpm) from 140°F down to a maximum temperature of 95°F. Working

closely with the client, APS reviewed flow rates, process stream and site data to serve as the basis of the temporary design. APS engineered and supplied equipment for a temporary cooling loop independent of the facility’s permanent system. The design included a heat exchanger as well as 1,000 tons of cooling, circulation pumps and accessories. The process waste water was diverted to the heat exchanger, which then rejected the heat into the atmosphere through evaporative cooling.

Provisions were also made to allow for the safe, reliable and continuous system operation for temperatures ranging from -40º F to 140º F.

Through its engineering specialists and custom equipment designs, Aggreko was able to help the client remain fully operational without having to incur additional utility infrastructure costs.

The temporary system was also designed to operate with minimal attention. Modifications were made to allow winter-time operation, equipped with an automatic heating component to keep the contents of the basin from freezing.

The Aggreko solution was robust and could handle a variety of conditions, enabling the client to operate the system unattended while providing safe and continuous operations.

What to look for in a rental provider:When looking for a rental provider to help improve processes and operations, it’s important to choose one with experience in combining temporary equipment with industry experience. The right partner will be able to identify and evaluate feasible options, and deliver and install reliable, high-quality solutions consistently, even on short notice.

The rental provider’s engineering group should be able to assist the owner’s engineers with quality, environmental, safety and operational challenges. Along with an engineered solution and equipment, other deliverables can include formal documentation, scoping studies, process design packages, after-action reports and MOC documents. For example:

• Onsite Engineering Studies – The APS team collaborates on-site with your engineers to evaluate alternatives systematically and customize the most cost-effective solution using temporary refinery-grade equipment.

• Process Design Package (PDP) – APS participates in process safety reviews and provides training needed for safe startup and shutdown of Aggreko systems. The team also delivers engineering data, simulations and documentation to ensure that the installed project meets Management of Change (MOC) requirements.

• Project Management – When required, APS assigns a project manager to direct activity and ensure the work is implemented in a manner consistent with HSE criteria, meeting milestones while ensuring efficiency in logistics, equipment transportation, assembly and commissioning.

• After-Action Report – APS outlines project benefits, best practices, lessons learned and future recommendations in a single document. This helps maximize efficiency for recurring seasonal projects and also incorporates valuable lessons learned during project execution.

As onshore oil and gas activities move to more complex multi-well pads, which require more hydraulic fracturing stages and increases the need for water, it’s important for operators to efficiently and cost-effectively manage their water resources to maintain a sufficient supply, adhere to environmental regulations and avoid potential costly fines. When processing produced water for reuse, which requires that temperatures fall within certain specifications, the best solution is one in which the cooling application has been engineered for optimal performance with the operator’s equipment and processes.

Contact Forrest Marsh at [email protected]


ENVIRONMENTALMANAGEMENT

OIL FIELD WASTE WATER COOLING

July 2014


Energy Sites, Energy E vents, Portraiture & Corporate

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3 PEC Basic Orientation - SafeLand USAWashington, PA www.rjrsafety.com

8 PEC Basic Orientation - SafeLand USA St. Clairsville, OH www.rjrsafety.com

8 - 11 OSHA 510 – Standards for the Construction IndustryMorgantown, WV www.safetyandhealth.ext.wvu.edu/osha_ed_center

8 - 11 OSHA 511 – Standards for General IndustryMorgantown, WV www.safetyandhealth.ext.wvu.edu/osha_ed_center

17 PEC Basic Orientation - SafeLand USAWashington, PA www.rjrsafety.com

29 - 1 OSHA 511 – Standards for General Industry Harrisburg, PA www.safetyandhealth.ext.wvu.edu/osha_ed_center

7PEC Basic Orientation - SafeLand USAWashington, PA www.rjrsafety.com

12 PEC Basic Orientation - SafeLand USA St. Clairsville, OH www.rjrsafety.com

12 - 15 OSHA 510 – Standards for the Construction Industry Pittsburgh, PA www.safetyandhealth.ext.wvu.edu/osha_ed_center

17 - 22SEG International Microseismic Technology WorkshopAshville, NC www.seg.org

19Fundamentals of Shale DevelopmentWilliamsport, PA www.pioga.org

19 - 22OSHA 5810 – Hazards Recognition and Standards for On-Shore Oil and Gas Exploration & ProductionPittsburgh, PAwww.safetyandhealth.ext.wvu.edu/osha_ed_center

19 - 22OSHA 511 – Standards for General Industry Charleston, WVwww.safetyandhealth.ext.wvu.edu/osha_ed_center

21PEC Basic Orientation – SafeLand USA Washington, PAwww.rjrsafety.com

26Fundamentals of Shale Development Tridelphia, WVwww.pioga.org

26 - 28Petroleum Engineering for Non-Engineers Pittsburgh, PA www.cese.utulsa.edu/programdetail

26 - 29OSHA 510 – Standards for the Construction Industry Richmond, PA www.safetyandhealth.ext.wvu.edu/osha_ed_center

27 Energy Industry Training Series Washington, PA www.energytrainingseries.com

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By: Kristie Kubovic, Director of Communications, Shale Media GroupEdited By: Mindy Gattner, Editor, Shale Media GroupImages From: U.S. Energy Information Administration (EIA)

“The United States dependence on energy links directly to our security,” relayed Leon Panetta, 23rd Secretary of Defense and former CIA Director, at the recent DUG East Conference and Exhibition in Pittsburgh, PA. The United States spends roughly $1.2M/minute on foreign oil. “Keep in mind a lot of this money goes to people who don’t like us very much,” relayed Bob Beatty, President, “O”Ring CNG Fuel Systems.

In recent years there has been has been a change in the tide. The discovery of vast reserves of shale oil and gas in areas such as the Marcellus, Utica and Bakken Shale plays have supported this change, along with improvements such as horizontal drilling being used in conjuncture with hydraulic fracturing, which have allowed

drilling to be completed eight to ten times more efficiently and thus, expanding the ability of producers to recover more shale oil and gas. These changes are leading to American energy security, which are in turn leading to American security in general.

In fact, if Pennsylvania, Ohio and West Virginia were a country, it would be the third largest energy producer in the world. In the tri-state region, the Marcellus and Utica Shale plays are a large part of this ebb and flow. According to the U.S. Energy Information Administration (EIA) from the early 1980’s to about 2005, U.S.

natural gas production ranged from remaining steady to seeing a slight increase in production. However since 2005, the U.S natural gas production has increased significantly.

On the other hand, from the early 1980’s to around 2005, the U.S. net import of crude oil and petroleum products was soaring almost out of control. However, since 2005 that number has been steadily dropping, and in turn bringing many around the globe to draw a correlation between the two.

This includes the Middle East, which is feeling the impact of this drop. One sign of this is anti-hydraulic fracturing movies, such as Promised Land, being partially funded by the royal family of the oil-rich United Arab Emirates (UAE). The film,

which starred Matt Damon and John Krasinski, presented American oil and natural gas producers as money-gluttonous companies poisoning rural American towns.This country’s natural gas reserves can be used as compressed natural gas (CNG) or one of its by-products, such as propane. Both CNG and propane can reduce America’s reliance on foreign oil. Ronald Schramm, President, ProGas, Inc., pointed out, “The consumer can be a clear cut winner if they choose to use CNG and/or propane, because they are domestic products and an energy source that will fuel our own economy and not a foreign country’s.”

Many companies, such as Frito Lay, Giant Eagle and Waste Management have made the switch to CNG. Beemac Trucking, a long-haul, steel hauling, flatbed carrier and logistics company, is also making that shift. Dave Dudo, Senior Vice President of Operations, Beemac Trucking, expressed, “We wanted to rely less on foreign oil. We have a problem supporting countries that bomb our towers and harm our soldiers. We were the ideal candidate for the CNG conversion due to the size, distance traveled and amount of gas consumed by our trucks.”

This connects to the American soldier and American security. To date, over 6,800 American soldiers have been killed in action during the Global War on Terror (GWOT) alone. Even though there are various official reasons for this war, energy and petroleum in particular do play a part in the equation. America’s shale oil and gas reserves represent a way to alleviate OPEC energy controls imposed by Middle Eastern nations. Without a dependency on oil, these petroleum exporting countries lose their leverage.

Beatty summed up the importance of the utilization of our shale oil and gas reserves and America’s quest for energy security by stating, “We don’t achieve national security by frisking grandma at the airport. We do it by not buying foreign oil. The taxpayer is paying for our military. The energy consumer is buying the guns and ammunition for the opposition.”

Shale Media Group (SMG) is a news, information, education and mapping resource dedicated to the shale oil and gas industries by messaging across video, Internet, publications, events and radio. For more, check out ShaleMediaGroup.com to access all platforms, including: TheMarcellusShale.com, TheUticaShale.com, TheShaleAcademy.com and ShaleEnergyNow.com. In addition, join us on July 24th for our next Elite Energy Event in front of the Holiday Inn Express in Bentleyville, PA from 6-9pm. Register or find more details at ShaleMediaGroup.com. Kristie Kubovic is the Director of Communications at Shale Media Group. Contact her at [email protected]


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Veyance Technologies, manufacturers of Goodyear Engineered Products is excited to announce the release of the latest in water transfer hose technology. Coined Velocity™, this

super tough and rigid PVC hose allows you to see water in motion as you perform onsite.

The research and development put in to the Velocity hose is what makes it such an ideal product. Built with fabric reinforced PVC product allows for a competitive marketplace in terms of hose sizes, working pressure equal to or greater than competitors, 3:1 minimum burst pressure in compliance with RMA, UV resistance & flexibility equal to or better than competitors and temperature rating -13degF (-25C) to 140degF (60C). Not only is Velocity extremely efficient and fast, it’s also flexible and includes a very rigid PVC helix. It’s bend radius at 3”, 4” and 6” hose diameters beat competitor like models significantly. In addition to its superior flexibility, Velocity is the ideal water transfer and suction hose for the dirtiest, most intense, toughest of jobs. Available in 8 sizes ranging from 1-1/2” (110 PSI) to 8” ID (60 PSI) and capable of full vacuum in all sizes (29 in. Hg.). This new hose features a corrugated OD, synthetic braid reinforcement, with a smooth inner bore to help maintain efficient water transfer.

The Velocity WT is ideal for agriculture, contractors, as well as oil & gas transfer application. The lightweight, flexible design makes the velocity easy to handle, yet stays in place to ensure your application needs are met. Velocity can be used in wide range of applications because the fabric reinforcement gives it a higher working pressure than a standard PVC hose. In addition, the orange PVC helix makes it easier to drag on smooth surfaces than rubber hoses. Contractors can use it on construction sites to move more volumes of water from ponds or trucks to the job site. Also, it is rated for full suction, which increases the versatility of the hose for both water suction and discharge applications. Oil and gas sites tend to use it in larger diameter short lengths to move water from the truck or water buffalo to the drill site and agriculture uses it for dewatering and irrigation applications

When it comes to performance, the Velocity WT, meets RMA’s UV resistance and exceeds competition in flexibility with lower Force-to-Bend and smaller Minimum Bend Radius. To support the release of the Velocity WT, Veyance Technologies, also makes available flexible helix coils that create a level surface for crimp or punch lock fittings. In addition, crimp specs were developed to aid customers in assembling fittings onto the Velocity hose. For more information on the new Velocity WT, please call Veyance Customer Service at 800.235.4632 or visit goodyearep.com.

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July 2014

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UPCOMING EVENTS

Denotes National EventVisit our website for links to these events

WWW.ONGMARKETPLACE.COM/EVENTS

JULY9-10IOGAWV Annual Oil and Gas Equipment ShowBuckhannon, WV | www.iogawv.com

14-15EIA Energy ConferenceWashington, DC | www.fbcinc.com

21-23ASCE Shale Energy Engineering ConferencePittsburgh, PA | content.asce.org/conferences

22-23PIOGA Pig Roast, Equipment Show and ConferenceSeven Springs, PA | www.pioga.org

30PA Gas Expo Indiana, PA www.pagasexpo.com

20-22NAPE SouthHouston, TX | www.napeexpo.com/nape-shows/nape-south

21-22Frac Sand Supply and Logistics ConferenceSan Antonio, TX | www.petroleumconnection.com/sand

25-27URTeC 2014 Denver, CO | www.urtec.org

8-10U.S. GTL Congress Washington, DC | www.oilandgasiq.com

8-10AAPG/SEG Fall Expo Houston, TX | www.seg.org

9-11NGL Gold Rush Summit Cleveland, OH | www.infocastinc.com

9-11Petroleum Innovation Expo Houston, TX | www.piexpo.net

10-11YOUNG 2014 Youngstown, OH | www.regionalchamber.com

17-19Northeast Energy Summit Boston, MA | www.infocastinc.com

18SOOGA Fall Trade Show TBA |www.sooga.org

23Northern Ohio Energy Management Conference Akron, OH | www.mecseminars.com

24-25Shale Insight 2014 Pittsburgh, PA | www.shaleinsight.com

24-25SPE Liquids Rich Basins ConferenceFt. Worth, TX | www.spe.org

24-28ADDC Annual ConventionLafayette, LA | www.addc.org

SEPTEMBER

AUGUST

July 2014

By: Joshua Sandberg, Environmental Project Manager, Palmerton Group, LLC and Laurel Oil and Gas Corp., the Oil and Gas Divisions of GZA GeoEnvironmental

Shale gas production in the Appalachian Basin has been on the rise over the last ten years and will undoubtedly continue as supplies and prices adjust to the market demands. As this takes place, operators are making strategic decisions to purchase land, and acquire smaller companies to position themselves for future development.

Many of these acquisitions have older conventional assets and liabilities associated with them, both known and unknown. Legacy assets such as orphaned, abandoned, and non-producing wells, old and degraded pipelines and gathering systems, tank batteries, buildings, dump sites, and former drill pits that were improperly decommissioned or capped are often included in these transactions unbeknownst to the purchaser. If they are known, their presence and impact are often not fully evaluated.

While mid-size and large operators may bring global experience to the table, they often lack the hands-on local skill sets and a complete historical perspective of the assets they acquire in the region. Acquiring operators often find out after the fact that the assets they have acquired are significant liabilities. Given the nature of environmental stewardship expected of our industry and the highly charged political debate, reactive management is not a choice. Here is where the experience of highly qualified environmental consulting firm with experience in oil and gas will pay big dividends.

One of the proposed revisions to the Pennsylvania Chapter 78 regulations

will require operators to identify, monitor, and/or plug orphaned and abandoned wells within 1,000 feet of vertical and horizontal well bores prior to hydraulic fracturing operations. Identification of these wells can be done through field efforts, historical documents and maps, Pennsylvania Department of Environmental Protection (PADEP) databases, and certain private collections and academic GIS databases that have been compiled through the years.

It is extremely important to conduct quality due diligence in the early stages of evaluating assets or land to be acquired or divested. As a purchaser or seller, the ability to comprehensively identify and evaluate current and historic environmental and operational liabilities is not only key to price negotiations, but also to understanding

the total scope of liability to be acquired, or what future culpability would be assumed. One way to mitigate the inherent risks associated with the acquisition or divestiture of assets is to employ a quality consultant with proven experience in the region. Once liabilities are identified and defined, operators must develop a strategy to manage them. Two obvious options are to divest or address them head on. If divesting, are you going to partially or fully divest? Comprehensive title and deed research combined with due diligence information can often help answer this and aid in evaluating risk versus value of divesting fully or partially, divesting at a later time, or not divesting at all. Establishing ownership may help determine who has liability for active or abandoned wells on the target property.

If choosing not to divest these liabilities, addressing them head on is by far the best choice.

With the risk / reward proposition settled and the decision to acquire or divest the assets and mitigate the liabilities made, here are some valuable cost savings considerations which are often overlooked by operators when completing a liability management project.

• Good Planning: It is critical when working with a consultant or any subcontractor to establish and agree upon a clear, concise, and detailed scope of work. This will set expectations for the project team and aid in forecasting costs, as well as promote discussion on cost savings. Topics discussed should include: overall scope, overall project team structure, health and safety program, methodologies, roles, responsibilities, schedule, costs, deliverables, operator-specific requirements, expectations, and a strategy for regulatory and stakeholder interfacing. Frequent

meetings with the project team are also crucial to evaluate the scope of work and adjust if necessary. This will avoid disputes amongst all parties and foster a better teamwork environment.

• Clear Health and Safety Expectations: A solid health and safety program is very important for keeping people safe and meeting regulatory requirements,

and there are a lot of great processes and tools to help establish a solid health and safety culture; however, don’t lose sight of the big picture. Keep the program simple and balance the process with common sense and above all, leadership. Involve your consultant, contractors, and other key personnel in the development of your health and safety program. Including these stakeholders will foster a sense of ownership and result in a much more effective and successful program.


LEGAL& FINANCE

SOUND STRATEGIES FOR MANAGING ACQUIRED AND LEGACY LIABILITIES: A CONSULTANT’S PERSPECTIVE

July 2014

• Stakeholder Interface: Being proactive when communicating with municipalities, landowners, residents, local responders, and regulatory agencies involved can also go a long way in avoiding unnecessary costs. Many current state regulations, as well as proposed changes, would require additional notifications to agencies and stakeholders if the well site is within a specified distance of publicly owned parks, national landmarks, species of concern, historical or archaeological sites, and water supply wells. Understanding their expectations, as well as having them understand yours, will make the project run much more smoothly and efficiently by avoiding shutdowns, fines, or additional work due to lack of planning. Understand your responsibility for addressing items such as road repairs, land restoration, timber compensation, surface and mineral rights, noise ordinances, permitting, etc.

• Understand the Waste Stream: Managing waste can become very costly. Again, many current state regulations and proposed changes impact waste management by identifying new requirements in the use, design, testing, and security of pits, open top vessels, fresh water impoundments, and secondary containment. Whether

dealing with well plugging fluids, unrecoverable oil, tank sludge, naturally occurring radioactive material (NORM), scrap metal, asbestos, or C&D, understanding quantity, regulations, disposal facilities, transport and disposal costs, and worker exposure risks is obviously important. Managing the waste on-site can be very tricky. The proper containment, separators, filtration units, etc. can be quite beneficial, but the required permitting for setting up such micro facilities can also be overlooked. Regulatory non-compliance with regards to waste can have a devastating impact on the project costs, as well as the operator’s public reputation. It is imperative to choose a consultant or waste manager that fully understands the waste stream.

• Let the Consultant do Their Part: Finally, let the consultant do what they do best, manage the project! Trust your consultant to run the project and deliver the product you need to manage the liabilities successfully.

Joshua Sandberg is an environmental project manager for Palmerton Group, LLC and Laurel Oil and Gas Corp., the Oil and Gas Divisions of GZA GeoEnvironmental. [email protected] 315-800-1800. GZA is a 500 person, engineering firm that offers a wide scope of services to the oil and gas, construction, industrial and commercial industries, and is currently celebrating its 50th anniversary as a company. Recently, GZA acquired Laurel Oil and Gas Corporation, providing completions supervisors and engineers to Appalachian Basin operators.

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Wednesday, July 16th 8:15 am – 3:45 pm: Technical Session 5:00 pm: Fundraiser Reception for NYS Governor candidate Rob Astorino 7:00 pm: Get Acquainted Cocktail Reception

Thursday, July 17th 8:00 am: Golf Tournament (Over $5,000 in prizes!) Scramble or Play your own ball

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12:00 pm: 34th Annual Barbecue & Oilfield Equipment Show Lunch and dinner provided. Vendor displays, great food, door prizes & music throughout the day!

Outdoor Exhibiting is available on July 17th during the Barbecue. NO FEE for exhibits but registration form and barbecue ticket required.

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By: Kristie Kubovic, Director of Communications, Shale Media GroupEdited By: Chris Stroyne, Editor, Shale Media GroupPhotos Provided By: ProGas, Inc. and “O” Ring CNG Fuel Systems

In an effort to ‘go green’ and reduce U.S. dependence on foreign fuels, alternative fuels have been gaining popularity in recent years. Due to this nation’s vast shale oil and gas reserves, two alternative fuels that have gathered more attention are compressed natural gas (CNG) and propane, also known as liquefied petroleum gas (LPG) or autogas. Both have advantages and disadvantages over the other and other fuel sources, such as gasoline and diesel. Which is best for the consumer boils down to items such as cost, safety and location.

The BasicsGoing back to Chemistry 101, CNG is predominantly composed of methane. With a chemical formula of CH4 (one carbon and four hydrogen atoms), methane is the simplest hydrocarbon and occurs naturally in nature. On the other hand, propane is a byproduct of both natural gas processing and petroleum refining. Propane is an alkane with a chemical formula of C3H8 (three carbon and eight hydrogen atoms).

Environmental ImpactLooking back at those chemical formulas, CNG has one carbon atom per molecule, while propane has three. CNG has the highest energy to carbon ratio (4 to 1) of all fossil fuels. This emits less carbon dioxide per unit of energy than all other fossil fuels. Also, propane (with three carbon molecules) is still a cleaner burning fuel than gasoline or diesel. As a result, relative to gasoline, CNG offers potential reductions in carbon dioxide emissions by 25 percent, while propane reduces carbon dioxide by 17-24 percent.

Rick Price, Executive Director, Pittsburgh Region Clean Cities, informed, “At Clean Cities, our mission is to advance the energy, economic and environmental security of the U.S. by supporting local decisions to adopt practices that reduce the use of petroleum in the transportation sector. Our goal is to reduce petroleum use by 2.5 billion gallons per year by 2020. We have already displaced nearly 5.5 billion gallons of petroleum since 1993 with the help of CNG and propane.”

Safety“Misinformation like ‘CNG is not safe’ is not true and still being tossed around,” expressed Bob Beatty, President, “O”Ring CNG Fuel Systems, who works with natural gas fueling stations and relates it to the Industrial Revolution stating, “Back then, it was said that electricity was dangerous and shouldn’t be used. It is the same territory, just a different era with CNG.”

John Iannarelli, President/CEO/CFO, Green Eye AutoGas Solutions, added, “General awareness is key. We’re at a point where the general public may benefit from more education in regards to propane autogas safety to relieve any preconceived fears that they may have. As an example, some have mentioned to me that propane autogas is like driving around with a potential bomb in my vehicle. That perception could not be farther from the truth. In fact, propane autogas gas tanks go through rigorous testing, have thicker tank walls and are equipped with safety features to ensure proper filling and transportation use.”

The auto ignition temperature is beneficially high for both CNG and propane in comparison to other common fuels. For example, CNG’s auto ignition temperature

is 1070°, while propane’s is 890°. On the flip side, gasoline’s is 475°, while diesel’s is only 420°.

In terms of a spill hazard, CNG does have a leg up. Both CNG and propane will dissipate into the air in an open environment. Since CNG is lighter than air, it isn’t considered a spill hazard. It mixes harmlessly and quickly with the air and won’t pool. On the other hand, propane is heavier than air. It will sink to the ground, collect and pool, which does pose a greater safety risk, like gasoline. However, both CNG and propane are considered non-toxic and pose no threat to soil, surface water or groundwater.

Fuel CostWhen it comes to the price at the pump, CNG is the winner by about a quarter/gallon. Currently in the Pittsburgh, PA region, the average price of gasoline in running $3.80/gallon, while diesel is sitting at a whopping $4.20/gallon. Propane fairs much better averaging $2.25/GGE. However, CNG plummets to around $2.00/GGE (Gas Gallon Equivalent).

In addition, gasoline and diesel sometimes seem to vary daily and are very dependent upon international affairs, particularly in the Middle East. “Prices should remain stable for both CNG and propane because of the abundance of product being found in the various shale formations throughout the country,” informed Ronald Schramm, President, ProGas, Inc.

Propane prices are prone to seasonal fluctuations, due to the greater demand for home heating during the winter month. Schramm explained, “Propane is commodity driven and fluctuates more from November to February, but the Marcellus Shale play has driven the price down.”

Automobile ConversionsFYDA Energy Solutions offers complete sales, parts and service for alternative fuel vehicles. Part of what the company does is offer CNG and propane conversions to the transportation industry and general public.

Tim Hooker, Director of Business Development at FYDA Energy Solutions, says, “The technology has been around since 1998, but now there is more awareness. Plus, more recently, significant improvements have been made to the technology. In terms of the mechanics, there are now state of the art electronic engine controls versus old school carburation and fumigation.”

There are two types of conversions that FYDA Energy Solutions performs: bi-fuel and dual-fuel. A vehicle’s weight plays into this determination. Light-duty vehicles with gasoline engines use a bi-fuel technology. A bi-fuel vehicle has separate tanks for the two fuels. The engine will run off one fuel at a time, but uses the alternate fuel first. It can switch from CNG or propane/Liquefied Petroleum Gas (LPG) to gasoline. This is often used in taxis, police cars, shuttles and commercial vans.


ALTERNATIVEFUELS

CNG VS. PROPANE: A BENEFICIAL BATTLE

July 2014

Vehicles over 33,000 pounds utilize dual-fuel technology, where LNG/CNG fuels are stored separately from the diesel fuel tanks. There are key benefits to this: no spark plugs, no fumigation, uses direct injection, functions at idle, utilizes power take off (PTO) and dynamic functions to provide maximum substitution. If the truck runs out of natural gas, it can convert back to diesel seamlessly, which eliminates range anxiety. With the conversion, FYDA could take a current diesel engine and convert it to one that runs on diesel and natural gas. Hooker explained, “This transition could lower overall fleet costs by 25 to 40%.” The users who see the biggest return are those who use the most gas.

A conversion takes about three to five days. It is still a pricey endeavor for the general public to convert a personal vehicle to CNG or propane, but there are often various grants to assist with the purchase or conversion. A propane light conversion costs about $6,000 to $8,000, while a CNG conversion runs around $10,000 to $14,000. Hooker says, “The high pressure CNG fuel cell is what keeps the CNG conversion

expensive.”

Fueling StationsAccording to the U.S. Department of Energy’s Alternative Fuels Data Center, there are currently a little over 700 public CNG fueling stations. When you switch to propane, the number jumps to close to 2,750 stations, making it the winner in the alternative fuels refueling

station battle. However, neither come close to the gasoline stations across this country, which is estimated to be close to 170,000.

Alternative fuel vehicles are becoming more commonplace on the roads. Hooker drives a CNG vehicle and gets about a 300-mile range. He says you just have to be thoughtful of the situation when it comes to refueling.

In order for alternate fuels to be available to the general public and fleet vehicles, our industry must provide and create a fueling infrastructure that people are familiar with. Schramm explained, “Dispensing units, pumps, for propane and CNG are being made to image that of gasoline and diesel fuel. Up until recently, we’ve only provided dispensing units for commercial fleet or industrial forklift accounts only. These units are crude in appearance and not what the general public is used to. Now that propane and CNG have made headway as a viable motor fuel, manufactures of propane and CNG dispensing units are developing units to look and work like gasoline and diesel dispensers.”

EconomicsGreen Eye AutoGas Solutions is a general contractor for the alternative fuel industry that focuses on propane for fleets. Iannarelli explained, “We engage with the potential consumer on the front end and work them through the process. We offer a pilot to give autogas a try and see if a company wants to go in that direction. If they do, we do the heavy lifting on the back end and project manage to make the two come together. Like with a house with a general contractor then with the subs, we figure out what to do next.”

Iannarelli says a big problem with alternative fuels in general and autogas in particular is a lack of education. “More education yields more interest. More interest yields more opportunities for fleets to do a ‘pilot’ to see and understand first-hand the benefits of vehicles running on propane autogas.” Green Eye AutoGas Solutions tends to focus more on companies with their own fleet and own yard, where they come back each night to refuel.

“We’re starting to see more companies change over. Awareness is growing. Entities such as municipalities are inquiring about the benefits and return on investment (ROI). Some have been early adopters. Those have generally been the ones on a tight budget, such as school bus companies or police forces, or companies where vehicle expenses are a big expense line item. CFOs at these companies are looking for savings. To get these savings, they start by focusing on payroll expense, but

also take a hard look at potential vehicle expense savings. A company often can’t do much about payroll, but they can look at fuel expenses,” relayed Iannarelli, who added, “In terms of conversion costs for those buses, to convert one to propane costs about $15,000 to $18,000, while a CNG bus conversion costs around $28,000 to $30,000.”

Propane fueling facilities are also cheaper to build upfront and offer a more modest investment. Iannarelli informed, “You could build 10 to 15 propane dispenser stations for the price of one CNG station. Depending on the bells and whistles selected, a CNG station may cost about $1,000,000 to $1,500,000, while a propane dispenser station costs about $25,000 to $35,000 to start. If you get more sophisticated, you can add on another $50,000 to $125,000.”

For those stations, CNG is stored above ground, while propane could be stored above or below ground. Iannarelli added, “Typically a 1,000 to 2,000 gallon tank is used when propane is stored above ground. However, much larger tanks are employed underground such as 12,000 to 30,000 gallon tanks. Also, the electricity to run a propane dispenser is significantly less than CNG.

InfrastructureLocation also plays a factor. Take Pennsylvania for instance. The western part of the state sits on top of the vast Marcellus and Utica Shale reserves. However, the southeastern part of the state does not. Due to these geographical influences, western Pennsylvanians tend to have more knowledge on CNG than their counterparts in southeastern Pennsylvania.

In addition, there are more pipelines in the western part of the state. CNG is often taken directly from those pipelines. CNG is always flowing, which means there is always product available. On the other hand, propane is brought in by bobtail or transport vehicles, which makes your choice of a propane supplier very important to ensure an ample supply. If there is a delivery delay, one may run out of propane. CNG is always flowing. Therefore, location is also an important part in the equation.

The ConclusionCompanies need to look at the total cost of investment and the return on investment. Their savings down the road could impact which alternative fuel selection is appropriate for them. Some companies may not want to spend a larger amount of money upfront and propane would work more to their advantage. For others, after sitting down, doing the math and taking into account items such as the size of a fleet and number of miles traveled, it may be to their advantage to spend more upfront since the cost of CNG is less. Often, CNG is the better choice for vehicles like buses or taxis that are on the road a lot if CNG is available. If CNG is not available, propane is the next logical choice.

Either way, both propane and CNG offer advantages. There is no clear cut winner in the battle between CNG and propane. “The consumer can be a clear cut winner if they choose to use CNG and/or propane because they are domestic products and an energy source that will fuel our own economy and not a foreign country’s,” pointed out Schramm. Both offer a lot of similar benefits, while there is very little difference in how well they perform. It truly comes down to the consumer and their emphasis on items such as cost and location. One item is clear—both offer advantages over gasoline and diesel. Iannarelli expressed, “Awareness and education are important, so that the general public can take advantage of something that the U.S. has a vast supply of. It is the great American story to be told.”

Shale Media Group (SMG) is a news, information, education and mapping resource dedicated to the shale oil and gas industries by messaging across video, Internet, publications, events and radio. For more, check out ShaleMediaGroup.com to access all platforms, including: TheMarcellusShale.com, TheUticaShale.com, TheShaleAcademy.com and ShaleEnergyNow.com. In addition, join us on July 24th for our next Elite Energy Event in front of the Holiday Inn Express in Bentleyville, PA from 6-9pm. Register or find more details at ShaleMediaGroup.com. Kristie Kubovic is the Director of Communications at Shale Media Group. Contact her at [email protected]


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