The Bakken Magazine January/February 2016

JANUARY/FEBRUARY 2016

www.THEBAKKEN.comPrinted in USA

Promising Tech Here Now Or Coming Soon6

New From The Field

PlusCrude Export Destinations

Page 22

AND Operator Transfers Bring New PlayersPage 14

THEBAKKEN.COM 3

CONTENTS JANUARY/FEBRUARY 2016 VOLUME 4 ISSUE 1

4 Editor’s NoteFocus On Technology Underscores Main Bakken ThemeBY LUKE GEIVER

6 ND Petroleum CouncilExpectations For The 24th Williston Basin Petroleum Conference BY TESSA SANDSTROM

5 Events Calendar

DEPARTMENTPg 22 IN PLAY

Bakken Export ExpectationsEarly reactions from the oil industry and the best markets for light tight oil.BY THE BAKKEN MAGAZINE STAFF

ON THE COVER: Energy Recovery Inc.'s pressure pump could reduce the number of units on the well site from 20 to 3. The VorTeq was tested and proven in the Bakken. Schlumberger has agreed to license the technology. IMAGE: ENERGY RECOVERY INC.

Pg 16 PRODUCTS & TECHNOLOGY

New Bakken Oilfield Tech

From wellsite infrastructure to the subsurface, new technology products are entering the Bakken play for reasons that have

nothing to do with oil prices. BY LUKE GEIVER

ADVERTISER INDEX28 AE2S

10 Bartlett & West

15 Convey-All USA

12 Dunlop Protective Footwear

21 Evoqua Water Technology LLC

13 Gibson Environmental Services

5 Hotsy Water Blast Manufacturing LP

26 iLevel Digital

14 ISCO Industries

11 J-W Energy Company

25 KLJ

24 Matrix Service

19 Protego USA, Inc.

27 Texas Classic Productions

2 The Bakken Conference & Expo

20 United Piping, Inc.

The BAKKEN MAGAZINE JANUARY/FEBRUARY 20164

Luke GeiverEditorThe Bakken [email protected]

EDITOR'S NOTEwww.THEBAKKEN.com

VOLUME 4 ISSUE 1

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

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EDITORIAL

Editor Luke Geiver [email protected]

Staff Writer Patrick C. Miller [email protected]

Staff Writer Ann [email protected]

Copy Editor Jan [email protected]

PUBLISHING & SALES

Chairman Mike Bryan [email protected]

CEO Joe Bryan [email protected]

President Tom Bryan [email protected]

Vice President of Operations Matthew Spoor [email protected]

Vice President of Content Tim Portz [email protected]

Marketing & Sales Director John Nelson [email protected]

Business Development Manager Bob Brown [email protected]

Account Manager Austin [email protected]

Circulation Manager Jessica Beaudry [email protected]

Marketing & Advertising Manager Marla DeFoe [email protected]

ART

Art Director Jaci Satterlund [email protected]

Graphic Designer Lindsey Noble [email protected]

Focus On Technology Underscores Main Bakken ThemeAn under told, sometimes untold, story has emerged from this month’s issue on oilfield technology in the Bakken. Despite the activity-related realities of low oil prices, new entities are entering the Bakken. Oil prices aren’t low enough to gloss over the appar-ent opportunities several segment specific entities believe exist in the Williston Basin circa 2016. New-to-the-Bakken operators from Iowa, Minnesota, Colo-rado and Texas are taking over both legacy wells and

undeveloped leaseholds with an eye on both the near- and long-term. Former oil executives are raising private capital to acquire existing assets and production. Private equity groups are forming just to partake in the Bakken play.

As we found out in our efforts to detail some of the more interesting or promising tech-nologies coming soon or recently launched there are numerous reasons why companies are eyeing the Bakken.

Low oil prices are certainly a reason to push a new product to upstream or midstream entities. As existing companies work to cut costs, any product or service that can change the bottom-line dynamic is welcome. In many cases, however, new products are entering the Bak-ken despite the price of oil. New products and technology packages come from the competi-tive nature of an unconventional play. Continued revenue requires constant innovation and a better offering, we were told. There are simply too many entities that offer a similar service or product in the massive oil and gas space to remain idle and keep product lines stagnant. The quest for more efficient operations in the field or the boardroom is also a gigantic reason why new products are being brought to the Bakken. New regulations, which always seem to be part of the Bakken, are also a reason new tech hits the Bakken market. In the end, we learned the negative of a low oil price is not enough to deter the product developer or the potential client from researching or investing in a new product or a producing well or field-related asset.

Following the work put into this issue looking at oilfield technology offerings, I expected to comment on some of the impressive or unique things coming to the Bakken. You can read about a few of them in our page 16 feature. The real theme for this issue, one that was cer-tainly unforeseen but also one we should have expected, is instead about the reality that low oil prices simply do not have the ability to overshadow one of the things the Bakken is, and always has been about: innovation and opportunity.

www.THEBAKKEN.com

VOLUME 4 ISSUE 1

EDITORIAL

Editor Luke Geiver [email protected]

Staff Writer Patrick C. Miller [email protected]

Staff Writer Ann [email protected]

Copy Editor Jan [email protected]

PUBLISHING & SALES

Chairman Mike Bryan [email protected]

CEO Joe Bryan [email protected]

President Tom Bryan [email protected]

Vice President of Operations Matthew Spoor [email protected]

Vice President of Content Tim Portz [email protected]

Marketing & Sales Director John Nelson [email protected]

Business Development Manager Bob Brown [email protected]

Account Manager Austin [email protected]

Circulation Manager Jessica Beaudry [email protected]

Marketing & Advertising Manager Marla DeFoe [email protected]

ART

Art Director Jaci Satterlund [email protected]

Graphic Designer Lindsey Noble [email protected]

EVENTS CALENDAR

The Bakken magazine will be distributed at the following events: Energy Generation ConferenceJanuary 26-28, 2016Denver, ColoradoIssue: January/February 2016The Bakken magazine

NAPE North American Prospect ExpoFebruary 10-12, 2016Houston, TexasIssue: January/February 2016The Bakken magazine

DUG Bakken and NiobraraMarch 31-April 2, 2016Denver, ColoradoIssue: March/April 2016The Bakken magazine

Williston Basin Petroleum ConferenceMay 24-26, 2016Bismarck, North DakotaIssue: May/June 2016The Bakken magazine

The Bakken Conference & Expo July 25-27, 2016 Grand Forks, North DakotaIssue: July 2016The Bakken magazine


NORTH DAKOTA PETROLEUM COUNCIL THE MESSAGE

Expectations For The 24th Williston Basin Petroleum Conference

By Tessa Sandstrom

We recently bid farewell to 2015, and for many in the oil and gas sector, usher-ing in a new year was wel-come. The year presented many challenges and these challenges were highlighted often. What was not high-lighted, however, was just how well the industry was able to manage.

In reading through a write-up from last year, I had lauded the fact that industry was figuring out how to pro-duce oil economically at $70 and even less. Today, prices are under $40, but production has continued as industry has got-ten better and better at recov-ering more oil with less. This is thanks in part to advance-ments in technology, which will be a major focus of this year’s Williston Basin Petro-leum Conference in Bismarck, N.D., May 24-26.

The WBPC began as a hy-draulic fracturing symposium and explored the technologies that have since unlocked the Bakken, defining our region as one of the top energy pro-

ducers in the world. This is a feat that more than a decade ago may not have seemed plausible. At that time, the re-trieving Bakken crude was still considered uneconomic. The relentless work of industry pioneers led to the innovation and combinations of tech-nologies that have since made the Bakken shale play a world-class resource. The conference has evolved since its early days to focus on more efficient oil drilling and completion meth-ods that are helping us recover more than 1 million bopd from the Williston Basin.

This year, we are pleased to welcome many prominent industry and company lead-ers to discuss the technolo-gies and efficiencies that are changing the way we develop our vast natural resources. Among them will be SM En-ergy’s president and CEO Jay Ottoson. Ottoson has more than 28 years’ experience in the industry and will share his knowledge and experience in optimization. Also joining him on this topic will be Gerbert

Schoonman vice president for Hess Corp.’s Bakken assets, to talk about the company’s work with efficiency, lean manufac-turing and the future of the Bakken in the current condi-tions.

One of the bright spots of 2015 was the passage of a provision that lifts the ban on

crude oil exports. For more than 40 years, the U.S. was vic-tim of price fixing by OPEC. This ban prevented the U.S. from participating in what is otherwise a global market, but Congress wisely voted to lift that ban in December. While the benefits of lifting this ban won’t be immediate,

THE NEW LEVEL: The last time the Williston Basin Petroleum Conference took place in North Dakota, oil prices were trading much higher. Producers have shown their ability to take operations to a new level, however, as production has remained above 1 million barrels of oil per day despite the price of oil.

THEBAKKEN.COM 7

NORTH DAKOTA PETROLEUM COUNCIL

it does present an opportunity for Bakken crude to find new markets with our allies in Eu-rope and Asia.

To discuss these new mar-ket opportunities will be Lian Yok Tan from K&L Gates out of Singapore. Ms. Tan has more than 20 years of experi-ence in energy, including serv-ing as an advisor to companies on joint ventures and mergers, project development, financ-ing and operation and oil and gas exploration and commer-cialization among other areas of expertise.

Attendees will also hear a keynote address from Don Hrap, president of Lower

48 for ConocoPhillips. Hrap leads the development, opera-tions and services related to the company’s exploration and production business in the Lower 48 region of the U.S. and will offer valuable insight into the future of the Bakken and ConocoPhillips’ involve-ment as one of the largest producers in North Dakota.

Encouraging our indus-try’s best and brightest to find these new opportunities will require leadership, espe-cially during these more diffi-cult times. To inspire current and future leaders, legendary coach Lou Holtz will pro-vide the keynote address the

final day of the conference. Deemed “the master of the turnaround,” Holtz’s experi-ences and lessons learned as a coach can be applied outside of sports, especially when and where leadership is needed most.

We also want to thank this year’s participants and spon-sors. We recognize that there are many shows each year focused on the oil and gas industry, but your continued support ensures that we can continue the WBPC and its reputation as one of the best and biggest conferences dedi-cated to the Bakken and shale plays overall.

A few years back, the mot-to for the WBPC was “The best is yet to come.” We still believe that’s true. We look forward to the discussions that will grow out of the 24th Annual WBPC and continue the momentum we have seen in the Williston Basin well into 2016 and beyond.

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

TECHNOLOGY FOCUS: Along with several speeches delivered from oilfield executives, the 2016 WBPC schedule will include a look at unique technology.


BAKKEN NEWS BAKKEN NEWS & TRENDS

Dakota Access pipeline receives approvals from SD, Illinois

A $3.8 billion pipeline capable of carrying nearly half the Bakken’s daily production to tank farms in Illinois has received approval from regulatory agencies in South Dakota and Illinois and is expected to receive approval from the North Dakota Public Service Commission (PSC) in January.

The 1,134-mile-long Dakota Ac-cess Pipeline crosses North Dakota, South Dakota, Iowa and Illinois to connect the Bakken with the Patoka Hub in southern Illinois. From there, it ties in with the Energy Transfer Crude Oil Pipeline to the Sunoco Logistics terminal in Nederland, Texas. The 30-inch pipeline will initially transport 450,000 barrels of oil per day, but can be expanded to 570,000 barrels.

The pipeline is being constructed by Dakota Assess LLC, a partner with Texas-based Energy Transfer LP, one of the largest limited partnerships in the United States. It operates approxi-mately 71,000 miles of natural gas, natural gas liquids (NGLs), refined products and crude oil pipelines.

In Iowa, where the Dakota Access pipeline met opposition from landown-ers, farm groups and environmental organizations, the Iowa Utilities Board concluded the public hearing process in December, but was not expected to make a decision until February.

However, Lisa Dillinger, Dakota Access spokesperson, says the com-pany hopes for an earlier decision to maintain a construction schedule that would enable the pipeline and its related facilities to be ready for service by late 2016.

“We appreciate the IUB moving skillfully through the hearings that have now concluded,” she said. “We will do all that we can to support the IUB in its decision-making process to meet this

timeframe.”Near the end of 2015, Dakota

Access had secured 77 percent of the voluntary easements needed in Iowa, compared to 85 percent in North Dakota, 91 percent in South Dakota and 83 percent in Illinois. Overall, the company had 83 percent of the total easements along the pipeline’s route.

In North Dakota Julie Fedorchak, Public Service Commission (PSC) chair, said the agency could make a decision on the Dakota Access project as early as Jan. 20 during its regularly scheduled meeting.

“Barring any unforeseen problems at this point, we hope that we can get this thing wrapped and taken care of within a month,” she said.

Fedorchak said there are two issues left to be resolved before the PSC can render a decision. The first involves shared working space between Dakota Access and the Enbridge Inc. Sandpiper pipeline project and which company will be responsible for recla-mation on the right of way.

The other issue involves reports to the State Historic Preservation Of-fice. Fedorchak said Dakota Access is required to provide reports on how the pipeline route will impact historic sites and what mitigation measures it will use.

“That’s a pretty important piece of the siting process because one of our main reviews is on cultural impacts,” she explained. “I’m hopeful that all that is going to be taken care of.”

In December, the South Dakota Public Utilities Commission approved a permit for the Dakota

Near the end of 2015, Dakota Access had secured 77 percent of the voluntary easements needed in Iowa

Barring any unforeseen problems at this point, we hope that we can get this thing wrapped and taken care of within a month

North Dakota

South Dakota

Minnesota

Iowa

Illinois

If this pipeline is constructed, it is imperative and nonnegotiable that construction and reclamation be conducted in a manner that allows farmers and ranchers impacted by the pipeline to very quickly get back to their business of producing food for the world in a manner uninhibited by the pipeline

To move Bakken crude from Illinois to the Gulf Coast, an existing 678 mile stretch of natural gas pipeline will be converted. Another 66 miles of new pipeline will also be built. The entire project will be complete by the end of 2016

Texas

OklahomaArkansas

Louisiana

AlabamaGeorgia

Tennessee

Kentucky

MissouriKansas

Delivery PointsOrigin SitesDakota Access PipelineEnergy Transfer Crude Oil PipelineBayou Bridge PipelineNederland TerminalApproved States

THEBAKKEN.COM 9

BAKKEN NEWS

Near the end of 2015, Dakota Access had secured 77 percent of the voluntary easements needed in Iowa

Barring any unforeseen problems at this point, we hope that we can get this thing wrapped and taken care of within a month

North Dakota

South Dakota

Minnesota

Iowa

Illinois

If this pipeline is constructed, it is imperative and nonnegotiable that construction and reclamation be conducted in a manner that allows farmers and ranchers impacted by the pipeline to very quickly get back to their business of producing food for the world in a manner uninhibited by the pipeline

To move Bakken crude from Illinois to the Gulf Coast, an existing 678 mile stretch of natural gas pipeline will be converted. Another 66 miles of new pipeline will also be built. The entire project will be complete by the end of 2016

Texas

OklahomaArkansas

Louisiana

AlabamaGeorgia

Tennessee

Kentucky

MissouriKansas

Delivery PointsOrigin SitesDakota Access PipelineEnergy Transfer Crude Oil PipelineBayou Bridge PipelineNederland TerminalApproved States

Access pipeline on a 2 to 1 vote. PUC Chairman Chris Nelson introduced more than 50 conditions he says were intended to protect the land and land-owners during the construction and

operation of the pipeline. All but one of the conditions were unanimously approved by the commission.

“If this pipeline is con-structed, it is imperative and non-negotiable that con-struction and reclamation be conducted in a manner that allows farmers and ranchers

impacted by the pipeline to very quickly get back

to their business of producing food for the world in a man-ner uninhibited by

the pipeline,” says Nelson.

Commis-sioner Gary Hanson

opposed the approval, saying Dakota Access

had not selected a route that prevented the pipeline from in-

terfering with development in the Sioux Falls area and surrounding communities. In addition, he said Dakota Access was not a good corporate citizen because it sued some landowners before it had a permit to build the pipeline. He suggested that the company apologize to those landowners and reim-

burse them for legal expenses.“I don’t want to stop Dakota Access from eventually get-

ting its permit,” said Hanson. “I simply

want it done right.”

Acting commissioner Rich Satt-gast, South Dakota state treasurer, cast the deciding vote in favor of granting a permit to Dakota Access, saying he believed the company will be a good steward and that it has met the burden required for permit approval.

Sattgast and Nelson agreed that the silence from most government enti-ties along the pipeline’s route indicated that they had no problem with its loca-tion. Nelson noted that Dakota Access had made changes to the route when the city of Sioux Falls and Lincoln County voiced concerns.

Nelson said the decision to ap-prove the Dakota Access pipeline wasn’t based on “whims of PUC, but based on complying with all applicable laws.” In his view, the pipeline doesn’t pose a risk to or substantially impair health and safety, and that it won’t interfere with development along the route.

“Dakota Access has demonstrated that they have a legal right to have the permit issued to them,” said Nelson.


BAKKEN NEWS

North Dakota’s two larg-est universities are conducting research projects in an effort to generate long-term solutions to reclaiming former Bakken oil field sites negatively impacted by salt water.

North Dakota State Univer-sity and the University of North Dakota Energy and Environ-mental Research Center, funded by the North Dakota Industrial Commission, are conducting the research on legacy or old brine-contaminated sites. The pits are several decades old, formed before the practice was outlawed in 1983.

“The idea of the project is to try to come up with a means

of returning those lands to productive use,” said John Harju, EERC vice president for strategic partnerships.

Drain tileThe EERC, which received

$500,000 from the North Dakota Industrial Commission, is focus-ing its research on a saltwater pit in northern North Dakota near Bottineau. The EERC research-ers who began studying the area this past fall discovered that the contaminated area is nearly nine acres, more than double the four that it had previously been char-acterized as, Harju said.

The increase in size may be the result of an inaccurate initial

characterization, groundwater moving through the drilling pit and broadening the distribution of the salt water or a combina-tion of both of those things, Harju said.

Because the contaminated area is larger than previously thought, returning the land to production will require a different approach than the one EERC originally planned to take and the reclamation project will take lon-

ger than the one or two years the EERC had anticipated it would take, Harju said.

One approach the EERC is considering includes the use of drain tile to stop the migration of salt, flushing water through the impacted area into a shal-low sump, and then removing the saltwater with a pump and disposing of it in a deep saltwater injection and disposal well.

Saltwater research efforts explore different remediation strategies

NEW SOLUTIONS TO OLD PROBLEMS: Brine contaminated sites found within the legacy brine study will offer new remediation approaches a perfect place for testing. PHOTO: NORTH DAKOTA STATE UNIVERSITY

At NDSU, researchers, led by Aaron Daigh, a soil scientist, are studying whether it is fea-sible to use the chemical iron (3) hexacyanoferrate to reclaim oilfield land that has been dam-aged by storing of salt water or salt water spills.

The iron (3) hexacyanofer-rate brings the salt to the soil surface so it can be removed, said Kevin Sedivec, an NDSU range management profes-sor who is coordinating the research project.

In contrast, other chemi-cals bind with the salt particles and are pushed further into the soil when it rains, Sedivec said.

“It’s a fix, but over time you have the same problem,”

he said. “What we wanted to do was look at something that brings salt to the surface, and then remove it from the surface.”

The salt that rises to the surface is removed by either a machine that power sucks the salt or scrapes it off with a tractor/loader, Sedivec said. The salt would need to be disposed or injected into an approved site that is already approved for brine products, he said.

Laboratory research conducted at NDSU showed that application of the iron (3) hexacyanoferrate, which is mixed with water and ammo-nia, brought nearly 70 percent

of the salt on high-salt soil, to the top, Sedivec said. The NDSU research team believes that the chemical could be ap-plied shortly after a salt water spill, before the salt penetrates deeply into the soil, he said.

The legacy or old brine contaminated sites will present more of a challenge because the salt in those locations is deep in the soil, Sedivec said. Some of the sites are from the 1970s, Sedivec noted. On those old sites, additional techniques may be needed in addition to the application of the iron (3) hexacyanoferrate, he said.

An advantage of using the iron (3) hexacyanoferrate on salt spills or storage sites is that it is available on the market and is non-proprietary so anyone can buy it, Sedivec said. Using

the chemical is a more af-fordable option than hiring a company to remove the soil that has been ruined by the salt, and then hauling in new soil to replace it, Sedivec said.

Meanwhile, using the chemical is a more sustainable option than the “dig and haul” technique because it doesn’t in-volve replacing the ruined soil with good soil from another location, he said.

Next summer, Sedivec will plant grass on sites in which the salt has been removed. The research team has been experi-menting in the laboratory with different breeds of grasses and is looking at planting species which are native to the area, he said.

BAKKEN NEWS

Bringing salt to the surface


BAKKEN NEWS

The last time North Da-kota’s rail plan was updated was in 2007. Oil and gas development in western North Dakota has greatly increased rail traffic in the state since then, but agriculture-based commodity movement has also increased. The amounts of agricultural commodities and oil shipped within the state have risen sharply during the past eight years, said Ben Ehreth, of the North Dakota Department of Transportation.

The new rail plan will com-ply with the requirements of the federal Passenger Rail Investment and Improvement Act, which was enacted in 2008, Ehreth said.

The NDDOT is leading a team of six state agencies working to develop the new state

rail plan. The goal of the state agencies is to draft a plan that will provide efficient, accessible service to rail customers and improve rail safety.

The new rail plan is ex-pected to give guidance to the rail systems and services that North Dakota freight shippers and pas-sengers use for at least the next 20 years. Besides the NDDOT the other North Dakota agencies working to develop the plan are: the Public Service Commission, the Department of Commerce, the Department of Emergency Services, the Pipeline Author-ity and the Upper Great Plains Transportation Institute.

The team developing the plan will look at several top-ics, including how the state rail

network has changed over time, how the network meets the needs of its users , and how it impacts the residents, the state economy, freight and passenger reliability, safety and the environment.

The first major task of the

team is to gather stakeholder and public input. That will include public meetings and interviews with individuals. A public internet survey also is being developed and is expected to be launched in the next several months.

ND rail update to improve efficiency, accessibility, safety

Dunlop_201505_OGM_03_USA_v10.indd 1 18-06-15 23:47

Economic, safety and environmental impacts on the state, including “tradeoffs” with other types of transportation such as highways, pipelines and air

Tracking the Update

Railroad condition, including crossings and rail lines

Train speeds

Existing railroad freight, passenger demands and future needs

North Dakota’s emergency response procedure

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BAKKEN NEWS

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The rail plan is being devel-oped in three phases, beginning with establishing the current rail system’s baseline. Phase one work began in September 2015 and is expected to continue through early 2016. Phase Two will iden-

tify North Dakota rail needs and opportunities, and has a target completion date of May. Phase three, which will look at rail ser-vice and investment, is scheduled for completion by late fall.

The new rail plan under

development may be the most important since the original was drafted in 1980, said Denver Tolliver, Upper Great Plains Transportation Institute director, noting that safe, cost-effective and reliable rail service is es-

sential to North Dakota’s, energy, agricultural and manufacturing industries.

Economic, safety and environmental impacts on the state, including “tradeoffs” with other types of transportation such as highways, pipelines and air

Tracking the Update

Railroad condition, including crossings and rail lines

Train speeds

Existing railroad freight, passenger demands and future needs

North Dakota’s emergency response procedure

Tank car specifications

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BAKKEN NEWS

The low oil price en-vironment is opening the door for new Bakken enti-ties. From the wellsite to the refinery, new-to-the-Bakken companies are working to become a long-term staple of the Williston Basin.

Backed with $100 million in funding from Post Oak Energy Capital, a team of former Houston oil execu-tives has announced their ef-forts to acquire acreage, wells or assets in the Bakken. The UpCurve team is led by De-nis Pone who is responsible for ConocoPhillips’ hori-zontal refracturing program. According to the UpCurve

team, the Bakken and other main unconventional basins “not only harbor thousands of refract opportunities due to the presence of older, less advanced completions, but also possess equally attractive undeveloped opportunities.”

Angelus Private Equity Group may not have the same type of experience as the UpCurve team, but that hasn’t stopped the recently formed equity group from entering the Bakken. In late December, the company announced it had acquired 9,750 net acres including undeveloped leaseholds in Montana and North Dakota

from Emerald Oil Inc. for roughly $10 million.

Not every new entrant into the Bakken is focused on extracting oil from the ground. A team from Texas and California has an-nounced its plans to build a diesel refinery near Belfield, N.D. Meridian Energy Group Inc. intends to break ground on a facility this summer. The proposed location of-fers several advantages, the team believes, including its proximity to transportation infrastructure, low-cost natu-ral gas in the region that can be used to fuel the plant and favorable policies and proce-

dures with local permitting authorities. And, according to Frederick Bloom, business development vice president, the downturn in oil prices has created a golden age for refineries. Lower prices can potentially increase profit margins for refineries, he said.

Low oil prices attract new players to Bakken

THEBAKKEN.COM 15

BAKKEN NEWS

Operator TransfersLow oil prices are increasing the number of operator transfers. As current operators look to realign operational strategies, new operators are seizing the opportunity to take over existing assets. The North Dakota Department of Mineral Resources has been updating its list of operator transfers more frequently this year. The list shows operator transfers from 2014 to current.

# of wellsLegacy Oil & Gas ND Inc. Crescent Point Energy U.S. Corp. 92Enduro Operating LLC Solutions Energy LLC 8American Eagle Energy Corp. Resource Energy Can-Am LLC 87Oxy Little Knife LLC Lime Rock Resources III-A, LP 4Oxy USA Inc. Lime Rock Resources III-A, LP 342Whiting Oil & Gas Corp. Foundation Energy Management 103Whiting Oil & Gas Corp. Cobra Oil & Gas Corp. 42EOG Resources Inc. Parshall SWD LLC 1High Roller Wells LLC NGL Water Solutions Bakken LLC 1Whiting Oil & Gas Corp. White Rock Oil & Gas LLC 80Executive Drilling LLC Core 54 Oil & Gas LLC 1Saul Azar DBA Illinois Energy LLC Leland Oil & Gas LLC 2Whiting Oil &Gas Corp. North Plains 53Fidelity Inc. Scout Energy Management 63Whiting Oil & Gas Corp. True Oil LLC 53Fidelity Kaiser - Francis Oil Co. 99Key Energy Services, LLC Swanson Oilfield Services Inc. 1

Blue = New to the Bakken from TexasOrange = New to the Bakken from ColoradoGreen = New to the Bakken from Iowa


PRODUCTS & TECHNOLOGY

Offerings in the play today, or slated for arrival soon, show low oil prices aren't the only reason new technology continues to enter the Bakken.By Luke Geiver

New Bakken Oilfield Tech

FIELD OFFICE DATA: The GroundMetrics team utilizes sensors placed on nearly any surface, including frozen ground. The sensors explain changes in the earth below the surface that can help show where missed pay still exists. PHOTO: GROUNDMETRICS

Any perceived, or real, ac-tivity slowdown in the Bakken hasn’t affected the influx of new oilfield technology. New offer-ings are entering the Bakken for a myriad of reasons, including: in-field operational gains, regulatory require-ments, cost savings or at the most basic level, just for the sake of do-ing things better. To underscore the continued arrival of technology into the Bakken or the greater unconven-tional oil and gas industry, our team has detailed a handful of new tech offerings that are impacting the Bak-ken today or could soon be operating in the play.

Technology Coming Soon GroundMetrics, a full-service

survey and monitoring company spun out of the U.S. Department of Defense, may not be in the Bakken yet, but the company’s proven ap-proach to tracking hydraulic fracture

fluids or finding bypassed pay in ma-ture fields should have exploration and production teams interested. The California-based firm has al-ready been contracted to perform a refracture survey of a mature oilfield in the Barnett Shale.

The GroundMetric’s team has developed a system to create a multi-mile resistivity map that shows more data on fluid properties, distribution and movement up to 11,000 feet be-low surface.

The key to the system, according to Mark Wilkinson, vice president of unconventionals and a geophysicist for the company, is the capacitive sensor used to obtain the data. As long as the team can put the sensor in contact with the ground, it can be deployed on sand, frozen ground, wet ground or rocky ground. Typi-cal electrical sensors on the surface can only penetrate to 1,000 me-ters, Wilkinson says. Through the

THEBAKKEN.COM 17




GroundMetrics approach, a well bore cas-ing is used as an antenna to send a signal from the sensor further down into the earth and capture data at the depth of a typical fracture event. The sensors, originally de-signed to find tunnels in the ground for the DOD, can actually detect changes in the earth while materials are being injected, Wilkinson says. No other method, includ-ing seismic, can track where fluid is going directly.

Due to the system’s ability to track flu-id, GroundMetrics has also used the system for waterflood and CO2 injection projects. Before the team partakes in a project, a field team performs a simple modeling of the survey area at no cost to the client. Then, the team creates a 3D model of how the survey project is expected to go.

A Wyoming frack job helps to illustrate the predictive power of the sensors, Wilkin-son says. Using the GroundMetrics system, the team was monitoring seven stages of a frack job. The fluid used on the job in-cluded fracture tracers capable of showing where the fluid was ending up. On one of the stages, the team gained data that sug-gested the frack fluids broke into a preex-isting fracture. “We predicted to the client that the fluid had traversed across two later-als to the west,” he said. Although the team showed the data to the client, they weren’t interested. But, the client became very in-terested in the data and predictive power of the system after they detected the tracer chemicals two wells over from the original survey well.

“Though commodity prices are down, clients are seeing the value in what we bring to the table. We are busy,” Wilkinson says. “We are backlogged into the beginning of the year.”

New Regulations Bring New Approaches

An April 2015 North Dakota Industrial Commission rule requiring the total vapor pressure of Bakken crude to be verified before transport set a Bismarck technology developer in motion. The rule, intended

DEEP REACH: The sensors designed by GroundMetrics are capable of collecting data to more than 10,000 feet below surface. PHOTO: GROUNDMETRICS

CUMULATIVE PRODUCTION, PROPEL SSP VS. OFFSET WELLS

SUSPENDED PROPPANT BENEFITS: Fairmount-Santrol's suspended proppant product has clearly displayed a production up tick versus offset wells. IMAGE: FAIRMOUNT-SANTROL

THEBAKKEN.COM 19


to ensure the volatility of Bakken crude, mimicked that of other high-volume liq-uid shipments like refined gasoline, re-quires all North Dakota producers to uti-lize a verification technology. The majority have relied on heater treaters installed on the well site to test the Reid vapor pres-sure numbers of the crude. But, heater treater units can suffer from the climate in the Bakken, experiencing operational difficulties in extreme cold temperatures or high winds.

In mid-December, the NDIC ap-proved a request by Hellervick to test a prototype capable of exceeding the oper-ational capabilities of the commonly used heater treater. The company has also set-up a pilot test with an undisclosed opera-tor at an undisclosed location.

“The main difference between cur-rent heater treaters and the Hellervik oil conditioning unit is that the Hellervik unit is able to continuously measure the vapor pressure of the crude oil in the vessel,” says Lowell Hellervik, CEO and founder. “It is then able to control the temperature and pressure within the vessel dynamically to achieve the pre-selected vapor pressure that the well operator desires.”

The technology relies on tempera-

ture distribution through oil agitation and nozzle configuration. An onboard com-puter can adjust those control parameters and adjust accordingly for external factors such as weather.

Expected Segments For UpgradesAs the unconventional oil and gas

industry evolves, frack sand and prop-pant suppliers are not content to sell basic products used in the past, no matter the price of oil. Many continue to tweak the size, strength, source and overall effec-tiveness of their offering. Changing frack fluids also creates new opportunities to bring new offerings to the market. Fair-mount-Santrol, a Texas-based proppant manufacturer, exemplifies the constant quest of proppant suppliers and develop-ers to offer a new and exciting product.

In the Bakken and Three Forks for-mation last year, Santrol completed a six-well field trial of its suspended proppant product for Enerplus Corp. When com-pared to offset wells, the six wells hydrau-lically fractured with the suspended prop-pant recorded a production increase of 39 percent. The proppant is made with a hy-drogel polymer wrapped around a prop-pant piece. The design, once added to wa-

MADE FOR THE BAKKEN: Hellervik's crude conditioning technology is made to operate in cold, windy conditions. A computer mounted on the unit can take outside variables like weather and temperature into its measurements. IMAGE: HELLERVICK



ter at temperatures starting at 35 degrees Fahrenheit or above, swells and suspends itself in the water. The Propel system al-lows for faster fracks and less water, ac-cording to Santrol. Each well used the same volume of proppant per lateral foot. Each well was a horizontal well that reached roughly 10,000 feet. The pump rate for the suspend product, Propel SSP, wells was 60 barrels per minute com-pared to the 35 bpm for the crosslinked, white sand wells. To frack the Propel in-fused wells, it took roughly 75 hours. The offset wells required nearly 87 hours to complete. Enerplus saved nearly $1.00 per barrel of water and the system paid for itself in roughly four months at $45 West Texas Intermediate oil prices.

Transformative Bakken TechnologyJoel Gay, president and CEO of

Energy Recovery Inc., is happy that the story of the VorTeq pump follows many narratives. The pump’s unique design can save pressure pumping firms main-tenance and per-barrel pumping costs. A VorTeq-infused pump set-up is also more efficient than most traditional pres-sure pumping layouts. And, the system

SET-UP FOR THE FRACK: In the Barnett Shale, GroundMetrics has been contracted to verify the benefits of a proposed refrack project. PHOTO: GROUNDMETRICS

THEBAKKEN.COM 21

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not only helps during a time of low oil prices, it also holds promise as the basis for the fracture infrastructure blueprint of the future.

Last year, Schlumberger agreed to a license agreement for the VorTeq pump. Liberty Resources has already used and tested the system for more than a year. Through a clause in the Schlumberger agreement, the global energy services firm and Liberty will be able to continue using or add the VorTeq pump to Bakken frack sites.

The system, built of tungsten car-bide, can reduce the number of plunger pumps needed on the frack job site from 20 to 3 centrifugal pumps. The pumps can also last roughly 60,000 hours before maintenance is required. Pumps used today typically last 6,000 to 8,000 hours. “We isolate the pumps from the prop-pant,” Gay says. “Pumps break down due to the erosive nature of the frack prop-pant in the pumps.”

From a company standpoint, Gay believes the success of the VorTeq shows how his team has completed a case study on how small and nimble firms can en-treanch itself in an established industry.

The success of ERI can be duplicated, he says, and it will be seen in the future. Low oil prices have essentially forced the industry to adopt and streamline practices of maintain-ing existing infrastructure, he says. “I see a renaissance of efficiency. We didn’t develop the VorTeq because we saw an opportunity in a downturn,” Gay says. “We developed it because we saw values across all elements of the cycle.” On the topic of other enti-ties following ERI’s lead into the greater oil

industry during the near-term, Gay is also positive. “I think you will see a lot of inter-esting technologies and innovations that will lower the operating expenses for the entire value chain."

Author: Luke GeiverEditor, The Bakken [email protected]


IN PLAY

It didn’t take long for NuStar Energy L.P., one of the largest independent liquid terminal and pipeline operators in the U.S., to become a crude exporter. Shortly after Congress approved a bill to remove the 40-year old ban on exporting U.S. crude in early December, NuStar went to work for ConocoPhillips. From its North Beach Terminal in the Port of Corpus Christi, NuStar loaded and shipped Eagle Ford light crude retrieved by Cono-coPhillips through a contract with international trading com-pany Vitol. The destination or

volumes shipped have not been disclosed, but Vitol does own and operate a refinery in Swit-zerland. Enterprise Product Partners, which ships through a contract with Vitol, also an-nounced it would begin export-ing crude shortly after the ban was lifted.

Although industry leaders have been unable to describe in detail how the ban’s exit will impact the shale energy indus-try in the short-term, the major-ity believe the ban’s removal is a boon to the industry over the long-term. “Modernizing our nation’s energy policy to reflect

this new era of energy abun-dance is a win for consumers, is a win for small business owners who support the energy supply chain, is a win for our economy and is a win for our allies and trading partners,” said George Baker, executive director of Producers for American Crude Oil Exports. “Now that we have leveled the playing field, the U.S. finally has an opportunity to compete and realize our nation’s full potential as a global energy super power.”

Lifting the ban will provide long-term benefits to North Dakota, said Ron Ness, presi-

dent of the North Dakota Pe-troleum Council, even if there is no immediate impact on oil prices.

Energy producers and mid-stream companies are both ex-ploring and executing on new strategies and investments that can make exporting U.S. crude possible. Pioneer Natural Re-sources, a large independent oil and gas exploration company, has already said it is actively working with its midstream partners to secure export facili-ties along the U.S. Gulf Coast for future export deals. NuStar has already made investments in

VOLUME SHIPMENTS: Most tankers capable of moving light tight oil from the U.S. will range in size from 300,000 to 600,000 barrels. PHOTO: THE BAKKEN MAGAZINE

Bakken Export Expectations

Industry reaction and destination possibilities By The Bakken Magazine staff

THEBAKKEN.COM 23

IN PLAY

Industry reaction and destination possibilities By The Bakken Magazine staff

additional storage tanks, dock space and automated systems at its Corpus Christi port. The company is also planning to build a second dock at the port. The new dock would bring Nu-Star’s total to four, and once built, would allow the company to load crude simultaneously at a maximum rate of 90,000 bar-rels of crude per hour.

Crude oil tankers are clas-sified into several categories. Tankers capable of shipping refined products are typically smaller, in the 70,000 barrel size range. Tankers most suitable to ship light crude oil, however, could move as much as 550,000 barrels per tanker. A tanker’s capacity is measured in dead-weight tons. Its capacity in bar-rels is calculated by estimating 90 percent of the ships dead-weight tonnage and multiplying that by a per barrel conversion factor specific to each type of petroleum product, according to the U.S. Energy Information Administration.

Crude LocationsPioneer Natural Resources

will initially focus on export-ing crude to Europe, Asia and Latin America. The majority of its crude will come from the Eagle Ford or Permian Basin. Experts from Turner Mason & Co., a Dallas-based engineer-ing and consulting firm, believe most exports will reach Mexico or other parts of Latin America in the near-term. Some will also reach Europe. In the future, the Atlantic Basin—not China—could be the top market for American producers, says John Auers, executive vice president at TMC.

“Europe wants to reduce

HISTORIC SHIP: The vessel, THEO T, departs Corpus Christi with the first US export shipment of crude oil in 40 years.PHOTO: PORT CORPUS CHRISTI

ULCC (Ultra-Large Crude Carrier)

Refined products

Refined products or crude oil

Crude oil

Average Freight Rate Assessment (AFRA) Scale - FixedCargo type Vessel class, capacity (thousand deadweight metric tons)

GP (General Purpose)

MR (Medium Range)

LR1 (Long Range 1)

AFRA (AFRAMAX)

LR2 (Long Range 2)

VLCC (Very Large Crude Carrier)

10,000 to 25,000

25,000 to 45,000

45,000 to 80,000

80,000 to 120,000

80,000 to 160,000

160,000 to 320,000

320,000 to 550,000


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IN PLAY

LATIN AMERICA• Home to 2 OPEC members, Venezuela and Ecuador

• Region is net long crude, but quality is "mismatched" with refinery capability

• Have not been able to execute projects to fix "mismatch"

• Light crude has market as diluent for blending with very heavy

its energy dependence on Rus-sian and other undependable sources such as Africa,” he said. “Having access to at least another source of crude that fits well with their refineries is a plus.”

The majority of crude exported from the U.S. will be shipped from the Gulf Coast,

Auers also said, but for the Bakken, that isn’t a bad thing. As more barrels are moved from Texas to the coast to non-U.S. markets, market space onshore in the U.S. will open for more Bakken crude.

Since passing the bill to repeal the export ban, Con-gress has already discussed the

MEXICO6 Refineries1.5 MMBPD

TOTAL LATINAMERICA

22 Countries70 Refineries7.4 MMBPD

BRAZIL13 Refineries1.9 MMBPD

REST OF LATIN AMERICA


SOURCE: TURNER MASON & CO.

THEBAKKEN.COM 25

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IN PLAY

EUROPEAN REGION• 3 distinct regions: Northwest, Mediterranean,

Eastern.

• Total crude runs of 14.5 MMBPD in 2014

• Limited and declinging regional production; 60% is imported

• EU has over 70% imports

NORTHWEST EUROPE


TOTAL EUROPE31 Countires

127 Refineries16.7 MMBPD

EASTERN EUROPE


MEDITERRANEAN EUROPE10 Countries43 Refineries5.5 MMBPD

SOURCE: TURNER MASON & CO.

possibility of implementing a tax break for U.S. refiners that were utilizing cost-advantaged crude from U.S.-based shale plays.

Ports along the Gulf Coast expect to see increased activity moving Eagle Ford crude. Port Corpus Christi already has deep water, dock space and abundant stor-age but it plans to deepen the channel near the port to accommodate some of the

world's largest tankers. "In-frastructure improvements at Port Corpus Christi have placed our port in a unique position as a critical com-ponent in the export of U.S. crude and condensate," says John LaRue, the port's execu-tive director.


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The Bakken Magazine January/February 2016

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Transcript of The Bakken Magazine January/February 2016