The Northeast ONG Marketplace April 2014

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

THE ONG SPOTLIGHT - Page 3 Robert Beatty, CEO, “O” Ring CNG Fuel Systems, L.P.

ALTERNATIVE FUELS - Pages 28-29 Tri-State Alternative Fueling Expo & Conference

WATER MANAGEMENT - p 6-7

HEALTH & SAFETY - p 10-11

ENVIRONMENTAL MANAGEMENT - p 12-13

INDUSTRY INSIGHT - p 14-15

NEW TECHNOLOGY - p 16-17

LEGAL & REGULATORY - p 24-25

The Northeast ONG Marketplace

Hopefully you enjoyed the redesign of the last issue of The ONG Marketplace. Also, Shale Media Group and The ONG Marketplace have collaborated to redesign the website, ongmarketplace.com. As always we welcome your feedback.

If you have any comments, questions or suggestions for the next edition, please email us at [email protected] or call 215-317-1177.

BELMONT COUNTY SUPPORTS AMERICA’S ENERGY INDEPENDENCE

JOIN US IN BELMONT COUNTY FOR THE 3RD ANNUAL OHIO VALLEY REGIONAL OIL & GAS EXPO TO EXPLORE AND UNDERSTAND NEW POSSIBILITIES IN THE UTICA SHALE PLAY. LIMITED

SPONSORSHIPS & EXHIBITOR OPPORTUNITIES ARE AVAILIABLE.

SPONSORS

April 30 - May 1, 2014Belmont County Carnes Center, St. Clairsville, Ohio

New LookNew Websitewww.ongmarketplace.com

April 2014

A Message from Robert H. Beatty Jr,CEO, “O” Ring CNG Fuel Systems, L.P.

Innovation. American ingenuity. Resourcefulness. Environmentally-conscious living. Energy independence. Support of local economies. These are just a few of the ideals that “O” Ring CNG Fuel Systems, L.P. embodies in its’ business model to alleviate our nations dependence on foreign oil and utilize local, clean natural gas to power the transportation industry. Along the path to success, “O” Ring CNG Fuel Systems, L.P., or “O” Ring CNG, has transformed a grassroots effort to utilize compressed natural gas (CNG) as a vehicular fuel into a regional movement that is now garnering national-level attention.

For “O” Ring CNG, the idea for a locally sourced alternative for vehicle fuel began to take shape in 2006, a few months after hurricane Katrina. Taking note

of increasing oil prices and our nation’s dependency on foreign sources oil, CEO of “O” Ring CNG, Robert H. Beatty, Jr., decided to take full advantage of Pennsylvania’s abundant supply of natural gas by using it to power his own small fleet of business vehicles. Beatty capitalized on his (then) 25+ years of

experience in the compressor industry and built his own CNG fueling station. He then purchased or converted all of his personal and company off-road equipment to operate on CNG—everything from a dump truck, to lawnmowers, and even a forklift eventually enabling his entire fleet of equipment and vehicles to operate on CNG. “By making the switch to an alternative, clean, abundant, and cheaper fuel source, I cut my own fuel bills in half and saved our company over $4,000 per month, “ said Beatty. “I am also a patriot - I believe in reducing our nation’s dependence on foreign oil and promoting our own local economy by using the fuel supply that is literally right under our feet.”

For Beatty, the next step was sharing the wealth. He goals expanded from not only cutting his own business costs and doing his part to lessen the demand for oil, but to also help others’ work towards energy independence and more profitable businesses. “I started by building about a half dozen private CNG fuel stations for other businesses to help them utilize PA gas supply and cut costs too. The results were so overwhelmingly positive that I saw a new business opportunity for alternative fueling stations.” Beatty’s unique experience in the compressor industry as well as experience as a natural gas well owner and operator has put him in an advantageous position as an industry expert as Pennsylvania and the United States moves more rapidly towards alternative fuel solutions.

The road to success was not without challenges: according to Beatty, one of the most difficult challenges to overcome is a lack of understanding about the benefits of CNG. “Most people have an inherent fear of the unknown. A lot of our time and

efforts are focused on outreach programs to educate fleet owners on just how safe and beneficial CNG can be for them,” says Beatty. Towards that end, in 2013 “O” Ring CNG built a new CNG educational facility, collocated with the Brookville, PA CNG station. In addition to accredited college courses from the Community College of Allegheny County, “O” Ring CNG offers its own outreach programs and the facility is also open to other entities that are interested in promoting the use of alternative fuels.

The education center is dedicated to dispelling myths and explaining the facts about CNG and other fuels. For instance, there one might learn that in addition to the cost and economical benefits, CNG is a much cleaner burning fuel than petroleum based fuel products. In fact, for every 1 atom of carbon released when burning CNG, 27 carbon atoms are released when burning the equivalent energy amount of diesel. Despite what some may erroneously believe, CNG is also much safer than petroleum based fuels. As a gas, it is lighter than air so in the event of a leak, spill, or even a catastrophic crash, CNG will

simply vent off harmlessly into the atmosphere. Additionally, natural gas vehicle technology improved vastly over the past two decades. The tanks used to hold CNG are nearly indestructible and in the case that they are compromised; they are much less likely to cause any additional damage during a crash than a petroleum tank.

Today Beatty can proudly state he is almost entirely energy independent - using Pennsylvania natural gas for heating, cooking, electric, and—of course—for vehicle fuel. More importantly, his local grassroots effort has taken hold and he has become a regional leader in the CNG industry, recognized by regional businesses, politicians, and industry partners as the go-to CNG expert in the tri-state area. In 2013, Beatty was awarded the Energy Leadership Award from the Pittsburgh Business Times and “O” Ring CNG was also featured on the In View Series, hosted by Larry King. As board member of the Pittsburgh Region Clean Cities (PRCC), he was recently selected to represent the organization at the 2014 national conference in Washington, DC. Beatty believes the next Industrial Revolution is upon our country, and you can find him leading the charge by inspiring crowns at various regional and national events.

“O” Ring CNG’s recent projects include full-scale, turn-key CNG station projects for companies such as the Clinton County Solid Waste Authority, in McElhatten, PA; Ringler Energy in Marengo, OH; and Shale Media Group in Barkeyville, PA. In addition, Beatty recently chaired the board of the 2014 Tri-State Alternative Fueling Expo & Conference – the first full-scale expo and conference in our area dedicated solely to alternative vehicle fuel technologies.

As Beatty often says during his talks: “There is no question as to the benefits of utilizing a cleaner, more economical, locally sourced fuel in our vehicles. The only question that remains is whether or not you will help lead the charge or will have to play catch-up later after the rest of the country is already doing it. You don’t want to be behind the power curve - the time to invest in CNG is now.”

Learn more about “O” Ring CNG Fuel Systems at www.oringcng.com and follow next year’s Tri-State Alternative Fueling Expo & Conference updates at www.alternativefuelingexpo.com.

THE ONG SPOTLIGHT


ARTICLESTHE ONG SPOTLIGHT: Robert Beatty, CEO, “O” Ring CNG Fuel Systems, L.P.................................... 3

WATER MANAGEMENT: Produced Water in the Marcellus Shale is Growing ................................. 6-7

HEALTH & SAFETY: The Fundamentals of Blast-Resistant Building Design for .......................... 10-11

ENVIRONMENTAL MANAGEMENT: Responsible Reclamation: Restoring ............... 12-13

INDUSTRY INSIGHT:The Eastern US Shale Plays............................. 14-15

NEW TECHNOLOGY: Wireless Remote Monitoring - Best Tool .................................... 16-17

LEGAL & REGULATORY: It’s not just Capital. It’s a Partnership ............................................. 24-25

ALTERNATIVE FUELS: Tristate Alternative Fueling Expo & Conference ............................. 28-29

ADVERTISER INDEXALPINE ELECTRIC .............................................. 27

ALBERTS SPRAY SOLUTIONS ............................. 5

AMERICAN REFINING GROUP .......................... 27

BRI-CHEM ........................................................... 18

CHANCELLOR INSURANCE ............................... 19

CST INDUSTRIES ................................................. 5

D&S INDUSTRIAL PRODUCTS ............................ 7

DMC DESIGN ........................................................ 8

DR WELL SITE .................................................... 19

ERNST SEED ....................................................... 25

ETC ...................................................................... 17

FAIRMONT SUPPLY ............................................ 23

FOSSIL ROCK SERVICES ................................... 19

GLUVCO .............................................................. 27

GOODWIN PUMPS - XYLEM .............................. 19

GREENHUNTER WATER ..................................... 31

GREER INDUSTRIES .......................................... 13

JM MILLER .......................................................... 18

KEYSTONE CLEARWATER SOLUTIONS ............ 29

KUHNS BROTHERS .............................................. 3

LEE REGER BUILDS ........................................... 17

LEE SUPPLY .......................................................... 9

MACHINERY STREET ........................................... 7

MANSFIELD CRANE ........................................... 19

MARCELLUS SAFETY CONSULTING ................. 17

MID-ATLANTIC STORAGE ................................. 19

MIDSTREAM PHOTO.COM ................................ 27

MJ PAINTING CONTRACTORS ............................. 3

NEW PIG ............................................................. 22

NORTH AMERICAN FIELD SERVICES ............... 29

OIL & GAS SAFETY SUPPLY .............................. 32

OIL RESEARCH CENTER ...................................... 8

“O”RING ............................................................. 30

PENNINGTON SEED ........................................... 17

PPC LUBRICANTS ......................................... 18,27

PSB ...................................................................... 17

REDGUARD ......................................................... 11

RIGMAIDS ........................................................... 27

ROCKWATER ........................................................ 1

SAMCO ENTERPRISES ....................................... 18

SHALE MARKETS ............................................... 27

SHALE MEDIA GROUP ....................................... 25

SHANNON SAFETY PRODUCTS ........................ 29

SKYCASTERS ...................................................... 25

STEEL NATION STEEL BUILDINGS ................... 26

ST!CK .................................................................. 18

THE SHALE ACADEMY.COM .............................. 27

UNIT LINER ........................................................... 9

V-F CONTROLS ................................................... 18

VEYANCE TECHNOLOGIES .................................. 8

WEAVERTOWN ENVIRONMENTAL ................... 18CALENDARSASSOCIATION MEETINGS ............................... 4TRAINING & WORKSHOPS .......................... 19UPCOMING EVENTS ...................................... 21NETWORKING EVENTS ................................... 8

EVENTS

OHIO VALLEY OIL & GAS EXPO ................... 2DUG EAST ......................................................... 20EGCR .................................................................. 18PIOGA’S CONFERENCE ................................. 26NAPE EAST ....................................................... 13UTICA-MARCELLUS INFRASTRUCTURE ... 27

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

OGIS New York | April 7 - 9, 2014 New York, NY - www.ipaa.org

KOGA Eastern Kentucky Meeting | April 29, 2014 Prestonsburg, KY - www.kyoilandgas.org

TOGA Annual Meeting | May 21 - 23, 2014 Gatlinburg, TN - www.tennoil.com

IPAA Mid-Year Meeting | June 18 - 20, 2014 Colorado Springs, CO - www.ipaa.org

VOGA Summer Meeting | June 25 - 27, 2014 Virginia Beach, VA - www.vaoilandgas.com

A Over 12,000 square feet. 3 loading docks.

A 8 offices. Easy access from Rt. 15

A South of Williamsport, PA.

Call: 1-570-568-1412Tim Kuhns ~ for info.

Lewisburg Warehouse/Office space for lease

PAINTING CONTRACTOR CORP.

MJ

Since 1970 Mike John, PresidentOlean Industrial Park • 291 Homer St.Olean, NY 14760Phone: 716-373-3033www.mjpaintingcontractor.com

Member of:Veriforce

ISNetworldPipeline Testing Consortium

Midwest Energy Assoc.Certified In:

SPC CoatingsDenso Coatings

Plural ComponentNACE CIP Level 1

Services offered:SandblastingEpoxy CoatingsAbove and Below Ground CoatingsTanks and TowersNatural Gas Compressor StationsNatural Gas Pipe LinesOil Refineries

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April 2014

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By: Kyle Wendel & Joseph Tinto, GE Power & Water

Intro: Despite having an abundance of fresh water, the Marcellus shale only has a handful of disposal wells, and thus has to rely mainly on neighboring Ohio for deep well disposal. Additionally, the flowback and produced water in the Marcellus is over five times as salty as seawater, rendering it too saline for municipal treatment and surface discharge. The majority of

flowback and produced water is being treated to reduce suspended solids and heavy metals creating a clean brine, which is then blended with fresh water and reused for new hydrofracture operations. This “floc and drop” treatment method significantly reduces the need to truck high volumes of water to Ohio. Using the disposal wells in Eastern Ohio has a high cost due to the long truck hauling distances and the rising deep well injection costs.

Produced water will continue to flow from fractured wells for over 20 years at roughly the rate of five to twenty barrels per day. As fields began to mature, and or as drilling activity declines in a well field, the supply of produced water will become greater than the volume needed for hydrofactruring new wells. As supply outstrips

demand, the blend and reuse option will not be as applicable or perhaps even available. In lieu of trucking this produced water to Ohio, another option will be the crystallization of this brine into valuable by-products.

Crystallization is a well proven and robust technology for treating high total dissolved solid (TDS) fluids for waste stream reduction and resource recovery. The use of crystallization

for the recycle and reuse of produced water, creating valuable products for both the well field and local industry, will significantly reduce or eliminate the need for trucking and deep well disposal.

The resources of value are primarily;1. Water: either (clean distilled water for local boiler use) or clean, crafted salinity solutions (3,000 – 50,000 mg/L) for use in the well fields per the operators requirements.

2. High density “clean” brines (1.5 s.g fluids) for well field uses such as well kill fluids, formation stabilization, or mud fluid viscosifiers.

3. Beneficial use salts (high purity NaCl) for use as feed stock for industrial chemical production such as sodium hypochlorite or feed stock to a chloralkali facility for the production of hydrochloric acid.

Today, a properly optimized crystallizer facility, treating well field produced water, can nearly eliminate the need for deep well disposal, dramatically reduce truck hauling runs and distances, and provide valuable beneficial use products. The use of an optimized crystallizer facility can substantially reduce overall well field water management operational costs.

The Produced Water Crystallizer Process will involve the following steps• Pretreatment

The produced water will require the removal of suspended solids, dissolved iron and manganese. In optimizing the recovered resources, additional constituents such as barium may be required to be removed.

• Detection and control of NORMsWhen removing barium from produced water specific methods must be undertaken to ensure that the sludge created and removed in pretreatment is not contaminated by NORM (naturally occurring radioactive material). GE Water & Process Technologies has spent five years, in cooperation with NETL (National Energy Technology Lab), to develop methods for detecting, and handling NORM in this process in a safe and regulatory compliant manner. The NORM material is kept below local health and safety limits.

• CrystallizationCrystallization involves concentrating the waste stream to the point(s) where specific salts will precipitate as solids (crystals). The process extracts water vapor which is condensed into very pure distillate. Some of the higher soluble salts will be removed from the crystallizer as a “clean” heavy brine.

• Distillate water and crafted salinity solutionsThe distillate water has use as boiler feed water and some local industry may wish to purchase this water. In most cases the distillate is mixed with some of the “clean” heavy brine to craft specific salinity solutions ranging from 3,000 – 30,000 mg/L for well field use.

• Heavy Brine and purificationThe crystallization process will create “clean” heavy brine, having a 1.5 s,g, which has many well field uses. The heavy brine pulled from the crystallizer is taken through purification steps to ensure the applicability to targeted use.

• Beneficial salts and purification The crystallization process will create clean beneficial use salts such as sodium chloride or calcium chloride. The beneficial use salts created in the crystallizer are taken through purification steps to insure the applicability to targeted use.

Summation: As the production of shale gas in the Marcellus increases, so will the volume of produced water. To eliminate the need of costly trucking and deep well disposal, producers have and will turn to the reuse of the produced water for future hydrofractruing operations. In some cases, this reuse option will not be sustainable as fields mature and drilling activity declines. Crystallization of the produced water to generate valuable by-products will allow the industry to avoid trucking the produced water to Ohio for deep well disposal.

For more information, please contact Kyle Wendel +1 425 828 2400, [email protected] or Joseph Tinto +1 425 691 2472, [email protected]

PRODUCED WATER IN THE MARCELLUS SHALE IS GROWING

WATERMANAGEMENT

Mechanical Vapor

Compressor

Crystallizer Vapor Body

Brine Heater

Recirculation Pump

Feed Brine

Concentrated Brine

Steam Vapor

Distillate/Condensate

April 2014

WWW.ONGMARKETPLACE.COM FOR LINKS TO UPCOMING INDUSTRY EVENTS.


WWW.ONGMARKETPLACE.COM

April 2YPE Pittsburgh Crew Change Bridgeville, PA | www.ypepittsburgh.org

April 10Energy Group MixerWellsville, PA | [email protected]

April 22OVOGA Boomtown PanelWheeling, WV | www.boomtownpanel.com

April 26Elite Crew ChangeBridgeville, PA | www.ypepittsburgh.org

May 8Energy Gala Washington, PA | www.bizjournals.com

May 10A Shale-abrationCambridge, OH | www.cambridgeohiochamber.com

NETWORKING EVENTS

FOR MORE EVENTS VISIT WWW.ONGMARKETPLACE.COM/EVENTS.

April 2014

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FRACT OR FICTION? Potassium sodium carbonate is one additive in fracturing fluid? See the answer on page 26.


By: Ali Sari, Ph.D., PE, Principal Consultant, Atkins

A new frontier

Blast-resistant building design is a relatively unexplored frontier. For one thing,very little research has been done on the actual effects of blasts on various types ofstructures. Then there are aesthetic and psychological considerations; in addition to making a building safe, it’s important to create interior spaces that are functionaland provide appropriate levels of comfort for personnel.

The reason my team was hired by RedGuard of Wichita, Kansas, to help design blastresistant buildings was that we’re one of the only engineering firms in the world with actual blast experience. We were called in to investigate the Texas City, Texas, refinery disaster in 2005, which provided us with data that’s ordinarily very difficult to come by, and which informed our efforts to design new and safer structures for personnel in blast zones.

Structural considerations

When we design a blast-resistant building, we start with a framework similar to that of the human rib cage. You can appreciate the strength of this natural construct ifyou have ever seen slow-motion video of a boxer taking a punch to the side of thebody. His ribs compress in a way that dissipates the energy of the punch over a large surface area, protecting the vital organs inside. The same is true of the steel studs we place at 11 to 12 inch intervals in the frame of a blast-resistant building. When we weld steel walls around these “ribs,” we have a structure many times tougher than a traditional building.

The interior walls are often made from oriented strand board, which minimizes the likelihood of wall shrapnel breaking free and injuring personnel.

Practical considerations

We equip every blast-resistant building with battery powered emergency lights,smoke detectors and a fire extinguisher.

Broken glass is a huge danger in a blast, so we use tamper-proof fluorescent lightfixtures, which are designed for correctional facilities. They have hard plasticdiffuser housings with shielded fluorescent tubes inside. If a tube breaks, the glass is safely contained inside these two protective layers.

Electrical and communication wiring conduits are deliberately left exposed so anydamage incurred in a blast will be visible, and personnel will know not to turnpower on until it’s repaired.

Making it comfortable

Many of the blast-resistant buildings we’ve helped design for RedGuard are placedin the field with very few frills, and they work well in a variety of applications, fromguard shacks to tool cribs. They can be transported like shipping containers, andthis portability allows petrochemical facilities to move them quickly and easily asneeds and work flows change.

But some applications call for foundation-mounted facilities with office-likeinteriors and amenities. RedGuard’s answer to this is SafetySuite, which feels lesslike a warehouse and more like an executive office on the inside.

In addition to being more elegant and somewhat more permanent (usuallyfoundation-mounted), SafetySuites offer a psychological advantage: many peopleare accustomed to seeing finished interior walls in permanent structures, so theyfeel safer in this type of environment.

Making sure it works

Various engineers performed analysis on our design, trying to predict how it wouldbehave in a blast, and some said it would slide or roll across the ground. My resultsindicated that it would not do so, but with all our math and real-world observation,we really didn’t know what would happen until we tested it.

We detonated 1,250 pounds of high explosive ANFO charge at a standoff distance of 110 feet from the building, which created a blast strength far in excess of the ratings required to meet ASCE low- to medium-response standards. The building suffered no structural damage, and it did not slide or roll. The furnishings, equipment and test dummy inside also sustained no damage.

Although blast-resistant building design is still a comparatively new discipline with very little information available to the safety engineers who are tasked withprotecting employees, we are making progress at last.

Learn more at redguard.com or call 855.REDGUARD.

THE FUNDAMENTALS OF BLAST-RESISTANT BUILDING DESIGN FOR PETROCHEMICAL FACILITIES

HEALTH& SAFETY

April 2014

THE NORTHEAST ONG MARKETPLACE855-269-1188 • 304-465-6640

[email protected] www.ongmarketplace.com

MARCELLUS • UTICAANTRIM • NEW ALBANY

Each month over 10,500 professionals receive a free copy ofThe Northeast ONG Marketplace, the only publicationthat covers all of the shale plays in the northeast U.S. oiland gas industry. Our affordable rates allow large andsmall businesses alike to let the industry know that you arehere to do business.


By: Randy Ferguson, Ernst Seeds

Many progressive operators in the oil & gas industry have recognized a unique opportunity to go a step beyond basic reclamation standards and adopt a practice of responsible reclamation.

So what is this concept of “responsible reclamation,” and isn’t reclamation, by its very definition, already a responsible practice? It’s a fair statement. After all, Merriam-Webster defines reclamation as: “to restore to a previous natural state.” That sounds pretty responsible, right?

But what if we could actually improve the land from what it was before development? What if, in the years after disturbance, affected areas became bio-diverse ecosystems with improved ecological function, greater wildlife populations, less erosion and improved water and soil quality?

This notion of responsible reclamation suggests a deeper commitment to informed, proactive and, well… responsible reclamation practices. It promotes the use of native species indigenous to the area being restored. It’s an opportunity to affirm the industry’s commitment to environmental stewardship and position it favorably in the minds of landowners and the public at-large.

Disturbed sites and erosion control efforts used to follow a fairly simple mantra: “keep the soil in place.” This was largely the case when Calvin Ernst founded what

was then Ernst Crownvetch Farms in 1964. The propagation of crownvetch seed for vegetating and securing highway rights-of-way and median strips is what put the company on the map and carried the business for decades.

Then, in the late ‘80’s, a shift in thinking began to take place. The benefits of native plants were fast being recognized as preferable over the use of non-natives, specifically in rehabilitating strip mine sites and other disturbed

areas. These plants were ideally adapted to the environment after centuries of natural selection, they required minimal inputs and very little maintenance.

Native deertongue was one of the first such native species used in Pennsylvania strip mine reclamation where low soil pH was a challenge. Ernst credits the propagation and marketing of deertongue seed as the turning point in his Company’s eventual transition from the non-native crownvetch that had driven sales for the first 20-plus years to the native plant species that would assume that role moving forward.

Soon after, the Company planted its first foundation switchgrass seed (‘Shelter’ variety) in 1988. Ernst was interested in switchgrass because it added wildlife

value to strip mine reclamation seed mixes. He soon learned, as have others, that switchgrass offers a whole host of ecological benefits including strong carbon-fixing properties, outstanding erosion control capabilities and great biomass potential, especially on otherwise marginal grounds that hold little other agricultural value.

Less than 25 years after those early native seed introductions, Ernst Conservation Seeds now offers over 400 species of native and naturalized seeds and live plant materials. From asters to Zizia aurea (Golden Alexanders), the company offers the widest selection of native plant species and ecotypes available.

The topography of the Marcellus and Utica shale plays varies significantly from those of mid-western oil states like Oklahoma and Texas. A ten-mile stretch of pipeline in Pennsylvania, for instance, might pass through wetlands, over steep mountain slopes, across rivers and through agricultural areas and state game lands. These areas should be reclaimed with vegetation that best matches the intended purpose of the land, the biodiversity that existed before disturbance and which best addresses issues such as erosion control, habitat fragmentation and other environmental concerns.

This approach to reclamation involves more planning and a bit higher cost at the outset, but pays dividends over time in the form of lower maintenance costs, improved environmental quality and a stronger public image for the contractor and the industry as a whole.

Many companies have already adopted an approach that includes assessing the various ecosystems their pipelines will traverse and developing a menu of pre-determined native seed mixes and bioengineering (live plant material) species to be placed on each as they are encountered. Others take this one step further by putting biologists, botanists or horticulturists in the field to assess the specific ecosystems within each project, develop a species inventory, replicate and, in some cases, enhance that inventory through native seed mixes and bioengineering materials customized for each project and/or site.

The next step in responsible reclamation involves assessing and preparing the site for seeding activity.

These areas may consist of rock fill, little to no topsoil or heavily compacted areas. These sites tend to be generally low in fertility and can benefit by adding a layer of topsoil or organic matter. Typically, the topsoil originally removed from the surface has been banked for use in the

reclamation process. Always check the soil pH and add the correct amount of lime as recommended by soil analysis. After re-grading the site, eradicate any vegetation that may have re-established on-site, as it is easier to control unwanted weed infestations before the new seeding is complete. Perennial weeds not addressed before seeding will be difficult to remove after.

RESPONSIBLE RECLAMATION: RESTORING ECOLOGICAL FUNCTION

ENVIRONMENTALMANAGEMENT

April 2014

Seeding methods such as hand seeding, mechanical broadcasting, hydroseeding or drill seeding may be used across the project area. Once the seed has been planted, drag with a light harrow or cultipacker, or track it in to ensure good seed-to-soil contact of 1/4”-1/2” deep. Following with straw mulch, hydromulch or covering with a straw/coconut fiber mat is recommended to protect the seed from drying out and

washing away. Follow erosion & sedimentation control BMPs that fit the situation. With adequate temperature and moisture, the seed should start to germinate within approximately three weeks.

Due to the varying terrains that these projects traverse, it’s wise to assess the site and use the appropriate maintenance schedule. Mowing to 4”-6” high or spot-spraying competitive, invasive weeds should follow seeding during the first year.

Ernst Conservation Seeds can assist in your efforts to adopt responsible reclamation practices. We have fifty years of conservation and restoration experience, and a highly experienced staff of sales consultants and plant materials specialists. We take the time to discuss your project’s individual needs and help you make informed species selections. If necessary, we can often send a representative to consult with you on-site, or we can refer you to the appropriate resources through our extensive network of associated partners.

For more information, visit www.ernstseed.com or call 814-336-2404.

SITE CONSTRUCTION & STABILIZATIONLIMESTONE PEBBLE (HOT) LIME

LIME KILN DUSTASPHALT

www.greerindustries.com

304-594-1640 304-296-1751


By: Kristie Kubovic, Director of Communications, Shale Media GroupContribution By: Adam Larson, Staff Writer, Shale Media GroupEdited By: Mindy Gattner, Editor, Shale Media Group

Shale Media Group has aggregated countless sources of information across our country on the shale oil and gas industry, while reaching millions through our news and information system. This first-of-its-kind chart is meant to be a general overview of the eastern U.S. shale plays. Information such as area, shale depth, thickness and estimated recoverable gas varies from source to source and can be affected by the age of the study, measurement methods and economic variables. The recoverable gas estimates tend to increase from year to year, especially in the more developed plays. Some shale plays even receive different names in different states and are often grouped in various ways. Jeff Reid, Senior Geologist, North Carolina Geological Survey, Division of Energy, Mineral and Land Resources, NC Department of Environment and Natural Resources related, “It is like comparing apples and kumquats.” Greg Kozera, President, Virginia Oil and Gas Association (VOGA), expressed, “There are technical challenges, but it is important to get fresh data on the industry. Almost anything is possible with technology. Some of the bigger challenges are linked to the need for public education.”

EASTERN U.S SHALE PLAYS

INDUSTRYINSIGHT

1.1. Location: southern New York, northern and western Pennsylvania, eastern Ohio, western Maryland, most of West Virginia, extreme western Virginia, below Lake Erie and into southern Ontario, Canada 1.2. Basin: Appalachian Basin 1.3. Age: Devonian age1.4. Area (in square miles): 104,000 sq. miles1.5. Shale Depth: 2,000 to 9,000 ft1.6. Thickness: 50 to 350 ft1.7. Estimated Recoverable Gas (in trillion cubic feet): 410 to 516 Tcf 1.8. Producers: Range Resources, Chesapeake Energy, Dominion, Rice Energy, CONSOL Energy, Atlas Energy, Noble Energy1.9. Production Start Up: Range Resources pioneered the Marcellus Shale play in 2004 by drilling a vertical well, the Renz #1.1.10. Misc: The Marcellus Shale formation is thought to be the second largest natural gas field in the world.

1. MARCELLUS

2.1. Location: New York, Pennsylvania, eastern Ohio, West Virginia, extreme eastern Kentucky, western Maryland, northeastern Tennessee, western Virginia and into Ontario and Quebec, Canada2.2. Basin: Appalachian Basin2.3. Age: Middle Ordovician age2.4. Area: 170,000 sq. miles2.5. Shale Depth: 2,000 to 14,000 ft2.6. Thickness: 50 to 500 ft2.7. Estimated Recoverable Gas: 38 to 69 Tcf2.8. Producers: Chesapeake Energy, BP, Chevron, Talisman, Anadarko, Rice Energy, Range Resources2.9. Production Start Up: Drilling and producing began in 2006 in Quebec. Forest Oil was the first company to do extensive shale testing and drilling in the Utica Shale Formation.2.10. Misc: The Utica shale is a major source of shale gas in Quebec and rapidly growing in Ohio.

2. UTICA

3.1. Location: southern New York, northwestern Pennsylvania, Ohio, West Virginia, eastern Kentucky, extreme western Virginia3.2. Basin: Appalachian Basin 3.3. Age: Devonian age3.4. Area: 79,400 sq. miles3.5. Shale Depth: 1,600 to 6,000 ft3.6. Thickness: 50 to 300 ft3.7. Estimated Recoverable Gas: 29 Tcf3.8. Producers: Equitable Resources, Cabot Oil & Gas, Chesapeake, Dominion, Rex Energy, CONSOL Energy, Range Resources3.9. Production Start Up: The first Devonian well was drilled by Range Resources in 2009.3.10. Misc: It is the shallowest of the Appalachian Basin shale plays.

3. DEVONIAN (OHIO)

4.1. Location: Michigan, extreme northern Ohio and extreme northern Indiana4.2. Basin: Michigan Basin4.3. Age: Late Devonian age4.4. Area: 39,000 sq. miles4.5. Shale Depth: 600 to 2,200 ft4.6. Thickness: 60 to 220 ft4.7. Estimated Recoverable Gas: 20 Tcf4.8. Producers: BreitBurn Energy Partners, Atlas Energy, Whiting Petroleum, HighMount E&P LLC4.9. Production Start Up: The Antrim Shale has produced gas since the 1940s, but the play was not active until 1980.4.10. Misc: Horizontal drilling is not typically used in the Antrim shale; however, it has been produced by vertical wells for several decades.

4. ANTRIM

5.1. Location: Indiana, eastern Illinois and north-western Kentucky5.2. Basin: Illinois basin5.3. Age: Devonian and Mississippian age 5.4. Area: 43,500 sq. miles5.5. Shale Depth: 120 and 2,100 ft5.6. Thickness: 100 to 300 ft5.7. Estimated Recoverable Gas: 11 to 19 Tcf5.8. Producers: CNX Gas, Noble Energy, Atlas Energy, BreitBurn Energy Partners, El Paso (CONSOL), Aurora, Magnum Hunter Resources, Trendwell Energy, Rex Energy5.9. Production Start Up: It has been a producer of gas for over 100 years. Production peaked in 1940.5.10. Misc: It was discovered accidentally by early settlers in search of saltwater.

5. NEW ALBANY

April 2014

With Special Thanks To:Jeff Reid, Senior Geologist, North Carolina Geological Survey, Division of Energy, Mineral and Land Resources, NC Department of Environment and Natural Resources (NC DENR)Greg Kozera, President, VA Oil and Gas Association (VOGA)Joanne Reilly, Board of Directors, North American Coalbed Methane (NACBM) Forum

1Reid, Jeffrey C. and Taylor, Kenneth B., 2013, Mesozoic rift basins – Onshore North Carolina and south central Virginia, U.S.A.: Deep River and Dan River ‐ Danville total petroleum systems (TPS) and assessment units (AU) for continuous gas accumulation: North Carolina Geological Survey, Open‐file report 2013‐01, 8p. 2 Milici, R.C., Coleman, J.L., Rowan, E.L., Cook, T.A., Charpentier, R.R., Kirschbaum, M.A., Klett, T.R., Pollastro, R.M., and Schenk, C.J., 2012, Assessment of undiscovered oil and gas resources of the East Coast Mesozoic basins of the Piedmont, Blue Ridge Thrust Belt, Atlantic Coastal Plain, and New England Provinces, 2011: U.S.Geological Survey Fact Sheet 2012–3075, 2 p. available at URL http://pubs.usgs.gov/fs/2012/3075/ 3 Reid, Jeffrey C. and Taylor, Kenneth B., 2013, Mesozoic rift basins – Onshore North Carolina and south central Virginia, U.S.A.: Deep River and Dan River ‐ Danville total petroleum systems (TPS) and assessment units (AU) for continuous gas accumulation: North Carolina Geological Survey, Open‐file report 2013‐01, 8p. 4 Natural Gas Potential of the Sandford sub-basin, Deep River Basin, North Carolina, by Reid, Jeffrey C. and Taylor, Kenneth B., with contributions by Olsen, Paul E., and Patterson, III, O.F., in Taylor, Kenneth B., and Jeffrey C. Reid, editors, “Field Trip Guidebook – 60th Annual Meeting,” Southeastern Section, Geological Society of America, Wilmington, North Carolina - March 2011. 5Milici, R.C., Coleman, J.L., Rowan, E.L., Cook, T.A., Charpentier, R.R., Kirschbaum, M.A., Klett, T.R., Pollastro, R.M., and Schenk, C.J., 2012, Assessment of undiscovered oil and gas resources of the East Coast Mesozoic basins of the Piedmont, Blue Ridge Thrust Belt, Atlantic Coastal Plain, and New England Provinces, 2011: U.S. Geological Survey Fact Sheet 2012–3075, 2 p. available at URL http://pubs.usgs.gov/fs/2012/3075/Maps 1-5, 8-10: Courtesy of Energy Information Administration, http://www.eia.gov/oil_gas/rpd/shale_gas.jpg.Maps 6-7: Courtesy of US Geological Survey, Provided by: Jeff Reid.

8.1. Location: western Alabama and eastern Mississippi8.2. Basin: Black Warrior Basin8.3. Age: Late Mississippian age8.4. Area: 21,000 sq. miles8.5. Shale Depth: 4,000 to 9,000 ft8.6. Thickness: 80 to 180 ft.8.7. Estimated Recoverable Gas: 2 Tcf 8.8. Producers: HighMount E&P, Chesapeake Energy, Energen, Anadarko, GeoMet, Carrizo Oil & Gas, Cabot Oil & Gas, Denbury Resources,Murphy Oil8.9. Production Start Up: Well testing began in 2005. 8.10. Misc: There has not been a lot of industry development in this play.

8. FLOYD-NEAL

9. CONASAUGA

10. CHATTANOOGA

10.1. Location: eastern Tennessee, northern Alabama, southern Ken-tucky and northeast Georgia10.2. Basin: Appalachian Basin10.3. Age: Late Devonian age10.4. Area: 20,000 sq. miles10.5. Shale Depth: 3,000 and 4,000 ft10.6. Thickness: 80 to 1,000 ft10.7. Estimated Recoverable Gas: 12.2 Tcf10.8. Producers: Atlas Energy, CNX Gas Company, GeoMet, CONSOL, Energen Corporation, Miller Energy Resources, Dominion Exploration and Production10.9. Production Start Up: The first wells were drilled in 2007 with interest growing more so in 2008.10.10. Misc: It is considered a fairly small shale gas play, still in its infancy.

6. DAN RIVER-DANVILLE BASIN

9.1. Location: Alabama, northwest Georgia and Tennessee9.2. Basin: Black Warrior Basin9.3. Age: Middle Cambrian age 9.4. Area: 18,000 sq. miles9.5. Shale Depth: 5,000 to 8,000 ft9.6. Thickness: 8,000 to 15,000 ft9.7. Estimated Recoverable Gas: 4 Tcf9.8. Producers: Dominion, Energen, Highmount, Northeast Alabama Gas District9.9. Production Start Up: In 2005, Dominion Black Warrior Basin drilled the first well.9.10. Misc: The Conasauga has one of the thickest shale sections in the world.7. DEEP RIVER BASIN

7.1. Location: North Carolina7.2. Basin: Continental rift /lacustrine Mesozoic basin7.3. Age: Late Triassic (Carnian)7.4. Area: 1,200 sq. miles7.5. Shale Depth: Median depth of 2,600 to 3,000 ft.7.6. Thickness: 180 to 800 ft. The TOC of the Cumnock Formation (n = 401) averages 1.89 weight percent. The range is from 0.01 to 33.62 weight percent. The standard deviation is 3.32 weight percent. 7.7. Estimated Recoverable Gas: 1660 bcfg 7.8. Producers: None7.9. Production Start Up: Hydraulic fracturing and horizontal drilling became legal in 2012. Revised administrative rules are to be completed by October 2014 by a special commission. The first permits may be issued in March 2015. Current rules allow permitted vertical exploration wells, but no hydraulic fracturing.7.10. Misc: Gas and oil shows occur in eighteen core holes, petro-leum exploration wells and mine workings of the 36 coal assess-ment core holes plus eight petroleum exploration holes that pene-trated the Cumnock Formation. Two shut-in wells have pressures, respectively, of over 900 psi (Butler #3) and ~300 psi (Simpson #1) as of March 2009. Coal mines, long closed, had underground oil shows in the coal workings, and three major fatal methane gas mine explosions.

6.1. Location: south central Virginia and north central North Carolina6.2. Basin: Continental rift / lacustrine Mesozoic basin6.3. Age: Late Triassic (Carnian)6.4. Area: 200 sq. miles6.5. Shale Depth: Surface to 4,700 ft.6.6. Thickness: The stratigraphically lower, the Walnut Cove Formation, is over 400-feet-thick, has a strike length of about twenty-two miles, and a probable width of ~1.1 miles – all in North Carolina. Its average total organic carbon (TOC) is 3.55% (n=122) from outcrop and three diamond drill hole cores. Its average %Ro is 1.85 (n=23). The stratigraphically higher Cow Branch Formation, is over 1,500-feet-thick, has a strike length of at least 6.5 miles in North Carolina and an additional 2-3 miles in Virginia and a probably width of 1.5 miles straddling the border between North Carolina and Virginia. Additional expo-sures occur to the southwest in North Carolina along strike of up to 10 miles; an isolated patch occurs near Greta, Virginia. In North Carolina the Cow Branch Formation has an average total organic content (TOC) of 1.38% (n=42) from a continuous quarry section. Its average %Ro is 2.08 (n=25). 6.7. Estimated Recoverable Gas: 49 bcfg 6.8. Producers: None6.9. Production Start Up: Hydraulic fracturing and horizontal drilling became legal in 2012. Revised administrative rules are to be completed by October 2014 by a special commission. The first permits may be issued in March 2015. Current rules allow permitted vertical exploration wells, but no hydraulic fracturing. 6.10. Misc: There are three shallow core holes in NorthCarolina. There has been no drilling in Virginia.


By: Joe Mitchell, LevelCon

It is quite amazing to look at an over view of a fracking site opera-tion. One only needs to see all the massive equipment, well head, sucker pipes and the man power to understand the substantial in-vestment operators spend to hit 1000 or 10,000 feet below the earth’s surface. But what about the most important details of this operation, water and fuel?

Since water is the basis of the fracturing fluid that transmits the pressure created from the fractur-ing pumps in order to crack (fracture) the shell formation, en-suring a site always has proper wa-ter levels is absolutely critical to the operation. Furthermore,

all the machinery on site must have fuel to sustain full operational capabili-ties. So how does one manage all these pieces of an operation? Through Wireless Remote Moni-toring.

One of the most inexpensive pieces of technology available to completely ensure each site has sufficient fluid levels is through re-mote wireless monitoring. Level data from water impoundments or remote fuel tanks, is remotely transmitted and monitored by the client’s staff at all times, so that the operation runs without inter-ruption.

Remote tank monitoring data allows the various dispatch compa-nies to accurately monitor how much water, fuel or fracking chem-icals is on site so as to avoid late night emergency deliveries, costly run outs, partial fills, or hazardous overfills.

The LevelCon Remote Monitor uses cellular or satellite communi-cation to a secure web portal which is easily accessed by any smart phone or tablet 24x7. Cus-tomers view their tank levels, GPS position, daily consumption and much more all from one screen, and can set up custom-ized alarm notices via email or text message alerts.

A typical impoundment or tank application calls for one wireless remote unit, capable of 4 analog and 4 digital chan-nels, and one pressure sensor (though a wide

array of sen-sors, from pressure to radar can be used). The pressure sensor is anchored to the bottom of the impoundment or lowered to the bottom of the tank and then con-nected to the moni-tor. The monitor can be powered with a solar panel and battery backup, with an 110v power adapt-er or with a robust lithium battery.

Report intervals depend on the application and power source. The

default solar powered or lithium powered unit reports 2-4 times a day, but can be adjusted up to eve-ry other hour. Whereas the pow-ered up unit, is capable of 20 min report intervals. These can be ad-justed via simple remote com-mands, so customers can set low report intervals when they are not in production, and high report in-tervals when they need the data the most.

Customers can set up “special” trigger reports based on tank lev-els. The unit wakes up every twen-ty minutes for a regular diagnostic check. If the sensor detects a level above the set threshold, it auto-matically sends a report. Thus, if the system is set up for three hour report intervals, and the unit de-tects that the level has broken theWireless Remote Monitoring- Best tool in your toolbox set threshold, it will send a report in-between its scheduled time. Therefore customers are assuredto always be in control of their operation.

The secure web portal is open to all who possess password access. Often times the operator wants to see all tanks/impoundments in operation, but only wants customers to see their individual assets. That is not a problem. Each customer is assigned to an account manager whois responsible for setting up all the user accounts that a company needs. They also regularly monitor the web portal and alert the customer if anything is out of the ordinary.

The advantage of the LevelCon monitor does not stop at tank levels. This same piece of equipment monitors generators, well heads and pump stations. With the digital input, we can display pump status, engine runtime and more. Beyond that, we can automaticallycontrol the pumps and stop them before there is an overfill or runout.The digital output detects the sensor level and cuts power to the pumps if the high or low threshold is broken. Couple this with email and text alerts, and the operation should never run dry.

Though water is extremely vital in the frac process, it is also very valuable to know how much product is being pulled into the frac tanks. The wireless remote monitor is ideal for this application; especiallyfor sites with multiple frac tanks being filled simultaneously. It is quite easy to monitor all equipment from one console. Built with a 10” outdoor touch screen and SCADA interface, customers can monitor all tank activity from one central location on the site.

This central monitor acts as a gateway for all other devices and pulls the data into one location. Each device talks seamlessly with one another so no data is lost and the full operation runs smoothly. No longer do clients need to put employees in harm’s way, with the technology of the remote monitoring system, customers have all eyes on their operation and never have to leave the office.

For more details on wireless remote monitoring, look us up at www.levelcon.com, or contact Joe Mitchell @ 937.689.6537

WIRELESS REMOTE MONITORING - BEST TOOL IN YOUR TOOLBOX

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TRAINING & WORKSHOPS

MAY (continued)

MAY

JUNE

3 Transportation Safety Day and Flagger TrainingState College, PA marcelluscoalition.org/get-involved

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

7 PEC Basic Orientation – SafeLand USA New Philadelphia, [email protected]

8 ESCGP-2 DEP Planning and Permitting Training Pittsburgh, PAmarcelluscoalition.org/get-involved

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

9 Energy Industry Training Series Washington, PA ypepittsburgh.org

16 PEC Basic Orientation - SafeLand USA Clarksburg, WVwww.hshi.com

17 PEC Basic Orientation - SafeLand USAClarksburg, WV www.hshi.com


18 PEC Basic Orientation - SafeLand USABridgeport, WV www.hshi.com

19 PEC Basic Orientation - SafeLand USABridgeport, WV www.hshi.com


12 PEC Basic Orientation – SafeLand USANew Philadelphia, OH [email protected]

13 Federal Motor Carrier Safety Administration Workshop Pittsburgh, PA marcelluscoalition.org/get-involved 13 PEC Basic Orientation - SafeLand USASt. Clairsville, OHwww.rjrsafety.com


19 PEC Basic Orientation - SafeLand USAClarksburg, WV www.hshi.com

3 - 6Gas Operations School Eastern US - TBD www.northeastgas.org/events.html

5 Energy Industry Training Series Washington, PA energytrainingseries.com


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

17 - 20 OSHA 5810 – Hazards Recognition and Standards for On-Shore Oil and Gas Exploration & Production Morgantown, WV safetyandhealth.ext.wvu.edu


APRIL


23 speakers

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15 conference sessions

Conference Statistics from 2013:

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UPCOMING EVENTS

Denotes National EventVisit our website for links to these events.

WWW.ONGMARKETPLACE.COM/EVENTS

APRIL1-3

SPE Unconventional Resources ConferenceThe Woodlands, TX | www.spe.org/events

7-9ShaleSafe Conference & ExpoWheeling, WV | www.shalesafe.info

9-11NAPE EastPittsburgh, PA | www.napeexpo.com

14-16VOGA Regional Natural Gas Vehicle ConferenceRichmond, VA | www.vaoilandgas.com

16-17AIPG 5th Annual SymposiumColumbus, OH | www.aipg.org

1712th Annual Michigan Petroleum ConferenceAcme, MI | www.michiganoilandgas.org

22-24Utica-Marcellus InfrastructurePittsburgh, PA | www.infocastinc.com/events/utica

29-30Utica & Marcellus NGL & Natural Gas Markets Congress Columbus, OH | www,american-business-conferences.com

29-30LNG Export USA 2014: Global Buyers CongressHouston, TX | www,american-business-conferences.com

30-May 1Ohio Valley Oil and Gas ExpoSt. Clairsville, OH | http://www.ohiovalleyoilgasexpo.com/

5-8Offshore Technology ConferenceHouston, TX | www.otcnet.org/2014

12-135th Annual National Shale ConferenceFarmington, PA | www.neienergy.org

13-14Oil & Gas Environmental ComplianceConference - Appalachian BasinWashington, PA | http://oilandgas.awma.org

13-14PIOGA’s Eastern Oil & Gas Conference& Trade ShowPittsburgh, PA | www.pioga.org

13-15Eastern Gas Compression RoundtableMoon Township, PA | www.egcr.org

15Drilling Onshore Conference & ExhibitionHouston, TX | www.iadc.org

18-20IOGCC Midyear SummitBiloxi, MS | www.iogcc.state.ok.us

19-21Advanced Contract Risk Management of O&GHouston, TX | www.oilandgasiq.com

3-5DUG EastPittsburgh, PA | www.dugeast.com

16-18Cyber Security for Oil and GasHouston, TX | www.oilandgasiq.com

MAY

JUNE


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By: Stuart Rexrode, Managing Partner, Blue Rock Energy Partners

As a small oil and gas producer looking for a growth catalyst, the right capital partner can make all the difference. And the key word is Partner. What kind of partner?

While bank debt financing may be an alternative, advance rates against current production and restrictive covenants and guarantees can significantly limit the creativity and control needed by small players looking to grow. And bank debt may simply be unavailable to a small producer.

Small producers may also be considering a working interest sell-down to equity participation capital providers. While mitigating some risk, the producer may be giving away too much upside and control of the project to really maximize its own cash flow and value.

So the question is what better alternatives are there to selling down your working interest to a standard industry partner? The answer is simple - a relationship that provides all the benefits of a trusted partner for a limited time period, but the partner then exits the project leaving virtually all the upside value to the producer.The good news is there is another alternative which will allow the small producer to have their cake and eat it too. More specifically, the producer will be able to retain the maximum project upside and control (like debt), while enjoying a partner that shares in the production and price risk (like a working interest partner). Essentially, it’s a structure that has a variable payback based on actual production and commodity pricing, and once a specified rate of return is met, the capital partner “goes away”. That is to say the partner is a temporary partner that provides needed growth capital for either acquisitions or proven reserve development, then exits the project, leaving the producer with the upside.

What structure does all this? It is known as a financial production payment structured as a temporary term overriding royalty interest.

Ultimately, the structure provides a much lower cost alternative to the typical working interest sell-down. Additionally, the advance rates against producing reserves is greater than bank debt, and the structure is non-recourse.

Here’s how it works:• The capital provider purchases a financial production payment structured as a term overriding royalty interest (“ORRI”) in the client’s producing assets and development assets• The temporary ORRI is structured as a defined percentage of revenue flowing to the capital provider• Typically, the ORRI percentage is the remaining % of revenue after sufficient revenue is left with the producer to cover landowner royalties, LOE’s, overhead, and a small buffer %• The capital provider is paid directly from the oil or gas purchaser• Once a contracted rate of return is met, the capital provider will revert the temporary interest back to the producer• In some cases, a 1-3% permanent override will be retained by the capital provider once the term override is reverted back to the producer

Below is a graphical representation of the transaction:

As can be seen, the capital facility is front end loaded, and the producer retains virtually all of the economic upside in the project. This structure provides a much higher level of overall net present value to the producer, and thus a lower cost of capital, as compared to selling down a working interest to a standard industry partner.

BlueRock Energy Partners is a firm that specializes in term overriding royalty interests and provides capital up $20MM per transaction. The BlueRock team has exclusively structured this type of project financing for 20 years, specializing in the small independent sector. BlueRock understands that a project often has unforeseen events that can affect the timing of cash flow and payback. As a partner, when small producers experience bumps in the road, BlueRock will work creatively with the client to provide the needed flexibility to ensure continuation of the project. This spirit of partnership is what makes BlueRock unique in the industry. Other benefits of BlueRock’s structure are the following:

• Non-recourse• No 3rd party engineering reports required• No personal or corporate guarantees• Higher advance rate than a bank• Simple deal structure and reporting• Repeatable and expandable• Favorable accounting and tax treatment may apply

IT’S NOT JUST CAPITAL. IT’S A PARTNERSHIP

LEGAL& FINANCE

April 2014

There are many things to consider when choosing the right capital partner. The following matrix summarizes many of those considerations for capital structures from senior debt through equity. BlueRock’s capital product and partner approach is positioned to give the small producer the simplest and most flexible relationship, while providing the most upside value.

If interested in speaking with BlueRock, please call 281-376-0111, and a BlueRock partner will be happy to discuss your project.

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MORE THAN HALF OF ALL THE HOMES IN THE UNITED STATES USE NATURAL GAS - ALMOST 62 MILLION FAMILIES.


By: Kristie Kubovic, Director of Communications, Shale Media GroupEdited By: Mindy Gattner, Editor, Shale Media GroupPhotos Provided By: John Kitchen, midstreamphoto.com

The inaugural Tri-State Alternative Fueling Expo and Conference was held February 18th-20th at the Monroeville Convention Center in Monroeville, PA. Themed, Powering America’s Future – Today, the event promoted the use of alternative energy sources in an effort to revolutionize the transportation industry with the hopes of boosting the local and national economies and protecting the environment.

“The Marcellus region is arguably the second largest gas supply and maybe even the second largest energy source on the planet right now. There are a lot of opportunities to take advantage of this resource that we have. We’ve had a lot of industry trade shows and events in the past few years that focus on drilling and Marcellus opportunities, but very little have focused on alternative fueling and the infrastructure for fueling those vehicles. Our transport sector has largely been ignored in this recent boom. It is our belief that this will be the sustainable business that is here when the drilling rigs go home, so we’re focused on creating a new market in the industry to take advantage of it,” explained Bob Beatty, Advisory Board Chairman, Tri-State Alternative Fueling Expo & Conference, and President, “O”Ring CNG Fuel Systems.

Dan Weaver, Director of Public Outreach, Pennsylvania Independent Oil and Gas Association (PIOGA), a nearly 100-year old association that represents over 900 shale oil and gas members from exploration and production companies to service providers to end users, says, “It is important to see what is going on in the industry,

especially on the end user side. There needs to be places or outlets for the product to go. It is fantastic to see new markets opening up at events like this.”

Showcasing over 100 vendors, the expo and conference opened with an evening of networking that included a job fair and casino night, where participants were able to view exhibits and ‘gamble’ with Dollar Bank Dollars. Alternative fuel trucks, new technology, various equipment and even a transportable compressed natural gas (CNG) fueling station and propane, liquefied petroleum gas (LPG), dispensing stations were on hand for attendees to view.

FYDA Energy Solutions offers complete sales, parts and service for alternative fuel vehicles and had a converted bi-fuel CNG Ford on display. Part of what the company does is offer CNG and propane conversions to the transportation industry and general public. “FYDA offers three primary products to the industry. First, we offer fueling containment and delivery systems for both CNG and Propane/LPG. Secondly, we offer conversions to dual-fuel for heavy duty diesel engines, and thirdly we offer a bi-fuel conversion for light duty vehicles, whether it be a van, pick-up truck or taxi cab,” relayed Tim Fyda, Owner and Founder, FYDA Energy Solutions, who also added, “Being in the heart of the Marcellus shale created interest, but there were three main objectives for creating the company. One, natural gas offers a clean alternative for vehicles. Two, it offers an economical alternative for vehicles since natural gas is roughly half the price of diesel. We believe that natural gas is

going to remain more stable as diesel rises over time. Thirdly, and very importantly, it is our fuel in this country. We want to get off of foreign dependence on petroleum and we think this is a good way to do that.”

Another exhibitor, Beemac Trucking, a flat-bed trucking company headquartered in Ambridge, PA, with offices nationwide, purchased 20 Volvo tractors that are original equipment manufacturer (OEM) CNG. In addition, Beemac is building a public CNG station in Ambridge to fuel those trucks. Ron Phelps, Director of Logistics, Beemac Trucking, expressed, “We decided about three years ago to look at optimizing CNG for our fleet. This is an effort to go green. Plus, it will be a cheaper cost for the fuel. In the long run, the trucks should help pay themselves off much quicker than if they were diesel products.”

ProGas, Inc., a propane distributor in western Pennsylvania, West Virginia and Ohio, that services residential accounts, commercial, motor fuel, and is now pursuing Autogas for propane, had a 1,000 gallon propane dispensing station that would be used for a fleet account on display. Ronald Schramm, President, ProGas, explained, “It is a unit that we could take out to their location. From that they could fuel their cars or vehicles. We as a nation need to utilize our own energy source. With the Marcellus shale and all the natural gas underneath us, propane is a part of that process. We should be using our own product from our own country.”

Representatives from across the region were in attendance, including, Green Eye AutoGas Solutions, a company that operates in eastern Pennsylvania and New Jersey. Green Eye AutoGas Solutions is a type of general contractor for the alternative fuel industry and works with Autogas and CNG. “There are benefits to both Autogas and CNG. Which one is better for an individual or company comes down to the customer’s needs, filling infrastructure and economics. Due to the availability of propane filling locations and that propane infrastructure and conversion costs are less expensive upfront, propane may be the better option for some. We work with our clients through the process. In general, it comes down to awareness and educating the general public. Working together, we can take advantage of a natural resource that the U.S. has a vast supply of. This is a great American story that needs to be told,” informed John Iannarelli, President/CEO/CFO, Green Eye AutoGas Solutions.

Working for petroleum based reductions and clean air, Pittsburgh Region Clean Cities (PRCC) is one of over 87 coalitions in partnership with the Department of Energy with the goal of educating people about all alternative fuels and technology. Responsible for 33 counties in western Pennsylvania, PRCC works on local initiatives and is fuel neutral. Rick Price, Executive Director, Pittsburgh Region Clean Cities, pointed out, “We teach all technology and work on the education side. There are a lot of misnomers about alternative fuel and technology. I like to give the facts and background. The expo was unique in that it brought five Clean Cities coalitions together: two from Pennsylvania, two from New York and one from Ohio, and two managers from the Department of Energy. Plus, the event in itself brought so many different varieties of vendors to one area for the purpose of alternative fuels. Investors were on hand for people to talk about being able to

TRI-STATE ALTERNATIVE FUELING EXPO & CONFERENCE

ALTERNATIVEFUELS

April 2014

afford and move to alternative fuels. While, first responders were in attendance and spoke of how they prepare for an accident. The event is a great option and lines up with the outreach of our Odyssey Day event that is held in October.”

The conference side of the event began on the 19th with various sessions and workshops. One point that was stressed is that a barrier of natural gas is the need for education. A CNG safety video was played that showed various crash, pistol firing and fire tests. All tests displayed the safety of CNG. The video can be found at https://www.youtube.com/watch?v=NqH_s3YC4sE.

In a seminar, titled, CNG…Why Now?, Beatty discussed the many advantages of natural gas and stated, “Natural gas is safe.” For example it doesn’t pool and mixes quickly with the air, unlike gasoline, which is more volatile, since it collects and pools. It is better for the environment and the cleanest of hydrocarbon fuels. Its use is reversing pollution, and it is non-toxic. Plus, it is domestic, affordable and the U.S. economically benefits from it. Beatty pointed out, “The rest of the world uses CNG.

Iran, which is the size of New Jersey, has 2.8 million CNG vehicles. The U.S. only has a little over 100,000 CNG vehicles. Natural gas is our opportunity. It offers energy independence, and it is green.”

In the same seminar, R.T. Walker, Vice President, Pittsburgh/Marcellus Utica Field Services Consultant,

Energy Facilities Group (EFG), CBRE, talked about the strategy of the infrastructure and finding land for CNG stations. He stressed the importance of research and putting a station in a strategic area and looking at items such as the ability to buy into transmission lines. Walker believes, “In 10 to 15 years, CNG stations will be everywhere. They are actually an easier sell since they are not below the ground.”

The Honorable Samuel Smith, Speaker, Pennsylvania House of Representatives, gave the Keynote Address on the final day of the expo and conference. Smith expressed, “We’re looking at a snapshot of history right now. The shale oil and gas industry is a true game changer and a great opportunity that should be promoted

and encouraged. Pennsylvania has had a long history in energy, since the heart of the Industrial Revolution. With negative issues of the past, we have figured out how to manage the industry in a responsible and effective manner.” Relaying that the government needs to help and not get in the way, Smith gave his perspective on the current state of the Pennsylvania Legislature and pointed out that many issues are driven by geography (east vs. west) as well as by party (Democrat vs. Republican). Smith spoke of the Pennsylvania Supreme Court decision to strike down specific provisions of Act 13 and believes the decision to be ill informed. “Act 13 was a long, hotly debated bill that was based on compromise. The court’s decision has taken away predictability and left a murky and unclear area. It is almost impossible to say where we’re going now. It wasn’t a clear decision with the judges and a solution won’t be reached quickly,” expressed Smith.

Believing there is no single energy domain, Smith says there is room for all of them. We just need to figure a way to work together. Looking at the jobs already created by the industry and the possibility for many more with the potential Shell cracker plant, the expansion of CNG stations along the Pennsylvania Turnpike and other corridors and the return of manufacturing with companies like Walmart and Urban Outfitters, the state is developing a diverse portfolio with the help of natural gas right under our feet.

For a video highlight of the event, visit http://vimeo.com/87626089. The Tri-State Alternative Fueling Expo and Conference will return to Monroeville, PA in February 2015.

Shale Media Group (SMG) is your 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, The UticaShale.com, TheShaleAcademy.com, ShaleaAdvantage.com and ShaleEnergyNow.com.

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Transcript of The Northeast ONG Marketplace April 2014