JOE FREEMAN - AESC · Workover/Well Servicing Publications, Inc., 121 E. Magnolia, Suite 103, ... YOU CAN TRUST NEW WELL COMPLETION TECHNOLOGIES. WELL SERVICING SEPTEMBER/OCTOBER

SEPTEMBER/OCTOBER 2017

2017-2018AESC PRESIDENT

JOE FREEMAN

WELL SERVICING SEPTEMBER/OCTOBER 2017 3

Volume 58, Number 5September / October 2017

FEATURES

WELLSERVICINGMAGAZINE

WHAT’S MORERELEVANT? DRILLING RIG COUNTS OR COMPLETIONS?

AESC NATIONAL SUMMER MEETING WRAP-UP

JOEFREEMAN

OFFICIAL PUBLICATION OF THE ASSOCIATION OF ENERGY SERVICE COMPANIES

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Volume 58, Number 5September / October 2017

CONTENTS

WELLSERVICINGMAGAZINE

PRESIDENT’S OUTLOOK

EXECUTIVE DIRECTOR’S CORNER

WELL SERVICE RIG COUNT

SAFETY TALK

GREAT CREW CHANGE

MARKET REPORT

• U.S. Refineries Still Rely on Crude from Abroad Because Not Enough Pipelines Reach East & West Coasts

• U.S. Coal is Hiring Again, but Traditional Jobs are Vanishing Workers Need Sharp, High-Tech Skills Today

• No End in Sight for U.S. Shale Gas Production Despite Global Oversupply

• Oil Majors Shift Messaging to Lure Millennials

CONGRESSIONAL SPOTLIGHT

Rep. Scott Tipton (R-CO-3)

ADVERTISER’S INDEX

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WELL SERVICING SEPTEMBER/OCTOBER 2017 7WELL SERVICING SEPTEMBER/OCTOBER 20176

It is an honor and a privilege to be able to serve as the 61st President of the AESC. It is truly humbling to follow in the footsteps of great leaders such as Frank Pool, Ellis Mills, Jesse Moore, J. F. Taylor, Jim LeVoy, Ron Boyd, Jim Byerlotzer, Charlie Moncla, and Kenny Jordan, just to mention a few.

I started in the industry in 1981 with a small well servicing company on the Texas Gulf Coast. I was impressed with the association meetings I attended. I realized then how important the association was to small service companies. There was no way companies could deal with all of the legislative and safety issues, especially in the 1980’s, without the help of an association.

The current downturn resembles the 80s in a lot of ways. The industry has lost nearly half its employees yet we are still producing the same amount of oil with half the rigs, fewer people and oil prices half as high as in the peak of 2014.

It is, on one hand, a tribute to the efficiency, innovation, safety, service quality and performance of the personnel in the oil field that we can generate these types of results, but on the other hand it might be that we have established a new plateau of performance that will be expected going forward.

Service quality and safety will be the guiding principles of survival. I know pricing is important, but at the end of the day your customers will know if they are getting their money’s worth based on what is important to them and the results.

Looking forward, I think it will be as important as ever to have an association that has our backs at all times. The AESC is in the forefront of legislative changes, OSHA regulations, DOT requirements and every other compliance problem facing the industry today. We need their efforts on our behalf now more than ever.

Currently the AESC has more than 500 member companies. I fear that

there will be some consolidation and mergers in our industry in the next 12 months, and unfortunately liquidations. With this economic environment, we may see a decline in our membership. It is imperative that we all attempt to solicit more members to keep our organization strong. We have a great effort ongoing to maintain and increase our membership led by Tracie Reed and her committee. They need your help.

Also, in the last year the AESC has brought Well Servicing magazine into manageable semi-profitability, with the help of great members including former AESC president Joyce Ryel and Kristin Hincke. We can’t thank them enough for all of their hard work.

I look forward to being the president of the AESC and will do my best to represent the association and carry on the good work that has been accomplished over the last 61 years. Finally, I want to thank Pioneer Energy Services for allowing me to take the needed time to accomplish this effort and represent the association.

PRESIDENT’S OUTLOOK

JOE FREEMAN

2017-2018

AESC President

Pioneer Energy Services

San Antonio, Texas

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WELL SERVICING SEPTEMBER/OCTOBER 2017 WELL SERVICING SEPTEMBER/OCTOBER 20178 9

DRUGS IN OUR WORKPLACE

Recently I read an article concerning drug use in the oil and gas service industry. It was an interview with a worker who had been through rehab, and he was recounting his situation while working as a CDL driver hauling fluid during the boom. These transport vehicles, when loaded, weigh up to 80,000 lbs. if they are not running overweight or on special permits. The interviewee stated that it is not uncommon in our industry for drivers to be masking drug tests and using narcotics and other drugs to stay awake during long hours in order to make the most money possible. Many of these drivers, at that time, were making upwards of six figures.

We realize that many companies, especially those in our own association, are doing the right things to screen and monitor current employees for safe work practices, especially in the areas of alcohol and narcotics abuse. So why are we having this problem? Why are workers feeling compelled to drive a commercial vehicle on the highway under the influence of drugs or alcohol? In a word: money.

One of the most common challenges occurs when an employee seeks a new job after failing a drug test and being terminated. The new employer is unaware of this prospective employee’s past. Employers must be diligent with their substance abuse policies and procedures for drug and alcohol screening in order to not only protect their businesses, but everyone on the roads.

So this begs the question, how do we, as an industry, improve our processes

in order to ensure that these drivers are not allowed to drive a commercial vehicle? How do we get the “bad players” out of our industry, whether they are individuals or companies that turn their backs on these behaviors?

Workers enjoy protections against discrimination in many areas; however, at what point does someone’s personal privacy rights take precedence over the safety of the general public? Only when there is a horrific accident involving an oilfield truck does this issue seem to get attention.

We, as an industry, cannot condone these actions in the workplace. If you are:

• telling your employees in advance when drug tests are scheduled or

• turning a blind eye to hazardous conditions or

• not maintaining your equipment in a safe, operable condition or

• aren’t dealing with the situation immediately

then you are part of the problem. Do you really want to be responsible for the deaths of innocent people on the roadway? At the end of the day, if you are turning your back on what is “the right thing to do,” and something happens on your watch because of it, you are just as guilty as the driver in the truck.

There are still a lot of questions to be answered, but it starts with management! Do not be one of the “above.” We, as an industry, must be vigilant to ensure that the interests of oilfield companies and the general public are protected!

EXECUTIVE DIRECTORCORNER

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Area

J U N E 2 0 1 7 12 months agoYear on year change

in active rig countActive Rigs

Available Rigs

Idle Rigs

Stacked Rigs

Active % of total

Active Rigs

% Utilization

Texas Gulf Coast 159 53 76 63 45% 130 41% 29

Arklatex 58 15 55 76 28% 42 22% 16

Eastern U.S.A. 54 10 30 22 47% 50 43% 4

South Louisiana 19 6 9 2 53% 11 37% 8

Mid-Continent 144 53 75 100 39% 90 23% 54

West Texas / Permian 409 26 218 271 44% 337 37% 72

Rocky Mountain 217 61 155 52 45% 197 36% 20

West Coast / Alaska 175 5 172 90 40% 152 31% 23

TOTAL U.S. 1235 229 790 676 42% 1009 33% 226

Area

J U L Y 2 0 1 7 12 months agoYear on year change

in active rig countActive Rigs

Available Rigs

Idle Rigs

Stacked Rigs

Active % of total

Active Rigs

% Utilization

Texas Gulf Coast 162 46 75 61 47% 133 41% 29

Arklatex 57 16 56 76 28% 48 26% 9

Eastern U.S.A. 46 18 26 21 49% 54 49% -8

South Louisiana 22 2 10 4 58% 11 38% 11

Mid-Continent 131 43 76 102 37% 99 25% 32

West Texas / Permian 408 31 213 269 44% 337 37% 71

Rocky Mountain 205 75 152 51 42% 208 40% -3

West Coast / Alaska 184 1 170 95 41% 163 33% 21

TOTAL U.S. 1215 232 778 679 42% 1053 36% 162

Driving is quite honestly something that we just take for granted every day. Why you ask? Because it’s become habit. When we climb into our company oilfield cars, trucks and SUVs, our brains are filled with a thousand different thoughts other than driving. Can I make it

to work on time in this traffic? What should I fix for dinner? How will my children perform at school today? Is it going to rain today?

SO WHY IS THINKING A PROBLEM WHILE DRIVING?

It means you are not focused on what is going on around you, including traffic in front and behind you, whether or not you remembered to fasten your seatbelt, speeding without even noticing it, or what lies ahead.

Vehicle Crash data reported throughout the industry from state and federal agencies as well as independent sources (including the Permian Road Safety Coalition) shows that speed and seatbelt use are the two biggest contributing factors that lead to oilfield-related fatalities, and yet we battle these issues as much today as we did ten years ago.

From 2003 to 2013, the U.S. oil and gas extraction industry experienced unprecedented growth, doubling the size of its workforce and increasing the number of drilling rigs by 71 percent. To describe fatal events among oil and gas workers during this period, CDC analyzed data from the Bureau of Labor Statistics’ (BLS) Census of Fatal Occupational Injuries (CFOI), a comprehensive database of fatal work injuries. Two-thirds of all worker fatalities were attributed to transportation incidents (479, 40.3%). More than 50 percent of persons fatally injured were employed by companies that service wells (615 51.7%).

When you look at the vehicle incidents as an example in the Permian Basin, there’s a high number of third party-involved recordables, and they are at or near intersections and also close to town where speed limit transitions from 70+ mph down to 35-45 mph are common. This is for no other reasons than lack of attention while driving and excessive speed.

Take, for example, State Hwy 302 located between Kermit and Mentone, Texas. Traffic from 2010 through 2015 increased from less than 1,000 vehicles per day to more than 5,000. The sheer volume of big

trucks blended with light duty vehicles exponentially increased risk and lowered the overall road conditions creating the perfect storm for more incidents. This resulted in 75 recorded incidents during this time frame: 28 percent Loss of Control, 24 percent Rear Ended, 15 percent Head-on, 18 percent Left Turn, 8 percent Fixed Object, 4 percent Right Angle and 3 percent Side Swiped.

Seventy five percent of these 75 accidents show that 21 percent were Failure to Control Speed, 21 percent were Lane Change-Passing, 15 percent were Driver Fatigue, 12 percent were Driver Inattention and 9 percent were Faulty Evasive Action……all driver behavior-related causes, not road or weather conditions.

The Permian Road Safety Coalition is a perfect example of the industry working with Texas Department of Transportation and other industry experts evaluating what is happening within their operating area and taking action to improve the condition of the roads to positively affect safety.

Why don’t drivers buckle up today? Every time this question comes up in discussion (typically following an accident investigation), managers consistently express frustration that after all of these years, employees are still not buckling up. As much as it might surprise and further frustrate company leaders, the answer is it’s

WELL SERVICE RIG COUNTWelcome to the Association of Energy Service Companies (AESC) Service Rig Count. This service is being provided by the AESC and is published in each issue of Well Servicing magazine and now may be accessed directly on the AESC website (www.aesc.net). Simply go to Industry Resources on the top tab, a drop-down box will show you “RIG COUNT” and click there.

Canadian rig count was provided by Topco Oilsite Products, but effective for the June 2016 Rig Count, they are no longer providing that service so it has been removed from the count.

Active Rig The rig is active if, on average, it is crewed and worked every day during the month.

Available Rig The rig is available if a rig has a crew and is ready to work, but is not working.

Idle Rig The rig is idle if the rig is capable of being put to work in less than 48 hours and does not require spending in excess of $50,000 to activate it, and does not have a crew currently assigned.

Stacked Rig The rig is stacked if the rig does not have a crew assigned and could not be put to work without significant investment in repairs and additional equipment in excess of $50,000.

SAFETY TALK LIFE BEHIND THE WHEEL IN THE OILFIELD By Paul Shouse, Vice President Sales, INTHINC an Orbcomm Company


(661) 979-0665

WELL SERVICING SEPTEMBER/OCTOBER 201712

simply a learned bad behavior for most. If you look at the sheer number of times that an oilfield service worker gets in and out of his/her truck on any given day, it’s understandable that seat belts would become a nuisance.

We also see instances where an employee gets out of the truck, doesn’t get it in park or set the emergency brake and the truck rolls over him/her. This should never happen, but it does every year. Again, these are learned behaviors that must be changed.

All of that said, the fastest way to implement change is to consider investing in an In-Vehicle-Monitoring-Solutions (IVMS) program. IVMS programs have become more prevalent over the past few years by companies within the industry looking for ways to curb the number of recordable driving incidents. The overwhelming consensus is that these systems work. IVMS programs have the best impact when the system provides immediate feedback to the driver so that they know they are doing something that

is putting them at risk, and they can change the behavior immediately without repercussion. Most of us want to do the right thing and as hard as it is to change the behaviors that put us at risk, we are much more willing to listen and learn when we know we aren’t being scolded or reprimanded for everything we do.

With the industry growing again, we have already seen a marked increase in the number of recordable incidents on the rise and, sadly, expect this trend to continue. One of the predominant reasons attributed to this is SSE – Short Service Employees who are statistically proven to be at a 40 percent or greater risk of injury and this includes driving. Risk factors include inexperience driving in the oil patch, an increase in work hours or unfamiliarity with the type of equipment driven in the oilfield. All of these factors add up to higher risk for some employees.

This is why it is even more critical to have a system in place that is capable of identifying and addressing risky driver behavior in real time, from the first day the new employee starts to work for your organization.

Fall is upon us and we will see our children heading back to school. This means an increase in overall traffic with school buses and after school events further adding to the frustrations of our workforce trying to get from point A to point B so campaigns to increase awareness and sensitivities to this issue can only help to again drive a positive culture for safe driving.

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NEW WELL COMPLETION TECHNOLOGIES

Devon Energy Corp. announced in July that its Privott 17-H well in southwestern Kingfisher County in Oklahoma’s STACK play reached a peak 24-hour rate of 6,000 barrels of oil equivalent (50 percent oil).

“I never expected that from a well in western Oklahoma,” admits Trey Lowe, completions engineering manager for Devon. “I started my career working offshore, and those are numbers we would expect offshore, not from a well just 45 minutes west of my office [in Oklahoma City].”

Sure, it all begins with longer laterals being drilled, allowing more rock to be contacted, but new completions technology has revolutionized the industry, making it possible to have increased production while drilling fewer wells.

“Completion intensity has gone up exponentially in the last couple of years,” Lowe contends, “from the number of frac stages to how much proppant is used. We’re still experimenting. It’s a scientific process. We collect data, analyze it and then continue to improve.”

The ability to analyze that data in real-time has made a huge difference, according to Lowe, who is a distinguished lecturer for the Society of Petroleum Engineers.

“We’re using microseismic, fiber optics and new logging tools in ‘underground laboratories’,” he explains. “You put everything together, and that lets us have a sense of what’s happening downhole. We’ve learned tons.”

Lowe calls the use of fiber optics a “breakthrough” in completions technology.

“We strap the fiber optic cable to the outside of the casing,” he continues. “It gives us a sense of what’s happening in terms of fracturing.”

Companies used to have to wait for several months of production before they could analyze a well. Now, Lowe says, Devon can analyze well results in real-time thanks to fiber optics.

He says the fracturing design of the record-setting Privott 17-H well, which was drilled with a 10,000-foot lateral and landed in the upper Meramec interval near

the company’s Showboat development, resulted from an “underground laboratory.”

Geosteering has also allowed Devon to make a “giant leap” in its efficiency of drilling the well, according to Lowe.

“Devon used to be in the zone 75 percent of the time,” he claims. “We made changes in how we do it, and now we’re in the zone above 95 percent of the time in a much smaller window.”

Most Devon-operated rigs are working in tandem with the company’s Well Construction team, called WellCon for short, which can monitor up to 75 rigs during the drilling process at the Devon Energy Center in Oklahoma City. Drilling engineers or geologists staff the WellCon nerve center 24/7. Using real-time data, they monitor drilling, geosteering and fracturing operations, looking for variances that can identify potential hazards.

The specifics of proppant used and the number of frac stages at the Privott 17-H well are proprietary, according to Lowe, but he notes that in general terms Devon is fracturing more stages and using two to three times the amount of proppant compared to just a couple of years ago.

The Privott 17-H is emblematic of the success that Devon, which has approximately 90 percent of its U.S. rig activity in Oklahoma’s STACK and the Delaware Basin on the western side of the Permian Basin, is experiencing with its enhanced completions strategy. For example, Devon recently brought online four other high-rate Meramec wells in the core of the over-pressured oil window in the STACK. Together, the four wells had an average 30-day initial production rate of 2,000 barrels of oil equivalent. On a per-lateral foot basis, the average well productivity was more than 300 barrels of oil equivalent per day for each 1,000 feet of gross perforated interval.

OPEN-HOLE COMPLETIONS

Cemented plug and perforation (P&P), which uses bridge plugs on wireline for isolation, remains the number one completion technology worldwide for

By Al Pickett, Contributing Writer

multistage stimulation, according to Drilling Contractor magazine. Open-hole completions, however, have advanced at a fast pace over the past five years.

“Operators in every unconventional play are actively using, have tried, or are considering open-hole completions,” Beau Wright, applications engineering manager for Baker Hughes, told Drilling Contractor. “Some areas use the technique more than others, and we have seen shifts back and forth between P&P and open-hole methods. One system is not technically superior to the other, and these plays are not static environments.”

Longer laterals and the need for more fracture stages have driven the trend to open-hole completions. Drilling Contractor reports that ball-drop/sleeve fracturing techniques have improved the process significantly. Wells have gone from an early threshold of 10 or 15 stages to provide hydraulic fracturing capabilities to 50 or more stages with increased efficiency and reliability.

According to the magazine, degradable alloys have further improved efficiency, including the latest trend of dissolvable P&P systems that can be applied in open holes.

Glenn Blumstein, president of GLB Exploration, Inc. in Oklahoma City, says his company has drilled 20 horizontal wells over the last nine or 10 years.

“The consensus used to be that you couldn’t perforate stages closer than 500 feet,” he states. “But now you can do 100 to 150 feet. The philosophy and technology has changed.”

VERTICAL COMPLETIONS

While an estimated 84 percent of the wells being drilled today in the United States are horizontal, there are still those finding success drilling vertical wells. One of those is Blumstein, who says his company is only drilling vertical wells.

“We have established a niche, providing vertical prospect ideas to the industry or individuals who don’t have the possibility to work with the big boys (in the giant horizontal unconventional plays),” he says. “You can make money at $40 to $50 oil with straight holes.”

GLB Exploration, Inc. targets the Simpson Sands, Viola, Hunton, Pennsylvanian Sands, including the Unconformity Sand, Skinner and Red Fork formations in Oklahoma. Blumstein says he completes his vertical wells “the old-fashioned way” by drilling the wellbore, setting the casing, perforating the well and then acidizing or fracturing it.

He notes that he uses slick water and sand in fracturing carbonate formations, but his fracs consist of cross-linked gel and sand when targeting sandstone formations.

Many factors including the price of crude, the geologic play, the operator, the drilling budget all affect decisions related to the utilization of well completion technologies. Who knows what we will see in the future.


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WHAT’S MORE RELEVANT? DRILLING RIG COUNTS OR COMPLETIONS? By Andy Maslowski, Contributing Writer

The economic health of the oil and gas industry is always in question. That’s why it must be continually checked with regular examinations.

In a worst case scenario, major surgery is required. Sadly, during the past three years this has occurred too many times and many employees have left the business forever.

Fortunately, there are a number of gauges to monitor the industry’s overall fitness and well-being. Oil and gas prices may be the most important symptom or warning sign, but drilling rig counts and the number of completions also play key roles. However, these factors often change independent of one another. Sometimes rig counts and completions increase when oil and gas prices decrease. And not all wells are completed right away, but if a well is not drilled, it cannot be completed at all!

STATISTICS

The modern oil business can trace its roots back some 160 years to a time when cable tools hung from wooden derricks or spring poles did most of the drilling. Since that time period, an estimated 4.5 million wells have been drilled in the U.S. in search of hydrocarbon deposits. According to various estimates, more than one million wells remain active, both shallow and deep.

For example, the Railroad Commission of Texas (RRC) reported in the spring that there were more than 434,000 oil and gas wells in Lone Star State. The North Dakota Industrial Commission said its state had some 15,500 wells capable of producing at the start of 2017, and state figures from Ohio indicated there were more than 50,000 wells in the Buckeye State, including an estimated 1,600 producing from the Utica Shale that were horizontally drilled during the past six years.

Baker Hughes and its predecessors, Baker Oil Tools and Baker International, have been monitoring American drilling rig counts for decades. Beginning in July 2017, all indications are the new GE-merged company, Baker Hughes, listed on the New York Stock Exchange as BHGE, will continue providing the famous tally.

In early July, BHGE reported the U.S. drilling rig count was 952. That’s more than double the total of 440 that were working around the nation at the same time in 2016. As usual, approximately half of the active rigs, 463, were operating in Texas.

As most of us know, drilling rig counts change all the time. Just three short years ago, the count surpassed 1,900 rigs before going on a downward trend that bottomed in the spring of 2016 at 404 rigs. That was the national count less than a year and a half ago! Things have been improving since then, but there are no guarantees that trend will continue.

As many say, “The greatest ability is availability.” You have to be willing and able to work when you have a chance. The same thing can be said about drilling rigs. The rigs are out there, but they have to be hired before they can go back out in the field.

COMPLETIONS

Drilling philosophies have changed during the past 30 years or so. Because of new horizontal well technologies, one rig now might sit on the same drilling and production pad and punch down multiple wells, usually spaced less than 100 feet apart from one another at the surface. This lowers the environmental

Following drilling and completion activities, oil and gas production is optimized on pads with multiple wells. (Photo by Andy Maslowski)


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impact of drilling, creating fewer wellsite locations and roads affected by heavy truck traffic. Trucks can follow the same approved hauling routes to move equipment, water, crude oil, and so on.

Completing a modern horizontal well is a true engineering marvel. Just getting the frac water, sand or proppant and other materials on location is a logistical challenge. Frac tanks, sand trucks, pumpers, and other gear have to be organized in the proper manner for hydraulic fracturing to proceed.

A horizontal borehole might stretch one or two miles (or more) from the main kick-off point at the vertical trunk. That means if production pipe is set, perforations could be spread over a series of pay zones 5,000-10,000 feet in length (or longer). Typically, these sweet spots are completed with multi-stage frac jobs—10, 20, 30 or more per well. Usually, the first perforations are made at the deepest or laterally longest portion of the hole.

In total, a few million gallons of water and a few million pounds of proppant may eventually be used for each well. If five or more wells are drilled on the same pad, the drilling and completion crews might end up completing more than 100 different pay zones. That could represent thousands of truckloads of water and sand even before production begins!

Once they are drilled, petroleum wells remain in various stages of development. Sad but true, some wells are dry as a desert. Others hit the ocean—water zones—and will never be economical to produce.

Hopefully, most will be fully productive once they are completed and hooked-up to a pipeline and various production assemblages. Then it’s time for pay back!

That’s exactly what has been happening in the U.S. in recent years after tens of thousands of wells, mostly shale wells, began spouting their flush production. As a result, American oil and natural gas production are either at or near all-time record levels.

According to the U.S. Energy Information Administration (EIA), in 2016 domestic liquid petroleum production averaged 12.354 MMBPD (million barrels per day), including 8.875 MMBPD of homegrown crude oil production and 3.478 MMBPD of natural gas plant

liquids and liquefied refinery gases. Marketed natural gas sales are even better. The EIA said more than 28 Tcfg (trillion cubic feet of natural gas) were marketed in both 2015 and 2016. That’s far more than the six Tcfg per year that was sold in the boom days of the early 1970s, the previous record years.

Oil imports have fallen during the past decade, and because of regional marketing conditions, some American petroleum products and liquefied natural gas (LNG) supplies are being exported to other countries. The EIA estimated crude oil and petroleum product imports peaked in 2005 at 5.005 billion barrels for the year, or about 13.7 MMBPD. Ten years later, the total had dropped to approximately 3.449 billion barrels or 9.4 MMBPD.

FRACKING AND DRILLING

Obviously, it is the combination of horizontal drilling with hydraulic fracturing that has fueled the recent revolution in the oil and gas business. Both are relevant in their own way and play a role in getting more hydrocarbons to the marketplace. Other oilfield statistics are also important.

For example, let’s look at drilling permit numbers in Texas for the past three years. The RRC estimated there were a staggering 25,793 drill permits issued in Texas in 2014, the last great year of the drilling boom.

T E X A S D R I L L I N G P E R M I T S & W E L L C O M P L E T I O N S

For 2016 For 2015 For 2014

Original Permits Issued 8,113 10,549 25,792

New Drill 6,559 9,030 23,273

Re-enter 117 139 472

Re-complete 1,437 1,380 2,047

Total Completions 10,493 19,521 29,555

New Drill Completions 8,900 17,667 27,478

Re-enter Completions 109 227 287

Re-Completions 1,484 1,627 1,790

Source: Railroad Commission of Texas

However, following the collapse of crude oil prices, which dropped from above $100/barrel in the summer of 2014 to less than $30/barrel during early 2016, the number of drilling permits also fell in the state to 10,549 in 2015 and to 8,113 last year. That’s an annual decline of more than 17,000 permits, almost 69 percent, in two years.

Not too surprisingly, the drilling rig count also fell during this time. Baker Hughes reported Texas operators had about 900 drilling rigs working in October 2014. In May 2016, it was less than 180 rigs.

Many wells are not drilled in the same year in which they are permitted. After a permit is issued, some may never get drilled at all since the operator may have had a change of plans, run out of money, found better prospects elsewhere, etc.

Completion numbers are more mercurial. The RRC counted 29,555 completions in 2014 in Texas, 19,521 in 2015 and 14,493 in 2016. As in permitting, a lag time may pass to get a completion performed on a well after it is drilled. As a result, some wells might wait up to two calendar years or even longer to be completed. Reportedly, that is the case now for a few thousand wells across the American oilpatch. Again, operators may have had a change of plans, are waiting on a rig, are hoping for an increase in prices or have other reasons not to finish the project.

In the end, all petroleum wells have to be both drilled and completed to make a profit. So while the drilling count is still relevant, other statistics such as number of completions are equally important to those making business decisions relating to drilling and servicing. While a good number of completions are on hold at the moment, eventually, the numbers for drilling and completions will even out. Fracking might get more headlines, but without a borehole there would be nothing to frac, and nothing to produce the hydrocarbon fuel we so desperately need in this modern world.


M E M B E R P R O F I L E :

JOE FREEMAN By Mark Crawford, Contributing Writer

Raised in an oilfield family in Houston, Texas, Joe Freeman developed an appreciation for hard work at an early age. This “can do” attitude has served him well over his nearly 40-year career. After several occupations (including pipeline construction, U.S. Army, fishing tools and well servicing), Freeman is now the senior vice president of Pioneer Energy Services’ Well Servicing Division in San Antonio where he oversees 125 workover rigs operating in Texas, Mississippi, Arkansas, Louisiana, and North Dakota.

Freeman started his new role as AESC president on July 27, having just finished his term as first vice president. Joe is looking forward to a whirlwind year as president and is ready to hit the ground running. Not only has he been an active AESC member since the 1980s, he fully understands the issues from his roles as first and second vice president. “It has been a big help serving as vice president, sitting on the executive board, and being involved in AESC activities and planning,” said Freeman.

READY TO LEADFreeman is ready to take on the issues that are challenging the oil and gas industry—including all the regulatory obstacles that well servicing companies face.

“Oil prices are still in the ditch and only about half of the equipment, drilling rigs, and workover rigs are working,” said Freeman. “That means only half of the workforce is working, and half of them are ready to retire. AESC director Kenny Jordan does a fantastic job staying on top of all new regulatory, environmental, DOT, and safety proposals coming out. If we can keep many of these costly and constraining issues at bay, at least until times are better, we can help our members stay in business until the turnaround comes.” Being president requires considerable travel. The AESC has 19 chapters throughout the U.S. that hold various events during the year, including membership meetings and scholarship fundraisers. Freeman plans to visit as many chapters as possible and

attend their regional meetings and activities. “We have some great chapters that devote a lot of energy to fundraising activities, from fishing tournaments to golf tournaments, for our scholarship efforts,” said Freeman.

He will also be attending many more board meetings and flying to Washington, D.C. to lobby on the AESC’s behalf. His AESC duties will require considerable time, but Pioneer Energy Services deeply believes in AESC and will support him in these endeavors. “There will be plenty of conference calls,” said Freeman.

TOP PRIORITIESFreeman’s primary goal is to improve the financial strength of the AESC. “If we cannot afford to do all of the things we need to do, we won’t get much done,” he said. “It is crucial to maintain and increase our member base.”

This is one reason Freeman is concerned about the possibility of more mergers and acquisitions. “More consolidation in our industry could have a negative impact on membership,” he said. “Also, our smaller member companies might be more financially pressed by the downturn and not renew their memberships. Maintaining all our members is very important. The tougher it gets out there, the more we need to come together and support AESC and the good work it does for all of us.”

AESC represents the well-servicing industry in many top issues, including DOT regulations, electronic logging devices for workover rigs and specialized equipment, hours of service, OSHA regulations, and silica and sand issues. “Anyone who has anything to do with sand could see massive regulatory compliance shoved down their throats very soon,” Freeman said. “ISN Networld is a major problem for many service companies, big and small. It is so easy to go from an A rating to an F rating overnight due to one piece of paper missing or being out of date.”

WORKING TOGETHER Sometimes the number of serious issues that challenge well service companies every day can

seem overwhelming. Certainly smaller companies cannot fight all of these battles alone. “It is only through being organized as an active association that our collective voices are heard at the state or federal levels,” urged Freeman. “That is why being a member of AESC is so important.”

When asked what he hopes to achieve as incoming president, Freeman answered, “end results.”

“I hope to see the association stronger after this next year,” he said. “We are already in much better shape than we were three years ago. The magazine has been updated and has returned to profitability. We have a wonderful group of directors and chapter chairs who will do whatever it takes to build the organization. I am honored to join them in that effort.”

Freeman is especially looking forward to getting to know the chapters, committees and their members. Freeman is eager to travel to their states to learn more about their issues and how AESC can help, as well as participate in their events.

“And maybe my golf game will get a little better.”

INSIDE LOOK WITH JOE FREEMANWhat does it take to be a good AESC leader? Lead by example, set high standards and goals, and see things through.

What’s been the biggest surprise for you from your leadership roles in the AESC? Wearing a suit all of the time. I am more of a field guy, but that’s okay. I can deal with it.

What have you enjoyed most about being a member of the AESC? The association brings tremendous resources to our conventions and I always look forward to the other member’s input and learning from them.

What should AESC members know about the AESC that perhaps they don’t? I do not think our members realize the full extent of the efforts we make to get regulatory issues under control. Many of these agencies look to AESC for guidance and they truly listen to our input and recommendations.

Best piece of advice for getting involved in the AESC? If you don’t get involved with the AESC, you are at the mercy of governmental and regulatory agencies.

If somebody says, “I don’t have enough time to get involved,” you would say . . .” I understand not having the time, especially if you are running your own company, but you can contribute financially through the organization to improve our industry as a whole, helping yourself in the process.

Joe Freeman and his wife Suzy


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According to the American Petroleum Institute, more than 70 percent of the workforce in the oil and gas industry is over the age of 70. It is estimated that nearly 50 percent of skilled oil and gas workers will retire in the next five years. The trade group also estimates that in order to replace retiring employees, companies will need to hire nearly 30,000 employees each year for the next 20 years.

“Everybody that’s going through the process of downsizing their business right now is faced with this extra complication,” Robert Sullivan, a management consultant for New York-based AlixPartners told Bloomberg. “Decisions that get made right now on how you right-size the company are going to have a huge impact when the market turns.”

Prior to the most recent oilfield boom, developing a sufficient number of quality employees had already been identified as a problem. A survey conducted in 2008 by Rice University and Ernst and Young highlighted this employee crisis. At that time, nearly 90 percent of senior executives interviewed at more than 20 top international oil and gas companies listed a shortage of quality employees as a top five problem facing their company. Those same executives believed that the lack of qualified employees could hurt the corporate growth of their companies.

During the downturn that began in the mid-1980s, 25 percent of engineers and geologists left the industry and never came back while few college graduates chose to enter the industry. During this time, the industry lost nearly 6,000 companies. College students in the early 1990’s shied away from the oilfield believing it wasn’t the path to career success. As crude bottomed out at $11 a barrel in 1998, the industry faced a decade of the best and brightest science minds choosing other industries. This has resulted in a shortage of mid-career professionals, an overabundance of Baby Boomers heading to retirement, and a large segment of Millennials who are inexperienced.

“There was a fairly significant amount of time when there wasn’t nearly as much recruiting as there

should have been,” said Robert Gruman, a partner at PricewaterhouseCoopers in a recent interview. “There is a gap in leadership and management ranks across the industry as people retire,” he said.

Although enrollment in STEM (science, technology, engineering and math) related majors has seen an uptick from 20.7 percent in 2005 to 28.2 percent in 2011, studies have shown that nearly half of those who initially identify as a STEM major graduate in a different degree field. A U.S. Census Bureau report issued in 2014 revealed that 74 percent of STEM graduates are not employed in what would be termed STEM occupations.

The impact of the Great Crew Change is immediate and astounding. A 2013 report by oilfield giant Schlumberger, predicted that the industry would experience a shortage of 15,000 experienced engineers and geoscientists by 2016. That means the industry is smack dab in the middle of this hiring crisis. The report also estimated that in order to meet current staffing needs while offsetting the increasing numbers headed to retirement more than 10,000 STEM professionals would need to be hired each year through 2020. While this number is less than what has been predicted by API, it is still astounding.

Many companies are holding onto their scientists as tight as they can. In some instances, decisions regarding layoffs focus on retaining the engineers and geologists since they are increasingly difficult to replace even though in many cases, their salaries are higher than

other professional positions. The current downturn has made finding experienced professionals slightly easier, and hiring managers are reporting that companies have more purchasing power over salary decisions. However, there is a segment of the population that left the oil and gas industry and bringing them back, no matter the salary range, may not be possible.

Maintaining quality employees may also be a challenge during the downturn. While some employees are grateful to dodge the layoff bullet, many are now expected to fill additional roles and take on added responsibilities as companies work through the upturn with fewer employees. Those near retirement age with years of experience are particularly susceptible to this increase in work load. Organizational experts have warned that companies must find methods to maintain institutional knowledge as experienced employees head out the door.

Companies also must find innovative ways to fill the mid-level management positions that are vacant due to the downturn of the 1980s. Some are looking at other industries that have skill sets that can be adapted into the energy industry. Others are looking to military veterans who possess many of the leadership traits desired and are easily trainable in many situations. Still others are looking outside the United States at candidates in places such as China where STEM graduates comprise more than 40 percent of all college graduates. Other companies have looked to Russia Commonwealth of Independent States for graduates in petroleum engineering and geosciences.

Some of the larger companies, such as Exxon Mobil, have instituted workforce training programs to entice employees into the industry while mentoring programs, such as the one sponsored by Baker Hughes, have become increasingly popular. Apache has asked senior staff to work past retirement age while running a professional development program for new hires to reinforce their commitment to the industry.

“There’s a big gap from 1985 to 2000 when not very many people entered this business,” said Apache’s Chief Executive Officer John Christmann in an interview with Bloomberg. He believes that Apache is poised to weather this storm; however, he doesn’t believe the industry, as a whole, is prepared to fill the gaps left by these retiring professionals. “We don’t have a lot of those managers,” he said. One third of Apache’s technical team is over 50, but nearly half are 36 or younger.

Many older professionals are prepared to share their knowledge, unfortunately there aren’t enough employees to step in and learn.


The U.S. shale revolution played a huge part in decreasing the country’s dependence on crude imports, but there’s a back story that isn’t quite as rosy for refiners on the U.S. East and West Coasts where there is a shortage of pipelines. It is especially problematic on the heavily populated Eastern Seaboard where refineries have a tough time accessing Midwest crude.

A lot has changed since the Bakken was exploding and pipelines from North Dakota and other parts of the country were moving crude mostly to the U.S. Gulf Coast. In 2014, rail transport, a more expensive option, was at its zenith when the Bakken was producing more than 800,000 barrels per day. That has changed. In March, only 285,000 barrels of crude were moved by rail and most of the transport originated from the Bakken.

Building pipelines that reach the Eastern Seaboard is especially challenging. With slowing production in many areas of the country, some major pipeline companies are finding it difficult to fill their other lines much less build pipelines to the East Coast. Some that access the Gulf Coast are looking for buyers, others are offering deep discounts to producers. The lack of accessibility to Midwest crude is why East Coast refineries are still relying on imports from abroad.

To break pipeline bottlenecks to the East Coast, a buildout of new pipelines is currently being planned.

In Pennsylvania, Buckeye Partners, operators of the Laurel pipeline, which runs from east to west, plan to reverse the flow in a section of the line that stretches all the way to Philadelphia. Products from the Midwest would take over much of the refinery market. It’s not surprising that there’s a lot of controversy attached to this project. Those opposed say it could put some refiners along the East Coast out of business.

Buckeye Partners is hedging bets that the Bakken’s success isn’t a thing of the past. If they’re right that the Bakken is also the future, Buckeye’s pipeline could be filled with crude for years to come.

Sunoco is also getting in on the action with its 350-mile long Sunoco Mariner East-2 pipeline being constructed in Chester and Delaware counties in Pennsylvania. The pipeline will carry natural gas liquids from Ohio to the East Coast in Philadelphia.

When completed, it will transport more than 350,000 barrels of ethane, butane and propane from the state’s Marcellus region to the former Marcus Hook refinery. From there, most of the shipment will be sent overseas.

Construction of the 20-inch pipeline is scheduled for completion by the end of the third quarter of this year. A second 16-inch pipeline is expected to be completed in 2018.

Sunoco has created several local jobs, including 475 people working in Spread 6, and an additional 15,000 construction contractors at Marcus Hook Industrial Complex in Pennslyvania.

While Sunoco’s pipeline is expected to have a negative impact on East Coast refiners, it is also expected to open up new options to decrease imported fuels from overseas.

M A R K E T R E P O R T

The oil and gas industry is well known for amplifying technology to gain efficiency and ramp up production. And yet, in some areas of the U.S., coal mining still has an image of miners digging coal with shovels and picks.

Which is why coal’s future is positioned to revolve around technology—those who have it, and those who can run with it.

Companies are searching for workers who have skills that can crunch gigabytes of data or drive mining vehicles hundreds of miles away or load up 100 rail cars of coal.

Achievements like these are designed to produce greater results, but with less manpower.

One example is Caterpillar Inc.’s autonomous haul trucks for Australian mining companies. The artificial intelligence associated with the trucks is known to have better than human capabilities for consistency and precision.

Coal companies that are prioritizing efficiency are typically relying on minimal manpower to achieve maximum output. Even though some coal companies are hiring again, the workforce is smaller. In a press interview, Heath Lovell, a spokesperson for coal producer Alliance Resource Partners LP, said, “We should be becoming more and more efficient, which would mean we could produce the same amount of coal with less employees.”

Last year, when President Donald Trump was on the campaign trail, he pledged to put Appalachian coal miners back to work. Coal companies added 2,400 jobs between September of last year and the end of June bringing the total to 51,000 coal industry jobs.

Compared to the heyday of coal back in 1923, the number of workers today is extremely small. According to the Mine Safety and Health Administration a record 863,000 miners were working in the mines with hand tools and oil lamps in that year.

A lot has changed since then. The big leap toward adapting technology came in the 1980s when scooping the ground from above began. Today, large trucks at Wyoming’s giant open-pit mine at Powder River Basin can scoop 400 tons of coal at a time.

So where does the future lie for coal company recruiters?

Many older workers who were laid off during the recent downturn are not interested in returning. Young people, who grew up with technology, are often pessimistic about being part of coal mining. Then there’s the problem of short-sightedness. Companies that didn’t prioritize the need to train a new generation of miners are finding themselves stuck.

The more resourceful companies are offering signing bonuses and fully paid healthcare to lure skilled workers like foremen, mechanics and electricians.

When Pennsylvania-based Corsa Coal Corp. opened a mine in Pennsylvania in June, they knew hiring would be tough. When he was talking about workers who have left coal, George Dethlefsen, Corsa’s CEO said in a news statement, “Those guys are not fully trusting that this market is back and here to stay.”

Still, a smaller workforce with higher efficiencies is hard for U.S. coal companies to resist as they struggle to stay competitive against cheap natural gas, solar and wind power.


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Nearly a decade ago, the U.S. shale gas revolution elevated the country to the world’s top producer. Last year, during the historic downturn, U.S. producers put the brakes on drilling shale.

Now a year later, oil prices are recovering and business is booming for some U.S. producers. In fact, they’re breaking production records. That’s especially true in the Marcellus and Permian basins, the two biggest U.S. shale deposits.

During the first six months of this year, 397 shale wells were drilled in Pennsylvania—that’s twice the number from the same six-month period last year. In fact, drillers in the Marcellus are cautiously optimistic and primarily concentrate on the most reliable reserves.

According to a report recently released by the U.S. Energy Information Administration, Marcellus gas output rose 0.5 percent to 19.4 billion cubic feet per day in July compared to the previous month. In the Permian, production was up by 1.9 percent to 8.5 billion cubic feet a day. These are record production highs at both basins.

Analysts point out these are snapshots of only two formations despite the record breaking statistics. The bottom line is that these high production levels aren’t representative of what’s happening throughout the U.S. In fact, some analysts predict oil prices are going to see significant declines once again.

It’s easy to lose sight of the fact that production in many parts of the country is still lower than it was a decade ago. In some sections of the U.S. where there was a high level of activity during the fracking boom, the boom towns are barely surviving today.

Could there be a slowdown in U.S. shale drilling anytime soon? In early July, analysts predicted oil prices would have to fall to around $30 a barrel before U.S. shale

producers would decrease oil production. Yet, some U.S. oil companies have locked-in $50-barrel deals that will keep drilling going at least through 2017. Global investors eyeing U.S. shale production are interested in striking supply deals to secure the flow of shale oil and gas.

Trafigura Group Pte is one of several large European traders to invest in U.S. energy. They have carved out supply deals to keep production moving. Energy investors point out that since the 40-year-old export ban was lifted in 2015, there are more options on the table for oil trading –exactly what traders need.

A supply need in untapped ventures overseas may keep U.S. shale drillers in business. The hope is that the U.S. can keep crude pumping by breaking into new markets. In July, the U.K. received its first shipment of liquefied natural gas from the U.S. If this trend continues, other European countries may look for similar strategies to decrease their dependence on Russian pipelines.

It’s another reason why there’s cautious optimism when it comes to U.S. shale production. Thanks to the vast number of U.S. shale formations, insiders are saying that despite the global glut, production of U.S. shale gas is here to stay.


If you were a millennial, how would you respond to a 30-second TV spot that started out by announcing, “This ain’t your daddy’s oil?” Next up, a colorful graffiti-decorated wall is covered with striking messages that read: “Oil strikes a pose. Oil taps potential. Oil pumps life.”

This commercial, rolled out earlier this year, is part of the American Petroleum Institute’s branding campaign to attract millennials, a valuable sector to marketers.

Millennials, who make up the largest share of the U.S. workforce, range in age from about 21 to 35 years old. The Institute’s recently distributed commercials are designed to offset the growing number of people who are retiring from jobs in oil and gas.

In the coming years industry is anticipating a big turnover, sometimes referred to as the “big crew change.” Consequently, Marty Durbin, chief strategy officer for API, said the organization is trying to interest millennials in working for fossil fuel companies, a daunting task given that this age group is typically more interested in working for brands that epitomize “conscious capitalists.”

The recent ads were not just showmanship, they were designed as educational formats, too. They provide insight into industry’s connection to U.S. economic growth, job creation, environmental stewardship and national security.

In a press interview, Durbin said, “It’s a shift in our messaging and our target that’s been in the works for several years. There isn’t a company out there that isn’t chasing the elusive millennials.” The Institute is also reaching out to other demographics such as women, veterans, and minorities.

Millennials are a tough group to understand and catch, especially when you’re talking about oil and gas. That “Not your daddy’s oil” ad, for example, received a wide mix of reactions from millennials.

When the University of Texas polled millennials about climate change last year, 91 percent said it was happening and over half of the respondents said they supported a carbon tax. About two-thirds of those polled said topics about energy issues played a part in how they would vote. That same two-thirds said they would like to buy an alternative fuel vehicle.

Jeff Fromm, an expert in marketing to younger Americans, noted in a press interview, “Any mature industry has to think about the fact that there’s a new sheriff in town with new values, new spending habits.” In referring to millennials, he noted, “Legacy brands often have that challenge.”

Oil and gas jobs may also have a perception issue. A recently released EY U.S. Oil and Gas Perception poll found less than half of millennials who aren’t on a specific career path find oil and gas jobs appealing. That may be partially due to a dated view of the industry. Studies have found this group considers oil and gas jobs dangerous, and physically demanding. They don’t understand that engineers and office workers are also part of the work force.

Since millennials tend to be interested in innovative, creative, and high tech industries, Durbin noted that, “If they don’t have that view of our industry, we have the opportunity to change that.”

NO END IN SIGHT FOR U.S. SHALE GAS PRODUCTION DESPITE GLOBAL OVERSUPPLY

OIL MAJORS SHIFT MESSAGING TO LURE MILLENNIALS


Congressman Scott Tipton was raised in Cortez, Colorado. He graduated from Ft. Lewis College in Durango, where he studied political science and became the first person in his family to earn a college degree. After college, he returned home to Cortez and co-founded Mesa Verde Indian Pottery with his brother Joe. It was through his business that Tipton met his wife Jean who is a former school teacher. The Tiptons have two daughters, two sons-in-law and three grandchildren.

In November 2008, Tipton was elected to the Colorado State House where he worked to protect his district’s water and air quality. Rep. Tipton was first elected to the U.S. House of Representatives in 2010. He currently serves on the House Committee on Financial Services and the House Natural Resources Committee. He is the co-chairman of the Congressional Small Business Caucus and vice chair of the Congressional Western Caucus where he has championed efforts to create an all-of-the-above energy policy that balances common sense conservation with responsible development.

Representative Tipton recently answered questions related to the oil and gas industry for Well Servicing magazine. The following answers were provided in July.

You recently reintroduced the Planning for American Energy Act. What is the mission of this legislation?

The goal of the Planning for American Energy Act is to bring the U.S. closer to creating an all-of-the-above energy plan to meet the nation’s growing energy needs. Putting an all-of-the-above domestic energy plan into place would unleash the potential for thousands of new jobs and ensure the U.S. has energy security well

into the future. It’s great to talk about the need for an all-of-the-above approach, but in order to make it a reality, we need a plan. The Planning for American Energy Act calls on the Departments of Interior and Agriculture to create forward-looking plans based off of energy projections from the Energy Information Administration.

Water is a serious concern for the oil and gas industry. Your Water Rights Protection Act would prohibit the federal government from circumventing state water laws. How would this legislation affect the oil and gas industry?

In recent years, the federal government has repeatedly attempted to circumvent long-established state water law by requiring the transfer of water rights to the federal government. We have seen these attempts made by the Forest Service when ski areas renew their permits to use National Forest land, as well as the Bureau of Land Management when it comes to the renewal of farming and ranching permits. These actions have been nothing more than an effort to further federalize water resources, erode state authority, and pave the way for unilateral mandates on state water resources. Absent of legislation codifying long-held state water law and priority-based systems, we could see the federal government use regulations on water to impede energy development on federal lands. The Water Rights Protection Act would provide permanent protections for all Western water users.

With the Republicans in the majority for the foreseeable future, what changes do you anticipate to regulations affecting energy production on federal lands?

C O N G R E S S I O N A L S P O T L I G H T

REP. SCOTT TIPTON (R-CO-3)Compiled by Kristin Hincke, Editor

For too long, energy development and environmental sustainability have been seen as two things that are mutually exclusive, but they are not. The U.S. and the West especially, are blessed with abundant natural resources, and thousands of good-paying jobs are tied to energy production. I have been encouraged by this Administration’s commitment to supporting responsible energy development on federal lands and common-sense approach to regulating resource development.

The Endangered Species Act (ESA) has been a key tool in protecting indigenous species such as the bald eagle. In recent years, many in our industry believe the ESA has been used to hinder resource development on private and public land. How should we balance a legitimate interest in conservation with our country’s ongoing need for economic development?

I firmly believe that protecting indigenous species requires coordination among stakeholders at the local, state, and federal levels. In Colorado, we have seen local preservation groups, industry stakeholders, and state officials come together to protect the Sage Grouse, and these preservation efforts have had a positive impact. Locally-tailed plans are far more effective for species preservation than the one-size-fits-all approach that is typically the result of an ESA listing. States, tribes, and local communities that are succeeding in species preservation should be allowed to continue without federal interference, and any new species preservation efforts should be driven at the local level.

The AESC has over 700 member companies. A majority of our members are small businesses, and they are concerned about regulatory compliance burdens. Industry is encouraged by actions taken by the Trump Administration so far, and wonder what is Congress doing to relieve regulatory burdens on small business?

During the 115th Congress, we have passed more Congressional Review Act Resolutions than any Congress in history. We have nullified 14 of the Obama Administration’s most egregious regulations. The House has made regulatory reform a priority with the passage of the REINS Act and the Regulatory Accountability Act of 2017, both of which protect small businesses from unilateral mandates and heavy-handed regulations. My team and I continue to work to advance legislation that would lift the one-size-fits-all regulations on financial institutions that are prohibiting community banks and credit unions from serving the small businesses in their communities. Our bill, the Taking Account of Institutions with Low Operational Risk (TAILOR) Act, which would require federal regulators to take into account the business model and risk profile of a financial institution when issuing regulations, passed through the House as part of the Financial CHOICE Act in June.


A E S C M E M B E R S A E S C M E M B E R S

MISSISSIPPI - LAUREL

ROCKY MOUNTAINCALIFORNIA

OKLAHOMA SOUTHEAST NEW MEXICO

Frank Talbert, Rig Supervisor(307) 670-5050

EAST TEXAS

NORTH TEXAS

TEXAS GULF COAST

TEXAS PANHANDLE TRI-STATE

A E S C M E M B E R S A E S C M E M B E R S

33WELL SERVICING SEPTEMBER/OCTOBER 2017 WELL SERVICING SEPTEMBER/OCTOBER 201732

PERMIAN BASIN SOUTHEAST NEW MEXICO

MICHIGAN


The AESC’s Annual Summer Meeting was held July 26-28 at the Gaylord Texan Resort and Convention Center in Grapevine, Texas. More than 200 members attended seminars on digital security, safety regulations and industry changes.

OPENING GENERAL SESSIONThe summer meeting kicked off with a motivational presentation by Dave Moore, a search and rescue pilot who is a former aviator and officer in the United States Navy and Air Force. Dave survived two plane crashes, flew through three hurricanes while performing search and rescue with the Coast Guard and has logged 39 combat missions in the Middle East. Dave encouraged attendees to keep a positive attitude through adversity and to work every project as though you own the company.

SELECT COMMITTEE PRESENTATIONSAttendees heard Mieng Lim, senior director of product management for Digital Defense, and Brian McCoy, vice president of business development for MiX Telematics, discuss electronic issues facing the industry. Mieng addressed the problem of corporate hacking. She reported that you have a one in four chance of being hacked in your lifetime, and that the cost of one data breach to a company can reach more than $3 million. She explained that hackers target small businesses because they tend to not invest a lot of money in cybersecurity. Brian discussed Electronic Logging Devices (ELDs) and the new mandate that goes into effect at the end of this year. He reminded the audience that there is an exemption for vehicles traveling in a 100 mile radius unless the vehicle crosses state lines.

POLITICAL AFFAIRSDoug Matheney, special advisor to the Secretary of Energy, and AESC’s DC lobbyist Michael Zehr, vice president of federal affairs for HBW Resources, brought positive messages from our nation’s capital. According to Matheney, rolling back burdensome regulations continues to be a priority for the President; however, Doug cautioned the audience that without legislative protection provided by Congress, the industry could be in jeopardy when leadership shifts in Washington. He encouraged everyone to call their Congressmen and Senators about protection for the energy

industry. Zehr reported that the “customer-friendly” environment within the Executive Branch in DC continues. He noted that there is pressure to place decisions regarding fracing with the states and that an Executive Order was issued urging the federal agencies to come up with reform regarding endangered species.

STATE OF THE INDUSTRY UPDATEThis panel discussed issues facing the industry each and every day. Jerrod Allen, owner of West Allen, PC, a law firm based in Dallas, shared tips on how companies can protect themselves during down times. Jerrod recommended companies structure contracts to include interest charged to late payments. He said that with interest accruing, companies can use the extra money as a cushion during the negotiation process and still collect 100 percent of what is owed. Carol Randall is president of Berkley Oil & Gas, a commercial insurance company providing coverage for oil field companies. Carol reported that distracted driving and fatigue continue to be liability issues in the industry. However, she also told the audience that employee turnover and personal use of company vehicles are also issues that companies should focus on. Attorney Christian Antkowiak presented current litigation trends and encouraged companies to develop and enforce wage and hour policies. He also discussed legal issues surrounding day rates. Christian is a partner at Buchanan Ingersoll & Rooney, PC in Pittsburgh. Tab Weaver is a managing director in the Austin office of Duff & Phelps and leader of the Tax Services business unit. He discussed taxes during the session and reported that the oil and gas industry pays $2 billion per year in property taxes.

STATE OF THE INDUSTRY – SERVICE COMPANY PERSPECTIVEThe panel discussion included Paul McDonald, vice president, Pioneer Natural Resources; Canaan Factor, president, Superior Well Services; and Darron Anderson, president, CEO and director with Ranger Energy Services. All of the panelists reported a rebound in business as the price of crude recovers. While the industry has become lean and mean during the downturn, these executives see hiring quality employees as an increasing problem. Many employees left the industry in the past few years and recruiting them to return is proving to be a challenge.

STATE OF THE INDUSTRY – ANALYSTS PERSPECTIVEThis discussion included Russell Weinberg, president and founder of Energy Capital

Solutions; Wayne Richards, president and CEO of GR Energy Service Holdings, LLC; Bud Weinstein, associate director of the Maguire Energy Institute at SMU and Bruce Bullock, director of the Maguire Energy Institute. Weinberg sells companies and raises capital for corporate financing. He has seen a rise in his business as the industry recovers from the recent downturn. Wayne Richards sees an increasing need for perforating equipment. He shared with the audience that he’s surprised the industry didn’t lose more companies during the

AESC NATIONAL SUMMER MEETING WRAP-UPAESC NATIONAL SUMMER MEETING WRAP-UP

AESC Past President Joyce Ryel and keynote speaker Dave Moore

AESC lobbyist Michael Zehr

Moderator Phil Moran and panelists Wayne Richards, Bruce Bullock, Bud Weinstein and Russell Weinberg

Speakers Mieng Lim and Brian McCoy

Panelists Jerrod Allen, Tab Weaver, Carol Randall and Christian Antkowiak

AESC staffers Susan Dudley and Roni Ashley present AESC First Lady Nancy Williamson with an award of appreciation.

Political Affairs Luncheon Speaker Doug Matheney

Panelists Darron Anderson, Canaan Factor, moderator Gay Wathen, and Paul McDonald

Jacky Williamson administers the oath of office to incoming AESC officers for 2017-2018. (L to R) 2nd Vice President Mark Gjovig, GO Wireline; President Joe Freeman, Pioneer Energy Services; and 1st Vice President Sam Tolley, Complete Energy Services – Well Services Division.

downturn, and he sees more complicated fracs headed our way. With the Permian Basin booming once again and increased production being seen in the offshore sector, Dr. Weinstein believes 2018 could be a record year. He also sees the price of natural gas rebounding as the Cheniere Energy’s Sabine Pass LNG export facility has been licensed by DOE. On the flip side, Bruce Bullock predicts the horizontal rig count will level off in the second half of 2017. He sees companies continuing to focus on efficiency and innovative technologies.


MELVIN WAYNE MCGOWANMel was born on June 24, 1937 in Merced, Calif., the oldest son of six children. He passed away on July 4, 2017 in the quiet of his home with his wife Suzanne at his side. Mel joined the Air Force at 17 and served as a military policeman. Except for the Air Force Tour, Mel spent his adult life in California.

When Mel left the Air Force, he held various jobs until he discovered the oilfields. After working for different oilfield companies, he and his brother decided in

1970 to start their own company, McGowan Wireline Services. Mel’s passion for work, his outgoing personality and his acute business sense led to what is today MMI Services. MMI Services is now being managed by second generation Stevie McGowan.

Mel’s generosity was something one seldom heard about. He and MMI Services have given generously to many charities and individuals. He had a particular passion for Pyles Boys Camp.

Mel is survived by his wife, three sons, two step sons, and five grandchildren.

The family, in lieu of flowers, would appreciate a gift in honor of Mel toward the new Heart Institute Expansion at Adventist Health Bakersfield/San Joaquin Community Hospital. Checks can be made to Adventist Hospital Bakersfield Foundation, PO Box 2615, Bakersfield, CA 93303-2615, 501c3, Tax ID: 95-2294234.

This year’s Golden Rod Wrench award, the highest honor given by the servicing industry to recognize a distinguished career, was presented to Dick Schremmer. Dick began his career in the oilfield while still in high school in Kansas. After working many “prestigious” jobs, he started his own company in 1985 and today it is a full-service entity operating 560 wells in Kansas. In 1988, he acquired Gressel Oilfield Services and grew it from a two rig well servicing company to a full-service operation with locations in Burrton, Great Bend, Hays and Haysville. Dick has served as president of the Wichita Petroleum Club, the Kansas Independent Oil and Gas Association (KIOGA) and the AESC. He currently serves on the board of the Wichita Petroleum Club, KIOGA, AESC and the Kansas Oil and Gas Resources Fund (also known as Kansas Strong). Dick and his lovely wife, Janice, have been married for 40 years and are the proud parents of three adult children and expecting their first grandchild.

The 2017 Associate’s Lifetime Achievement Award was presented to Tim Maples. Tim began his career in the oil and gas industry in 1973 when he took his first full-time job with Valley GM Diesel in California. In August of 1975, he moved to Mid Continent Supply as a shipping and receiving clerk. Unfortunately, the downturn in the industry cause Mid Continent to close its doors in 1988 and Tim and his wife, Marlia, took a leap of faith and started United Distribution, which became a successful parts distribution and used equipment repair company. TJM Distribution, Inc. was added in 1999. In 2005, United Distribution was sold to National Oilwell Varco (NOV) and Tim worked for NOV until 2016. Tim serves as the California Chapter Chair for the AESC and also volunteers his time to the Greater Bakersfield Chamber of Commerce, Western States Petroleum Association, Taft Union High School’s Oil Technology Academy among others. Tim and Marlia have been married for 44 years. They have four daughters and eight grandchildren.

Receives Golden Rod Wrench Award

Receives Associates Advisory Committee Lifetime

Achievement Award

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AESC President Jacky Willliamson presents Dick Schremmer with the 2017 Golden Rod Wrench Award.

Associates Advisory Committee Chairman Scott Bourque presents the Associates Advisory Committee Lifetime Achievement Award to Tim Maples.

DICK SCHREMMER TIM MAPLES

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Documents

JOE FREEMAN - AESC · Workover/Well Servicing Publications, Inc., 121 E. Magnolia, Suite 103, ... YOU CAN TRUST NEW WELL COMPLETION TECHNOLOGIES. WELL SERVICING SEPTEMBER/OCTOBER