Drilling Deeper: Re-Tooling

In this week’s miscellany of articles, if there’s a common thread, it’s a focus on recapitalizing, stimulating, improving safety, or improving as a communicator; one way or another, many are seeing this time in oil and gas as a time of self-improvement as we look ahead to better times. These are the full versions of the “Drilling Deeper” news items that appeared as abbreviated versions in the print edition of PBOG’s May 2016 issue.

 

Globe Energy Receives Recapitalization

Clearlake Capital Group, L.P. (together with its affiliates, “Clearlake”) and Globe Energy Services, LLC (“Globe” or the “Company”) announced on Mar. 17 that Clearlake has led the successful recapitalization of Globe in partnership with the Company’s management team, led by Founder Troy Botts, Jr., and other existing stakeholders. Terms of the transaction were not disclosed.

Headquartered in Snyder, Texas, Globe is a provider of oilfield services with more than 50 operating locations throughout Texas, New Mexico, and Oklahoma. The company offers a full range of services primarily focused on production activities and the maintenance of existing wells, with capabilities that include fluid services, completion services, artificial lift, well services, fishing and rental, production chemicals, water infrastructure solutions and other environmental services.

“With the transaction complete, Globe can now leverage Clearlake’s substantial resources and our experience in the energy and oilfield services sectors to propel its growth strategy,” said José E. Feliciano, founder and managing partner of Clearlake.

“Globe has an experienced management team with a demonstrated track record of providing customers with high quality oilfield service solutions. As a result, we firmly believe that this recapitalization positions Globe to grow both organically and via strategic acquisitions.”

Globe was founded in 2004 to serve oil and gas producers in the Permian Basin, and has since grown to provide additional complementary service lines across multiple basins in the United States as a result of the strong support from its loyal customer base and the Company’s commitment to operational excellence.

“We are pleased to partner with the experienced Clearlake team as we look to position Globe to capture share in the midst of a challenging market,” said Troy Botts Jr., Globe’s founder, president, and CEO. “This partnership provides Globe with a strengthened financial position that will enable us to reinvest in the business and execute through current industry headwinds. More than ever, we remain committed to our core philosophy of prioritizing our customers, employees and safety culture.”

“We are excited to partner with Troy and his team to advance Globe’s strategy. With Clearlake’s sponsorship and a stronger balance sheet capable of supporting significant operational flexibility, we believe the Company is well positioned for future growth as an industry consolidator,” added Colin Leonard, a Principal at Clearlake.

About Clearlake Capital Group

Clearlake Capital Group, L.P., is a private investment firm with a sector-focused approach. The firm seeks to partner with world-class management teams by providing patient, long-term capital to dynamic businesses that can benefit from Clearlake’s operational and strategic expertise. The firm’s core target sectors include technology, communications, and business services; industrials, energy and power; and consumer products and services. Clearlake currently has over $3.5 billion of assets under management. More information is available at www.clearlakecapital.com.
About Globe Energy Services

Globe Energy Services, LLC, is a leading Permian-based oilfield services company. It offers its services through various divisions and operating subsidiaries, with a focus on fluid services, completion systems, artificial lift, well servicing, fishing and rental, production chemicals, water infrastructure solutions and other environmental services. Founded in 2004, Globe is based in the Permian Basin and operates in Texas, New Mexico, and Oklahoma. More information is available at www.globeenergyservices.com.

 

Seismic Stimulation

by Rick Adams, Sr. District Engineer, Energen Resources, and Bill Wooden, Applied Seismic Research Corp.

In August 2007, Energen Resources began to explore use of a new technology called “seismic stimulation” that improves oil production by providing energy to allow coalescence of the immobile oil droplets into mobilized oil. At the time, the technology had shown success in Permian Basin Clearfork and Glorieta carbonates as well as in sandstone fields in other parts of the United States. Energen was especially attracted by the fact that the tools can be deployed in shut-in or temporarily abandoned wells. The tools have very little required maintenance and zero environmental impact. Only a month later, the Texas Railroad Commission (RRC) certified seismic stimulation as an official Tertiary Recovery method, thereby qualifying for a 50 percent reduction in the State Severance Tax for ten years on total affected production including all future in-fill drilling. The novelty of the technology and the attraction of long-term tax credits drove the initial use of seismic stimulation in the company.

ASR’s service contract places no additional burdens on Energen’s time to monitor the stimulation or provide filings with the RRC. ASR includes, as part of its service, preparation of the necessary graphs and tabular data for filing of the RRC H-12 which is the first step in starting an EOR project. During stimulation, ASR provides graphs showing the monthly progress of the stimulation. After a one-year stimulation period, as required by the RRC for tax credit qualification, ASR prepares the graphs and tabular data for the filing of the H-13. Energen employs an Austin-based consulting firm for the formal filings of the H-12 and H-13. This firm is experienced in these filings and also provides an independent second opinion on the EOR results. The RRC requires “proof of positive response” over the course of a one-year stimulation to qualify the affected area for the tax credits. All graphs constructed by ASR contain only those wells unaffected by other stimulation methods during the historical and stimulation timeframes.

The first seismic stimulation Tool was deployed in the Whiteface Unit (WFU), Levelland County, Texas. The Whiteface Unit is a San Andres waterflood with a stable production history against which the stimulation could be judged.

The map of WFU shown below has 0.75, 1.0 and 1.4 mile Radii displayed on it.

The reason for monitoring three stimulation radii is that the TRRC allows an operator a 0.75 mile radius “to start the EOR project” meaning that it assumes Seismic Stimulation will potentially enhance oil recovery in at least a 0.75 mile radius. ASR monitors all three radii and provides graphs of each area enclosed to show whether or not the stimulation is reaching that area. In the final H-13 submission, the most distant radii graph is submitted as evidence of the stimulation being effective to that distance. The TRRC then reviews the H-13 submission and following its approval, all production, both current and future to the farthest radii, is granted the Tertiary EOR credits. In this instance the entire unit benefits from the tax credits.

The graph to date of the results is shown below:

To date, the Whiteface Unit has recovered an estimated 92,000 additional barrels of oil and generated tax savings in excess of $1 million dollars.

The successful implementation of Seismic Stimulation at the Whiteface Unit encouraged Energen to utilize it in the North Robertson Unit (NRU), a Clearfork waterflood in Gaines County, Texas. A map of the NRU illustrating the 0.75 and 1.0 mile radii is shown below:

A graph of all 182 wells within the 1.25 mile radius is shown below:

 

As of March 2015, the stimulation has enhanced oil recovery by approximately 94,000 barrels of oil. At present NRU is under existing tax credits for the waterflood and on their expiry the Seismic Stimulation tax credits will begin to apply.

A map of the most recent installation, the West Fuhrman Mascho Unit (WFMU), a San Andres waterflood in Andrews County, illustrating the 0.75, 1.0 and 1.25 mile radii, is shown below:

 

WFMU is typical of many units in the U.S. with less than ideal well testing data. In such fields, ASR has to analyze each well’s test data. For each well, a least-squares best fit line is calculated through the historical and stimulation data. All wells’ best fit lines are then combined to construct a composite best-fit line representing the historical trend and similarly a composite best-fit line for the stimulation.

Fortunately, ASR has done this before for other clients and was successful in making the case to the TRRC. That client’s project was approved for Tertiary EOR credits. At present the composite graphs for the WFMU display good stimulation results as shown below.

Based on results after one year of stimulation, WFMU will qualify for the Tertiary tax credits. The TRRC requires at least one year of “proof of positive response” to file for the tax credits. Presently, WFMU results (the H-13) are being filed with the TRRC. It is important to note the tax credits start at the point of departure of the stimulation from the historical trend. In the case of WFMU these credits will start with the first month of stimulation and are retroactive to that point.

It is of interest to note the costs of implementing such a project. Typically, Energen budgets $200,000 as start-up expense including the tool, well prep, tubing, rods, and the pumping unit. ASR charges $45,000 for the tool and $6,000 per month lease. The value of the tax credits far exceed the cost of implementation once the tax credits are granted.

Energen is planning on starting a fourth project, in its North Westbrook Unit in 2016, budget contraints permitting. This is a large field and will require three Seismic Stimulation tools to cover. In it, ASR and Energen are expecting similar results qualifying the project for the Severance Tax credits.

 

Five Tips for Going Global

By Anne Connor

The Coca-Cola Company is the leading beverage maker in China’s $69 billion soft drink market, but the story might have been quite different if it weren’t for some smart and localized brand management at the very beginning of its foray into the country. Protecting the company’s valuable trademark was a high priority when Coca-Cola began to expand outside the United States. When the company turned its attention to China, it became clear that the trademark also needed to be transliterated. That’s easier said than done. Finding the nearest phonetic equivalent to “Coca-Cola” meant sifting through some 40,000 characters to locate a separate Chinese character for each of the four syllables—an enormous task in the pre-computer days of the 1920s.

Today Coca-Cola products are sold in all but two countries: Cuba and North Korea. This worldwide success was only possible because the company realized the importance of taking the reins of its own international branding through proactive translation and localization.

No matter what size your business is, you can learn a thing or two from this story and Coca-Cola’s success. For one thing, don’t underestimate the localization process. But it goes well beyond that. Here are five tips to help you take your business global.

1) Do your homework. One thing we have today that Coca-Cola didn’t in the 1920s is instant access to an Internet of information where we can find tons of support for marketing products or services overseas. Check out the Small Business Administration’s online guidelines for doing business abroad. Then search the Census Bureau’s website for U.S. Exports of Goods by End-Use Category and Commodity, Services by Major Category, and the Top U.S. Trading Partners as of December 2015. These resources will lead you to plenty more so you can determine your potential in international markets.

2) Know your target markets. Once you’ve assessed your potential and zeroed in on some markets, you need to understand your target market so you can tailor your business to it. For example, will the names of your products and services be accepted or do you need to have them translated or transliterated? A good place to start, especially for small and medium-sized business, is your local or national translators association. Professional translators are much more than linguistic experts; they also possess an intimate understanding of the business culture in the target markets in which they specialize. Most associations have searchable directories online, where you can find a professional who translates from English into the language of your target market. By taking a proactive approach to your branding before entering the market, you’ll avoid any potential mishaps.

3) Localize. Once you’ve taken a hard look at your brand, it’s time to localize your entire storefront. And like your brand, this means finding professionals to translate and localize your website and marketing materials. A small team of translation professionals can likely help if your company is relatively small and only targeting a few markets, but you’ll want to consider contracting a language company if you’re looking at more than three or four. The professionals who helped you understand your target market are a great place to start. Avoid the temptation to add one of those plug-ins that automatically translate web pages and blog posts, because you’re asking for trouble. Hiring professionals to handle the translation and localization will ensure that your foreign-language website really reaches and resonates with consumers.

4) Know what you say and sign. Speaking your customers’ language will likely go beyond your website and marketing materials and include communication supplies and/or local agents. Even if you’ve hired a local representative who both speaks English and understands the current laws for doing business, it’s still wise to have all-important documents translated into English by a legal translation professional for you and your attorney to review. Taking a hard look at contracts before you sign them will save time, money and aggravation in the long run. Moreover, contracting a professional translator and communicating with customers in their own language does wonders for relations and retention, not to mention helping to avoid any cultural misunderstandings. And the expense shouldn’t be prohibitive. If you really want to up your international sales potential, hire an interpreter and follow up some of those emails with a personal phone call to your target customers!

5) Get paid. No matter how well you manage your brand, localization and communication, you’ll need to ensure that you get paid and that getting paid doesn’t cost you too much. International transactions can be an expensive enterprise, so proper preparation should be part of your expansion plan. Do you need to adjust your prices in the respective markets to account for international wire transfer or online payment portal fees? PayPal, for example, charges a standard 2.9 percent fee plus a cross-border fee of 1 percent, both of which are deducted in the foreign currency payment amount before the exchange rate is applied and entered into your PayPal account in U.S. dollars. For large shipments or amounts, it may be best to request that your customer open up a Letter of Credit in your favor for an amount in U.S. dollars. Be sure to check with your bank or other international financial consultant to make sure you choose the payment option(s) best for you.

Your business may not have the means to expand into foreign markets like one of the world’s leading beverage makers, but you do have the means to emulate how seriously Coca-Cola took the process. Before your first foray into the global market, consider the cultural and linguistic needs of your potential customers. You’ll be miles ahead of the competition if you take the time to get closer to them and speak their language—and your company’s products, services, or slogan won’t become the next Facebook meme to mock clueless foreigners. Do your homework and you’ll be well on your way to going global and achieving international success.

About the author

Anne Connor holds a BBA in Business Law from Temple University in Philadelphia, and is an active member of the American Translators Association. The American Translators Association represents over 10,000 translators and interpreters across 91 countries. Along with advancing the translation and interpreting professions, ATA promotes the education and development of language services providers and consumers alike. For more information on ATA or translation and interpreting professionals, please visit www.atanet.org

 

Managing Corrosion Means Safety and Savings

NACE International released on Mar. 7 the “International Measures of Prevention, Application and Economics of Corrosion Technology (IMPACT)” study, in which it estimates the global cost of corrosion to be $2.5 trillion, equivalent to roughly 3.4 percent of the global Gross Domestic Product (GDP). The two-year global study released at the CORROSION 2016 conference in Vancouver, examined the economics of corrosion and the role of corrosion management in establishing industry best practices. The study found that implementing corrosion prevention best practices could result in global savings of between 15-35 percent of the cost of damage, or between $375-875 billion.

“The IMPACT study reinforces what recent news headlines have made all too clear: there needs to be a change in how corrosion decisions are made,” said Bob Chalker, CEO of NACE International. “Whether it is a pipeline, an airplane, a water treatment plant, or highway bridge, corrosion prevention and control is essential to avoiding catastrophic events before it’s too late.”

Looking beyond corrosion’s cost to businesses and industries worldwide, IMPACT assessed corrosion management practices across various industries and regions. Specifically, the study examined the oil and gas, pipeline, and drinking and wastewater industries, as well as the U.S. Department of Defense.

IMPACT also includes a case study of corrosion management within the automobile industry–which it found over time saved $9.6 billion or 52 percent annually in 1999 compared to 1975. “Looking at the success within the auto industry, corrosion prevention decisions were made at the highest levels,” said Chalker. “The result has been lower corrosion costs for auto makers and longer lasting autos for consumers.”

Corrosion management systems (CMS) address the threat of corrosion for existing and future assets across the complete lifecycle of the asset, from design to decommissioning. The IMPACT Study notes CMS best practices for companies including: corrosion management systems that are integrated with organization policy overall; corrosion management information is made available to everyone within the organization and linked to its overall goals, and organizational leadership is actively involved in corrosion management decision-making.

The study also identified the need for more corrosion management professionals, given there is a significant wave of retirements in this area projected in the next decade. In fact, University of Akron, Ohio, provides the only bachelor’s degree in corrosion engineering, with its inaugural class graduating in 2015.

“There needs to be a renewed sense of priority for corrosion engineering amongst employers and educators,” said Jim Feather, president of NACE International. “NACE has provided training and professional development to tens of thousands of engineers and professionals in more than 130 countries, but the industry needs more academic programs and more universal means of communications across all levels of business.”

To learn more and view the IMPACT study in its entirety, visit impact.nace.org.

About NACE International

Founded in 1943, NACE International, The Corrosion Society, serves 36,000 members in 130 countries. Based in Houston, with offices in the United States, China, Malaysia, India, Brazil, and Saudi Arabia, and a training center in Dubai, the organization serves all industries impacted by corrosion and provides the most specified technical training and certification programs, conferences, industry standards, reports, and publications focused on corrosion prevention and mitigation.

 

 

 

SOB or ESP: What’s your Communication Style?

By Tracey C. Jones

Texan: “Where are you from?”
Harvard Grad: “I come from a place where we do not end our sentences with prepositions.”
Texan: “Okay—where are you from, smart-aleck?”

We are rapidly losing the art of communication. The very trait that separates us from the animals is about to be our downfall, but fear not! There are ways we can rally and save humanity. First and foremost, ask yourself: Do I communicate to serve myself or do I communicate to serve others? In other words, when you communicate, are you an SOB: (Self-Oriented Behavior) or do you use ESP: (Emotional, Spiritual, Personal)?

In order to get to the heart of the issue, you have to get to the heart. Communication is not simply the external circuitry of words transmitted from your mouth to others’ ears, but rather an internal reverberation of thoughts between your mind and your heart. Communication is simply the golden rule. It’s part etiquette, part ethics, and part just being a decent human being. That means delineating boundaries for your emotional side so everyone can play in the sandbox nicely without getting into fights.

You can’t expect people to see your point of view if you can’t see theirs. When we get squeezed what’s inside comes out. All too often this takes the form of uncivil discourse. People are polarized by their tendency to see communication as a battle: somebody wins, somebody loses; too bad, so sad; in your face; suck it up, butter cup. It seems to be forgotten that for every action there is an equal and opposite reaction. And if you can’t get comfortable floating in the fluidity of humanity, it’s sunk.

Opinions are not a competitive sport. They are deeply held convictions. So here’s a quick and easy way to assess if you are practicing great communication skills or if you are just being an SOB.

SOB: Self-Oriented Behavior. Let’s face it: A lack of compassion is downright distasteful and has nothing to do with who or what is right and wrong. If you constantly feel the need to seize and to preach the “ministry of me” then you are an SOB communicator.

SOBs exhibit the following traits in their communication:

• Aggression
• Seeking sympathy
• Manipulation
• Clowning or mocking tone
• Competition
• Domination
• Labeling
• Bullying/cyberbullying

If you’re an SOB, you view communication as a battlefield. Your level of indignation grants you the right to go from silence to thermonuclear in your content and tone. You have a hard time with dissenting points of view because you assume anyone who doesn’t agree with you is a bigot. This type of behavior has been amplified by technology and mainstream media, which grants unfiltered, unchecked, and ample coverage to an unending parade of poltroons. Winston Churchill said it best, “A fanatic is one who can’t change his mind and won’t change the subject.”

Now let’s look at the flip side of the coin: How can you best communicate with another in a way that affords the respect and civility that binds you to others in deeper and more knowledgeable ways? Here are the ways to win friends and influence people and ensure that you can talk to someone’s heart, thus guaranteeing an open and honest dialogue sure to leave both parties enlightened and valued.

ESP: Emotional, Spiritual, Personal. It’s like extrasensory perception on steroids. They say it ain’t what you say, it’s the way that you say it. Truer words were never spoken. The manner in which you connect is the most important factor in communication. If you do it well, the details are superfluous. Someone can completely disagree with everything you say, but still totally respect you as a person. The truth, no matter how hard it is to hear, should always have an element of love accompanying it. As the saying goes, a spoonful of sugar helps the medicine go down. The person who can accomplish this is a leader of unparalleled magnitude and a true uniter, not a divider.

ESPs exhibit the following traits in their communication:

• Individuality
• Respect
• The Golden Rule
• One-on-one
• Private
• Peacemaker
• Acceptance
• Civility

The ESP communicator also understands that strongly held convictions do not necessarily classify someone as a “hater.” They respect the other person’s emotions and personal beliefs. Communication isn’t some sort of Darwinian survival of the fittest. The ESP communicator firmly believes that we are not to trample one another out of existence with the butts of our heels and the slices of our tongues, but rather to be kind to one another, especially during disagreements. Churchill had another great quote about this type of communicator, “Tact is the ability to tell someone to go to hell in such a way that they look forward to the trip.”

Beautiful people see beauty; hateful people see hate. Someone once said, “Those who spend their time looking for the faults in others have no time to correct their own.” Once you get serious about discussing and not just cussing, you’ll take your communication to a new realm.

Be kind to humankind because it’s all you’ve got. 

About the author 

Tracey C. Jones is a U.S. Air Force veteran, entrepreneur, speaker, and publisher. She speaks to audiences across the nation on leadership, accountability, business success, and other topics. Her latest book is “Beyond Tremendous: Raising the Bar on Life.” For more information visit www.TremendousTracey.com.

 

Ethanol Marketing Agreement

Murex LLC, a leading domestic ethanol marketer and distributer announced on Mar. 18 further market growth with the execution of a multi-year ethanol marketing agreement with White Energy. The agreement calls for Murex LLC to market all three of White Energy’s production locations, two in Texas, and one in Kansas, totaling 295mm gallons of permitted ethanol production annually.

“Murex is privileged to represent White Energy in the ethanol marketplace. We look forward to the success this partnership will afford both parties,” stated Robert Wright, President of Murex LLC.

According to Don Gales, CEO of White Energy, “We look forward to the integration of our ethanol volume with the other marketing partners of Murex to optimize our financial success in the future.”

Murex LLC, headquartered in Plano, maintains more than 30 million gallons of dedicated coastal storage capacity, granting ethanol producers access to South American, European, African, Middle Eastern, and Asian markets—reducing the growing gap between ethanol production and domestic demand. In addition to domestic ethanol marketing and its focus on export ethanol, Murex LLC provides customer-based marketing services for crude oil, methanol and other gasoline blend stocks—more information about Murex LLC can be found at www.murexltd.com.

White Energy, established in 2006, is headquartered in Dallas, and was founded to build and acquire ethanol production projects. Today, it is the dominant producer in the State of Texas and is positioned among the top ethanol producers in the United States. www.white-energy.com