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Archive for the ‘Oil & Gas’ Category

Half his garage was ammo; the other half was tequila. That was the first thing I noticed when I pulled up to Richard’s house in Austin.

We were slated to ride to Lubbock, Texas to present at a local event, and he was driving. What I did not know at the time was that, because he had no use of his legs, Richard drove his Chevy Suburban entirely with his hands. This would be fine, except that he also talked on his phones (yes, plural), smoked repeatedly, and… wait, how many hands do you have again? Then he’d take a corner fast and guns would come sliding out from beneath the seats to greet your feet (it’s Texas, people).

This was our VP Operations of Vortex Tools: Richard C. Haas.

As a kid, Richard was diagnosed with polio, wore leg braces, and was then wheelchair-bound almost his entire life. The son of an oil man, he followed his father’s footsteps, but his approach required more grit and determination: Oil & gas rigs do not have disabled access. This meant that Richard would leave his wheelchair off to the side and slide around using his upper body strength. A rig can be a brutal environment when you’re standing on your feet and Richard would drag his body along to get the job done.

If there was an award, he received it (he was voted Aggie of the Year at Texas A&M twice). If there was a featured role—instructor, speaker, Club President, Chairman of the Board—he got it. He received two patents and wrote several articles and White Papers. After negotiating oil & gas deals around the world (in the U.S., Mexico, and the Gambia), Richard settled back in near Austin, Texas. In 2001, he helped found Border to Border Exploration. Under his drilling guidance, BBX turned a $2.4 million investment into a billion-dollar asset value—making them one of the top independents in the U.S.

In 2011, he joined Vortex Tools to explore innovative uses of our optimization tools. In drilling, he’d complete a well in less time and for less money than other companies in the area. As an operator, he’d get more production from his wells, and that was the kind of innovation we wanted in our company. Since Richard entered the industry when oil was a mere $20 a barrel and gas a bare 10 cents an MCF, he was always looking to, as he said, “get the last squeal out of the pig.”

As a company, we believe that, despite what you may think of the oil & gas industry, it’s the key resource we have right now, so we should make it as optimal and as clean as possible. Richard’s approach fit right into that viewpoint.

He also drank repeatedly brewed iced tea that had the consistency of motor oil. First time he offered me some, my boss shook his head. I took it anyway, drank down a couple of inches, and shook wide awake until 2 AM.

And in June, Richard suffered a stroke. Three months later, he passed.

He’s survived by his wife, six adult children, several grandkids, and many friends who can tell you more about his home life, but I’ll speak to our coworker: In an industry where everyone thinks they know everything, people listened to him. In an industry where there’s so much success, he was revered.

In short: The man was a notch above.

Here’s to our friend and coworker, Ricardo.

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for coal, biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

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Last week I noted that much of the oil & gas industry is waiting to see what President Trump will do. While consensus was that he would likely scale back regulations, the question was how fast and how consistent he’ll be. Today—essentially the second work day of the Trump administration—gave the initial answer, as President Trump signed executive actions to advance Keystone XL and Dakota Access oil pipelines. While this does not provide the permits required to build these pipelines, it essentially paves their way for approval.

Keystone Pipeline Route

Keystone Pipeline Route

If you aren’t familiar with the Keystone pipeline system, it allows for the transportation of oil & gas production between Alberta, Canada to several refineries and distribution centers in the U.S. (including Illinois, Oklahoma, and Texas). Despite protests over the XL phase of the Keystone system, many people don’t know is that the first three phases of this pipeline are already in place (phase one since 2010). The proposed XL phase of the system—which essentially duplicates the first three phases with shorter routes, while adding in oil & gas production from Montana/North Dakota—became a battleground over climate change and the value of fossil fuels in today’s world. Given the way politics works, it also became a dividing issue between democrats and republicans. Former President Obama rejected the Keystone XL phase in 2015 while President Trump, when campaigning in 2016, insisted he would approve it.

While many in the oil & gas industry view Keystone XL as key to growing U.S. prominence in the market while reducing dependency on foreign oil, the big complaint over the Keystone XL pipeline was in the environmental danger of routing over the Sandhills in Nebraska:

Boiling sands are areas where sandy soil is so thin that groundwater can bubble up through it to the surface. In Nebraska, they are found in the Sand Hills, an ecologically sensitive region of grass-covered dunes underlain by a giant freshwater aquifer, called the Ogallala, that sustains agricultural production down the centre of America.

In addition to the unforeseen environmental consequences, others argue that the route threatens the water supply of the nearby Standing Rock Sioux tribe.

The Dakota Access pipeline—an 1,172-mile-long, underground pipeline beginning in the rich Bakken oilfields of North Dakota and ending near Patoka, Illinois—has also seen protests and push-back. Although mostly completed, the current route does not have approval. Given today’s executive orders, both the Dakota Access pipeline and the Keystone XL pipeline are closer to approval than they’ve been in years.

President Trump insisted on that both projects are “subject to terms and conditions to be negotiated by us.” While it is uncertain what this means regarding environmental impact, President Trump has already given some insight about what this means for U.S. jobs, believing that U.S. pipeline should be constructed in the U.S., thereby “putting a lot of steel workers back to work.” He also believes Keystone XL will add 28,000 construction jobs. There is expected push-back from democrats and environmentalists, but without current political maneuverability, those roadblocks may be a thing of the past.

EDIT: Revised White House stance on U.S. steel: http://www.ogj.com/articles/2017/03/white-house-keystone-xl-will-not-use-us-produced-steel.html

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for coal, biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

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donald-trump1So I’ve been quiet for a wee while. Call it 10 months of quiet?

Part of it is that little has changed in the industries I work in:

Oil & Gas   

Every commodity has its ups and downs, but oil & gas has swirled around its latest downturn since June 2014. It’s the same old story: Ask a dozen talking heads why this happened and you’ll get a dozen different answers (bonus points if the speaker gives contradictory views of OPEC in the same hypothesis). Despite that, there are reasons to be hopeful, including rig counts increasing most weeks. While some of that is because exploration had stalled for long enough that eventually you can’t go anywhere but up, more rigs equals more new drilling, and new production—whether it should be or not—is the accepted indicator of oil & gas health in the U.S.

Despite these hopeful signs, as of early 2017, the industry is still largely on hold. Normally this happens in January each year because companies are still waiting for approved annual budgets to proceed with anything. In lean times, annual budgets can sometimes be held back until February or March. However, this year, everyone is waiting to see what President Trump will do. Whether individuals may have a favorable or negative view of Donald Trump, the oil & gas companies overall believe his policies will be favorable to the industry. How many regulations will be scaled back and how consistent he’ll be has yet to be seen, but in every meeting, every phone call, and every email, the same hold line comes up: “Let’s see what President Trump will do.”

Water

I’ll make this one short: People still don’t care about water.

There’s a belief that we will care about water someday soon, but it’s the same belief accompanied with the same inaction year after year. Even environmentalists don’t care that much about water. It still takes a backseat to solar power and wind power.

I met with a guy this week who talked about his company’s testing water standards 15-20 years ago. At the end of their filtration, they’d have some of the water off to the side, and place a catfish in there. If you killed that bottom feeder, then you knew you messed up. While standards have gotten more objective than seeing if you can keep from killing a bacteria loving vacuum-fish, they aren’t universal. Every industry needs regulation; the goal is to have good regulation—promoting safety for people and the environment while allowing businesses to pursue success—but it’s easy to get the pendulum swinging in the wrong direction.

Since I mentioned wind power and solar energy:

  • There are still (inaccurate) stories about too many birds getting diced by wind power turbines. What I don’t hear is that the wind power design you’re most likely to see are some of the least efficient. Making lighter blades, using lighter material—none of this changes the limitations of the design. Most of the better designs—that appear more static, but are better at generating energy off each vibration—don’t make it to market, but that’s any industry: the best design rarely gets the market share (or even a viable business).
  • Solar still has issues with sourcing the right metals. This metal needs to be A) affordable; and B) have consistent high conductivity. The issue is that it’s still hard to find both. If the metal is affordable, it’s often not in the U.S., but making sure you get what you paid for is harder when you’re thousands of miles away. Then, if the metal is of the right quality, it’s harder to get affordably and consistently. Thus any innovation of the solar power industry is still limited by basic sourcing issues.

Okay, so things are kind of stuck, but if there’s one thing I’ve learned is that anger does little to build anything meaningful. As Sam Rayburn said, “Any jackass can kick down a barn, but it takes a good carpenter to build one.” Whatever the future of water and oil & gas hold, I want to be a part of building it well.

Let’s get pushing.

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for coal, biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

Read Full Post »

SpiroFlo and Vortex Tools comment on changes in Colorado—both in the recession of oil & gas and the rise of the marijuana industry.Marijuana

Despite being the VP Marketing for multiple companies, it’s rare I do a crossover blog where I represent more than one company at a time, as the marketing reality that most people only care about stories that impact their industry or scratch their interest (duh). However, since the business landscape in Colorado has shifted over the last year, we’ve seen changes that affect different industries, so here we go. Firstly:

Oil and Gas Has Scaled Back Out of Colorado

Overall, it’s been a brutal year for oil and gas. The top four global companies scaled back 10% of their work force… and that was just the beginning. The cuts have continued and spread to smaller companies. Companies have scaled back to their core assets, selling off the rest, and for most, those core assets aren’t in Colorado. Blame asset valuations, blame stricter regulations, but week after week, formerly prominent oil and gas companies are leaving Colorado,* or filing for bankruptcy, or, at the very least, not spending money on anything.

*Usually right about here I’d link up a few stories of this happening, but there are so, so many. Right now you can Google “Denver oil and gas company” every week and pop up a negative story, but hey, gasoline prices are low, so many don’t care.

Most analysts now believe oil and gas prices will not recover until 2017. Prices have dipped again in October and November this year due to refinery maintenance season (during times of cheap oil, they’re at high capacity, so any time one goes down for a period of time, it hurts an already stressed market). In addition, many wells are currently shut in, so when prices do inch up a bit, everyone’s going to rush to take advantage of that gain, flood the market with production glut, and, you got it,  tank the price again.

This means it should be a time of improving existing production—lowering operation costs, recovering more production/valuable liquids (condensates and natural gas liquids), and avoiding environmental fines (easiest way: by not polluting)—the kinds of applications Vortex Tools enable, but many of the employees who are left are just keeping their heads down and trying not to get laid off. This should also be a time of asset expansion for smart investors (the adage of “buy low, sell high” still applies), but for many oil and gas companies, they’re not doing much of anything save staving off going out of business.

At the same time:

Marijuana is Booming in Colorado

As one of the first states to legalize recreational marijuana, a whirlwind of industry has set up around this venture, but it’s still a complicated (and energy intensive) market. Energy companies call pot one of the most energy intensive ventures. In one Colorado service area, retail marijuana makes up for ~1% of retail electricity use. Increased electricity use was one of the ways (illegal) pot growers used to get caught—turns out when your electricity bills spike several times over what they used to be, people take notice, and the assumption is you aren’t just plugging in a slew of outlet air fresheners.

In addition to high electricity use, the marijuana industry uses a lot of water, and currently, what’s going down the drain untreated shouldn’t be (lots of nitrates, fertilizers, chemicals, etc.). Most everyone involved in the industry is surprised that the law hasn’t changed yet and that it’s a matter of time until it does. However, there’s a misconception that the marijuana industry has a lot of money, but most players do not. Once laws change to get more stringent, a lot of smaller operations that hopped into this growing industry will burn out. In addition, the marijuana industry has also been sold a lot of snake oil already, so there’s a lot of skepticism for even valid solutions.

That’s where SpiroFlo comes in. With no moving parts and no additional energy source required, there are two main applications we work in: 1) Reducing the amount of water used and improving the water quality/oxygen content of what’s left: Basically improved hydroponics—growing better plants faster with fewer resources. 2) Removing contaminants from water drainage: Most people expect the laws to change on this within the next 12 months, so spinning out contaminants from water used for marijuana will become important (and will be a determining factor in which companies go out of business). Given that we’ve done similar applications in other markets, we’ve got both credibility and low operating expenses covered.

As a company, SpiroFlo sat down and discussed the moral side of it, as marijuana is in a strange place: It’s legal in certain states, but not nationally, which causes issues with banking and credit. Then investors want to play games, too. They recognize there’s money to be made here, but they don’t want the negative association. Currently the general rule is: If you touch the plant, investors can’t fund you. However, if you help the people who do touch the plant, then they can fund you.

Yeah…

Anyway, we sat down as a company and had the moral conversation on marijuana and the conclusion we came to is this: When it comes to industries you can’t work with for moral reasons, where do you draw the line? What issues are more important than others? Even in Vortex Tools’ work in oil and gas, there are people who don’t like the industry enough to acknowledge the value in our tools reducing pollution, energy, and operational costs while increasing the efficiency and revenue generators from the oil and gas production. Regardless, some issues are gimmes to avoid (hint: you don’t have to discuss them as an organization, or if you do, you’ll be doing so in prison), marijuana isn’t. Not anymore. So we looked at our company goal as SpiroFlo, which is to reduce water use and improve the quality of the water left. Regardless of what different employees thought of the marijuana industry, we agreed that while it’s here, we should do what we can to improve water use.

Colorado Business is Going to Look Different

So overall, what this means is that oil and gas in Colorado will be replaced by the marijuana industry. However, that’s not the only business sector being replaced; it’s happening all over. There is little warehouse/retail space left to lease and what is left over is high above market value. Due to the population influx, residential rents are above what they should be, too. Yet all of this could bend as laws become more stringent or more states legalize marijuana. For now, this is a common sentiment from many Coloradoans:

stop-moving-to-colorado-bumper-sticker-car-1024x768

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for coal, biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

Read Full Post »

Vortex Tools covers the ongoing scaling back of the oil and gas industry in 2015—specifically: layoffs in Colorado.

I can describe the current American oil and gas experience in four words: Layoffs and low prices.

Whether it’s big companies or small companies, the story is the same: 2015 budgets were delayed then drastically reduced. From there, oil and gas companies have hemorrhaged employees (yet production continues to climb).

With being headquartered in Colorado, we’ve kept tabs on what’s happening around us. Over the last six months:

  •  Noble Energy planned to cut 220 jobs or 10% of its workforce, 80 from Colorado (and Noble is one of the main companies in the state).
  • WPX Energy cut 8% of its nationwide workforce, scaling its Denver office back from 156 people to 15 (25 Denver-based jobs were eliminated—120 were offered to relocate to Tulsa, OK).
  • Bayou Well Services decided to permanently lay off 250 Colorado employees.
  • Sabine Oil and Gas Corp. laid off 102 Denver-based employees starting in December 2014.
  • Linn Energy will shut its Denver office, cutting 52 jobs.

(Despite this, we’ve still sold Vortex DX-I tools into the Wattenberg basin [in northeastern Colorado] to increase oil recovery efficiency in horizontal applications when combined with gas lift.)

Field install of the DX-I Vortex tool

Field install of the DX-I Vortex tool

Some of this is scaling back the bloat that occurred with high oil prices, but some of it has to do with the downside of how many American companies conduct business. I can’t remember where I ran across this study, but it noted how different parts of the world formulate their business plans. Great Britain works off a five-year plan; Germany, a 10-year plan; and Japan, 15 years. The United States? Companies usually plan around whatever will increase stock prices this quarter.

You might think that 5-15 years is too long of a planning period, but planning around what can bump numbers within a 90-day period is woefully shortsighted and often hamstrings future development. However, with oil and gas, when it hurts financially, it hurts big, and when recovery comes, companies can often buy their way to solutions then. For 2015, however, even if it’s a great market to pursue oil and gas efficiency—squeezing every bit of value from the well—it’s going to be a year of engineers trying not to get fired.

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for coal, biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

Read Full Post »

Vortex Tools shares a graphic of the oil rig developments rising up since 2011, then rapidly declining in early 2015.

Over the last six months, I’ve shared a few posts on the impact of low oil prices (see here, here, and here).  However, since a picture is worth a thousand words, here’s the steep drop in active rigs in a graph. Yet thanks to modern efficiency, you’ll notice oil production continues to climb:

active rigs v oil production

If a picture is worth a thousand words how much is an animation worth? Head over to Bloomberg to watch an animation of the US-wide oil rig count falling by over 45% from 1,595 rigs in October 2014 to 866 rigs in March 2015.

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for coal, biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

 

Read Full Post »

Vortex Tools covers how low prices are shaping the budgets, workforce, and operations of oil and gas companies.

Even if you don’t know the specifics of the steep 2014 decline in oil prices, if you’re on social media, you’ve likely seen a pic or 10 of low prices at the gas pump. But there’s also a sense of wondering how long these low oil and gas prices will last. Depending on which talking head you listen to, some believe oil prices will stay low until the end of 2016, while others think oil could hit $200/barrel in the next few years.

However it goes, this is what’s currently happening in the oil and gas industry:

Large Budget Cuts: Typically budgets for the New Year are finalized by the end of January at the latest, but in 2015, many company budgets have been delayed. Right away this means that budgets are ~10% lower, as parts of January and February were put on hold expenditure-wise. Then, as budgets have come out, a lot of them are 40-50% lower than the year before (Pioneer Natural Resources’ capital expenditures dropped by 45%, Apache gutted $3.5 billion from the year previous). This means:

Layoffs: With companies losing billions in the fourth quarter of 2014, employee cuts have followed. BP laid off 300 Scottish workers in January and Halliburton plans to lay off 5,000-6,500 of their 80,000 workers. (As the VP Marketing for Vortex Tools, my inbox has seen a spike in job applications, too.) According to Fuel Fix, “Halliburton’s move brings the number of layoffs announced by the world’s four biggest oil field services in recent weeks to more than 30,000 workers around the world. That’s about 9.4 percent of their combined workforce.” Even with layoffs attempting to balance out costs and stock prices, there are still:

Equipment Cost Pains: Oil and gas prices may be down, the amount of workers may have dropped to meet the work pace, but it still costs about the same to complete a new well or work over an existing well.  In dealing with steep, hyperbolic decline shale wells—oil and gas wells that start with high, valuable production, but quickly reduce to lower rates—operators have to keep drilling to stay profitable, so there’s a lot of unavoidable cost.

These pain points mean that some companies won’t survive, whereas others are using this as an opportunity to lean up their business model and pursue a more efficient direction. One member of the Vortex team, Richard Haas, was an oil and gas operator for 36 years. He started when oil was worth $11 a barrel and gas 16 cents an MCF (adjusted prices still lower than today). In addition, gas value was not adjusted based on its BTU (or energy) equivalent—it all got valued the same no matter how much it fueled. Because of this, Richard knew how to wring every bit of oil or condensate from the production stream. Now that oil is at less than half the value of where it was eight months ago, it’s going to take that kind of efficiency thinking for companies to thrive at low oil prices.

With Vortex tools increasing production efficiency, reducing chemical/surfactant costs, and eliminating pollution fines, that type of required efficiency is available now.

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for coal, biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

Read Full Post »

Vortex Tools discusses why oil prices (and gasoline prices) have declined, the inefficiency of U.S. oil and gas, and what can be done to make a profit at low crude prices.  

If you haven’t kept track of the recent changes in oil and gas prices, here are the basics:

  • People are happy at the pump: Gasoline prices are at a four-year low (down 40% from six months ago). Eight states are expected to have gas below $2/gallon, and the 2015 nationwide average is projected to stay lower than 2014 average.
  • Oil and gas companies are scaling back: In addition to gasoline prices sitting at a four-year low, crude oil prices just hit a five-year low. Currently, they’re at the low-to-mid-$60s/barrel range. There are projections that the slump is not over, that these low prices could hold through 2016, and that oil may not get above $100/barrel again for a long time.

While there are natural ups and downs with commodity prices, this rapid decline was unforeseen by most, and the timing is bad for the industry. The Organization of Petroleum Countries (OPEC) reduced the oil estimates needed in 2015 by 300,000 barrels down to 28.9 million. Doesn’t seem like a lot percentage wise, but it’s the lowest in 12 years. With lower demand, drilling rig counts are down, 2015 budgets are getting slashed, and oil company stocks are falling.

Even with low prices, the Middle East has no plans to slow down their production. Some say this is a way to root out terrorist influence, others say it’s a way of protecting market share, but whatever the case, the success or failure of the U.S. oil and gas industry doesn’t majorly play into their plans.

What this has done is highlight the inefficiency of U.S oil and gas.

The Middle East claims that their costs per barrel are at about half of U.S. costs (and significantly lower than the average cost of all other countries), so $60/barrel oil may cut into their profits, but in the U.S., where $60-$64/barrel is considered break-even price for shale production, $60/barrel can be a breaking point.

Probably doesn’t hurt that Saudi Arabia has $700 billion in foreign currency reserves thanks to higher oil prices.

From: https://i1.wp.com/cdn.na16.netdna-cdn.com/wp-content/uploads/2012/06/scrooge-mcduck.jpg

Pretty much what I think of, head-into-coin injuries be damned

You can debate the profit mark—which will also fluctuate due to legislation, available technology, and world issues—but generally speaking, the U.S. oil and gas industry has two modes, both of which avoid efficiency:

  • When oil prices are high, they’re too busy to invest in innovation/efficiency and it’s full on drill, baby, drill!
  • When oil prices are low they don’t have any money to invest in innovation/efficiency.

These maxims hold true until legislation requires oil and gas companies to change, and 2015 is a year of legislation when it comes to making companies deal with flared gas, vented vapors, and the volatility of oil.

It also doesn’t help that U.S. companies largely focus on what will boost their stocks this quarter, even if it’s to the detriment of say, next quarter. Oil and gas companies care about their bottom line (which is good—you should make a profit in business), but they often don’t have the ability (read: time and/or money) to care about efficiency in their processes, even if doing so would greatly increase their bottom line.

I recently met with a customer that had posters everywhere that said something like, “Safety first, environment second, profit third.” I joked that the reality is actually, “Profit, profit, profit… and don’t get me fined while you’re at it.” This doesn’t make them villains. The reality is I’ve worked in enough green industries to know that the way you get people—individuals or business groups—to care about environmental issues is to make them money while doing good.

To be blunt: No company primarily cares about environmental issues when they’re facing heavy losses and/or going out of business.

Given that Vortex tools improve oil and gas efficiency and gives an environmental benefit, here’s some of what we can do (and are expecting to grow into more in the coming year):

2015 is set to be a rocky year for oil and gas producers/operators. It’s time to squeeze every bit of efficiency and value from production.

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*Sources and image credit listed in the comments.

Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

Read Full Post »

Vortex Tools explores changes in international business, how oil and gas valuations are changing globally, a recent publication on increasing well efficiency/profitability, and how to find the best Chinese dumplings.  

I have a confession:

I no longer eat Chinese food in the United States.

Not because I’m some food snob, but because in the last couple of years, we started stepping up our international sales. Before, Vortex Tools sold internationally to Australia, Canada, and Mexico (among others), but now we also sell into China, India, and the Middle East. Naturally, international sales often involve a degree of international travel.

In traveling to China every 12-18 months, I eat nothing but Chinese food for a week straight. Oh, and the stuff they consider breakfast food is what the average American considers dinner food, so being a guy that typically likes Chinese food once or twice a month, eating it 20+ times in one week pretty much kills my desire to have it stateside.

(Which isn’t to say I don’t thoroughly enjoy the food there. One of our contractors speaks fluent Mandarin and walked around looking for a restaurant identified only by a doorway. “We’re looking for a doorway?” I said. “In China? Oh, I’m sure we’ll find this place any year now.” Sure enough, the contractor asked around for the door that led to great dumplings and people knew what he was talking about. We walked through a doorway that led to stairs to a basement restaurant serving the best dumplings you’ve ever had.)

Anyway, international business is changing. Overall, the global oil and gas industry is changing, too. The price of natural gas has gone up in India; while in the States the price of oil fell below $80 a barrel for the first time in a year (October 2014). Both of these led to oil and gas operators valuing efficiency more.

oil 80bbl

When natural gas prices are low, no one wants to build the pipelines to recover these low values, so the gas typically gets flared. Gas needs to hit a decent enough value to get recovered and sold. For oil, however, if the price is high, it’s full on drill, baby, drill with no time to consider efficiency. As prices drop and budgets get tighter, operators slow down enough to consider how to squeeze out more value from the well.

$80/barrel for oil is actually a frightful marker for many larger companies—especially those drilling shale wells, where the production rates decline fast enough that they need to keep drilling to keep the profits flowing. Larger companies have larger costs, and some believe they can’t turn a profit at $80/barrel.

So that’s where we’ve gotten more traction with Vortex tools in oil and gas efficiency. After extensive testing in the Austin Chalk and Eagle Ford formations (Texas), data noted that Vortex tools recover up to 10 times more natural gas liquids than conventional methods like pigging (read: shoving a brush down the pipeline). The NGLs are valuable, so greater efficiency = greater profit.

A recent ONG Marketplace article on Vortex Tools’ value in the Utica (Ohio/Pennsylvania) and Marcellus formations (same as before plus New York and West Virginia)—including increasing NGL/condensate recovery, preventing line freezing, and keeping wells in air quality compliance—is available here.

I can’t tell you what country I’ll be in three months from now, but one thing’s for sure: I’ll decline the offer for Chinese food.

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

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Vortex Tools discusses Denver Startup Week, how much sand is used in fracking operations, and how jobs in the oil and gas industry are changing.

Denver Startup Week was this month. We’ve participated before, but this year we attended their “oil and tech” presentation by RockPile Energy Services‘ VP Marketing and Sales, Howard Rough. Rough worked for Schlumberger for 30 years before starting RockPile—they provide services to the oil and gas industry.

Sounds pretty generic, yeah?

Okay, let’s chat specifics: In 2015, RockPile will provide a billion pounds of fracking sand to the Bakken formation in North Dakota. That’s the size of Santa Barbara beach.

Shove it down a well!

It sounds like a lot, but they’re maybe 5-6% of the frack sand market in North Dakota. One well uses about 10 million pounds of sand (along with a lot of water and a bit of gar gum [hydroxyethyl cellulose] to suspend the sand in the liquid). It’s not just any sand either. We’re talking white, clean sand from Minnesota that’s a specific size. You can use other sand, but in the opinion of many, it’s not as good.

And that’s where a current pain point of the oil and gas industry lies: It’s really difficult to logistically transport and store all that sand and water with minimal environmental impact.

Overall, there’s a push for greener fracking approaches. As a company that works with oil and gas operators to increase their energy efficiency (recovering more natural gas liquids and condensates) and to keep their wells in EPA air quality compliance, we know some of the struggles they face. Fracking is perceived as a huge water waste (when it’s less than 1% of Colorado’s water use). While I’m happy to see companies reusing fracking water, agriculture is still the water monster to slay in these drought years (using 69% of the state’s water).

On the sand side of things, they don’t have great logistics, and rail is an entirely separate issue. Finally, the massive silos required to store sand lead to storage issues, too.

Overall, there are many pain points with fracking logistics that Rough would like to see addressed. The second is addressing employee retention in oil and gas. There are two problems here:

  • In the oil and gas industry, you have Baby Boomers with 30+ years of experience getting ready to retire. The next rung down is those with 10 years of experience. Most of the oil and gas industry workers have 3-4 years’ worth of experience, so there’s a huge changing of the guard going on.
  • With most people having little experience, a huge chunk of the problem is employee retention.

Unless you’re working at the downtown corporate offices, you can get shoved off to some mighty obscure places. Oil and gas fields are often in the middle of nowhere, thus oil and gas jobs can be in the middle of nowhere, too. Plus, right when you get adjusted to your living arrangements, you get transferred to the next less-than-ideal place. After 3-4 years of repeating that cycle, you can get burned out and move on to a different line of work.

But wait, your brain says, don’t oil and gas people make six-figure salaries?

Some do, but it’s long hours and less-than-ideal work conditions. Parts of North Dakota freeze for four months and get 100 mph winds; you can work outside in Alaska when it’s 62 degrees below zero. Then after that, you return to the trailer with a dozen other dudes and sleep in the sweaty bed that the last guy just left. There’s no going home for days or weeks on end; the well site is in the middle of nowhere. One of our engineers worked a similar set up and kept getting his electric razor stolen… by someone else also making six figures.

You can understand why all this might get tiresome. With these issues, there’s not enough experience and huge companies have a big turnover rate (40% annually). That’s a lot of money wasted on training for people who don’t stick around that long.

So there’s also a need for oil and gas companies to connect with qualified, talented individuals. Rough thinks the future may be a LinkedIn for oil and gas professionals—maybe even something that helps give people a virtual tour of an oil and gas field. That way they know what to expect. What Rough has found is that military are often a great fit for the oil and gas industry. As one man put it: “It’s twice the pay and you don’t get shot at.”

If you think you can address the problems covered here, there’s demand, and if you’re military personnel looking for your next gig, come get more pay and less bullets (unless you work in Texas—no guarantee there).

*     *     *

Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

Read Full Post »

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