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Posts Tagged ‘natural gas liquids’

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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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).

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Vortex Tools discusses the Northern Colorado Energy Summit (#2015EnergySummit) and an energy future based on low oil and gas prices.

Last week I spoke at the Northern Colorado Energy Summit in Loveland, Colorado (#2015EnergySummit). That’s me—second from the right—missing the suit jacket memo:

EnergySummitPic

As the Summit was titled “Drilling Down: The Economic Impact of Declining Energy Prices,” Vortex Tools was invited to speak on our applications recovering more oil condensates and reducing operational costs. We’ll be speaking on similar topics at the Rocky Mountain Energy Summit conference: August 24th-27th, 2015.

As with any trade show, the NoCo Energy Summit had booths loaded with swag (“I don’t know what this is, but I’m taking it anyway”), free meals and coffee, a fat stack of business cards exchanged, and, if you weren’t farting around on your smartphone the whole time, some great info to be gleaned from the panels. Of note:

Oil Prices Will Remain Low

I know, you get 10 speculators on stage and you’ll get 10 different opinions as to why oil and gas prices are low and if/when they’ll come back, but when you average them all out, very few think oil prices will get much above $60/barrel by year’s end. You can blame strict air quality regulations; you can blame the recent Iran deal; you can blame the downturn in the Chinese stock market (like I said, multiple speculators equals multiple opinions), but even with the small ups and downs this year, oil prices remain low overall.

Dan Kearney is the Senior Business Development Analyst with Noble Energy. When asked about whether the worst is over with low oil prices, he said, “I think we’re in between storms, and that we’ll continue to be between storms.” A recent uptick in oil prices led to producers flooding the market—hoping to grab part of that value increase along with everyone else—and this saturated the market, dropping oil prices back down again.

Another Low is Coming in 2015

Sarp Ozkan is an oil and gas Market Analyst for Ponderosa Energy. When asked the same question as above, he said that the next oil price drop will come in October or November this year. That seemed more specific than the rest, but he had good reason: That’s refinery maintenance season (and they’re currently running at 90%+ of capacity—leading to problems when they’re shut down).

$100+/Barrel Oil Wasn’t Very Realistic (Or Likely to Return Soon)

So things aren’t looking too great for 2015 oil prices and, as noted during the Summit, no OPEC country is balancing its budget at $50 oil. While some lament that $100/barrel oil is far, far away (if ever again), Ozkan ran the numbers as to where the oil and gas market can do well with lower prices. After factoring in lower commodity prices, increased regulations, and reducing operational costs to keep up, the price-per-barrel point to see good margins was $65/barrel. $60/barrel was about breakeven; below that was a loss; but $65/barrel is the marker where the industry profitability opens back up. At least that’s one analyst’s view.

The Global Middle Class is Growing and Needs Energy

Tisha Schuller was the President/CEO of the Colorado Oil and Gas Association (COGA) for five years and now serves as Project Director for Stanford University’s Natural Gas Initiative. Schuller began her career as an environmentalist, but became an oil and gas advocate for two main reasons:

  1. When comparing the total impact (energy output versus environmental imprint) of oil and gas versus alternative energy options, the numbers were heavily in favor of oil and gas; and
  2. She realized that giving access to this abundant energy resource is one of the best things you do for impoverished communities. Otherwise you are limited by daylight and what your body can do. Even in Colorado, abundant and affordable energy is valuable. For those living below the poverty line, 25% of their income is spent on energy. Schuller also noted that pesky detail that everything you’re standing on, sitting on, leaning on, texting on comes from petroleum.

As the breakfast keynote speaker, Schuller noted some reasons to be positive despite the down energy market:

  • Although it feels like the middle class in the U.S. is getting smaller, the global middle class is growing—mostly in Asia. According to Reuter’s, it will more than double in size by 2030.
  • With this growth will come great demand for energy, and 84% of it will be from oil and gas. It is currently estimated the need will be above the supply. When it comes to basic economics, you know what that does to prices.
  • Many believe that this will enable the U.S. to export oil. As someone later stated, “If Iran can, the U.S. should be able to also.” Analysts believe that the U.S. leaves $5.50/barrel of profit on the table by not exporting oil.
  • Operational costs continue to come down (hello, Vortex tools) as do emissions. Currently, CO2 emissions in the U.S. are down to 1992 levels. The U.S. is the only country to achieve this as a free market.

So the oil and gas market has reasons to be hopeful; just most of them aren’t showing up in 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 V Only logoIt’s new! It’s shiny! It’s still mildly (mildly!) in progress, but the new Vortex Tools site is live.

Check it out here: VortexTools.com

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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).

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).

Read Full Post »

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).

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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 covers Colorado becoming the first state to control methane emissions at oil and gas sites, as well as noting its solution to help keep oil and gas companies in compliance with more stringent air quality standards. 

The Colorado Air Quality Commission just passed the strictest oil and gas air regulation issues in the nation, as they are the first to directly address and regulate emissions of methane gas (which is linked to climate change). For some, this is an overdue environmental necessity. For others, it’s one more attempt to shut down oil and gas production under the guise of purely health and environmental motivations.

Gov Hickenlooper (colorado.gov)

Gov Hickenlooper (colorado.gov)

After four days of hearings, on February 23rd, the state Air Quality Control Commission (AQCC) passed the motion by a vote of 8-1. They did so with support from Governor John Hickenlooper, environmental groups, and three large oil and gas operators — Anadarko, EnCana, and Noble Energy — along with Colorado’s largest natural gas gathering/processing company, DCP Midstream.

However, several smaller oil and gas companies, along with the Colorado Oil and Gas Association (COGA) and the Colorado Petroleum Association (CPA), opposed the far-reaching aspects of the regulations. COGA spokesman Doug Flanders noted, “Unfortunately, we were not successful in ensuring that the rule accommodates the differences in basins and operators. Nevertheless, we are committed to working with our operators, our communities and the state to successfully and effectively implement these rules.”

According to the Denver Business Journal, “State officials have pegged compliance costs at about $42.5 million a year, or less than $500 per ton of pollution eliminated. Executives at some of the Colorado’s biggest oil and gas companies have said the state’s estimate is in line with their estimates and a cost they consider acceptable.”

Funny thing about estimates that occur before regulations go into effect: they often fall woefully short once the laws of supply and demand kick in. If you must fix something to avoid fines (and yes, avoid damaging the environment), no one is surprised when the cost of fixing that requirement goes way up.

In addition:

The new operations standards are expected to remove from the air about 93,500 tons per day of volatile organic compounds (VOCs), which can cook into ozone on hot, sunny days, state officials have said.

They’re also expected to cut methane leaks by about 65,000 tons per year, with the methane — a strong greenhouse gas — captured and redirected into pipelines bound for markets.

Methane: harmful even when not coming from the backside of a cow

Methane: harmful even when not coming from the backside of a cow

So how are these rules different?

1. The regulations affect all of Colorado

This is something oil and gas proponents don’t like because different areas can have different issues, so a blanket approach not only takes the power away from the individual counties to make their own decisions, but can potentially apply standards that don’t make sense to that area. Like an omnibus or a comprehensive reform bill, some things get over-regulated, where other things aren’t regulated enough. In addition, these sweeping decisions can also be viewed as a state power grab over what should be an ongoing area-by-area conversation. For example, attempts to ban fracking in Colorado went after a statewide approach, got shot down, and returned as county-by-county initiatives (with some successes, some failures).

However, understand this: Similar to how a ban on fracking essentially shuts down oil and gas production, over-regulating methane emissions in producing oil and gas wells can do the same thing. For activists opposed to oil and gas, this is simply a greater victory, but the Average Joe voter may not be aware of all the damaging effects of this sweeping move, especially to the local economy and jobs.

2. The regulations require routine checks for leaks

This makes sense. If equipment is malfunctioning or something needs to be repaired (because it’s not doing what it’s designed to do), it should be fixed. Regulators can check up to once a month and any issue needs to be resolved in 15 days or the company faces ongoing fines.

I’ve been to enough oil and gas conferences to where I’ve heard repeatedly that oil and gas companies state they’re not opposed to regulation, just bad regulation. A lot of the larger companies — like the four above — are stepping out ahead of regulations to embrace these changes. Many of them now realize that the concerns of the Average Joe towards oil and gas are important (even if those concerns are shaped by misinformation supplied by activists opposed to this energy industry). This should be an obvious understanding, but it’s only recently, with some fracking bans succeeding, that valuing these concerns has increased.

But why are these big four on the opposite side of a lot of the smaller companies? Part of it is innovation. I saw a presentation from XTO Energy where they were detailing changes to their standards to improve wildlife protection. They weren’t being forced; it seemed like an “everybody wins” business practice. However, these larger companies can also afford to take a slight hit in Colorado if it helps their PR elsewhere. Noble Energy I’m unsure on; they’re fairly committed to Colorado, but the last time strong oil and gas regulations showed up in Colorado, EnCana slashed their state budget to 10% of what it was the year before. If EnCana pulls back again, they still have a global business to work with, but Colorado takes a hit on the jobs they no longer provide, and the smaller oil and gas companies take a hit due to increased costs.

 3. The regulations specifically target methane

Prior legislation only regulated volatile organic compounds (VOCs). When referring to oil and gas emissions, VOCs typically mean harmful gases and vapors. Previously, no other state has regulated methane, as it’d be difficult to enforce throughout the oil and gas chain. Which brings us to the next point:

4. The regulations include the entire natural gas chain

This includes “the well site, storage tanks, gathering lines and compression stations as well as processing plants.”

I’m all for preventing methane issues — especially in leaking and abandoned wells that should have their environmentally negligent issues addressed — but there are ongoing production areas that will become an issue. I mentioned above that methane regulation would be difficult to enforce throughout the entire chain. It’s not tough to enforce because the EPA doesn’t have the means — they have infrared cameras on helicopters to fly over and fine with ease — it’s tough to enforce because so many parts of producing wells have problems that stem from moving gas, especially with the 95% compliance rate they’ve set.

Natural gas is hard to control. It’s not like you can just grab it in scoops and stick it a giant zip lock bag that’ll never leak, and once it’s loose, there is no amazing net to swat over this loose natural gas to reel it back in.

As with many issues in the oil and gas industry, solutions shift once the existing solution is regulated away.

Vortex Tools has a solution to vented methane emissions at the well site. As with VOCs, the Vortex tool spins the flow of oil, gas, water, and natural gas liquids. By doing so, much of what would be fugitive vapors are converted to liquids and not allowed to escape at the culprit atmospheric release points. This allows operators to remain in compliance with EPA air standards (customer data shows negligible vapors at the well site, even at 103-degree F ambient daytime temperatures) and recover more valuable oil, condensate, and natural gas liquids to boot.

Vortex vapor recovery tool

Vortex vapor recovery tool

For more info on this application, email me at colin (at) vortextools (dot) com.

Of course, the largest sources of methane emissions still belong to termites and volcanoes, but bugs, exploding lava, and giant smoke clouds don’t listen to regulations. Maybe we’ll work on a solution to them next.

For now, it will be interesting to see if other states follow the standards set here or if it’s simply a Colorado-only effect for all the good and bad these regulations can bring.

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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 looks at how the polar vortex might lead to a propane shortage.

Ladies and gentlemen, we’ve found our environmental boogieman of 2014: the polar vortex.

It’s been blamed for enough things that I might as well frame it for me slacking on blog updates, too, but when it comes to your heating bill, you don’t need to be conspiracy minded to understand that the colder it is, the higher your heating bill is likelier to be. Well, what happens when we take record low temperatures, limited supply of natural gas, increased demand, and expand the issue nationwide?

Well, this:

Source: OPIS

Source: OPIS

Sure, it looks like a couple of squiggly lines showing the ups and downs on the value of propane and ethane over the last few years until… oh my, is that 2014—as in, now, today—on the far right?

Yes it is, and the skew is far from over considering there are many months of cold weather to come.

Here’s what this means:

Propane is a popular heating fuel. With temperatures being so low, demand has doubled… then doubled again. Hence why that line is going straight up. An acquaintance called a local propane dealer three days apart—the price went up 112% in that time and the quote was only guaranteed for one lone hour.

Ethane, however, is now viewed as a problem fuel, because you can’t burn ethane in a propane heater (you can use butane, but you need a different burner). It’s now worth ($0.50)/gallon—as in minus fifty-cents a gallon. You actually have to pay someone to take it away. Or you burn it—which is pretty much the oil and gas solution to unwanted gas (and natural gas liquid) issues. It’s part of the reason why the Bakken looks like a lit-up city from space.

(Regulations haven’t gone into effect against flaring/burning gas yet, but overall, some think these issues may be good for gas prices as they’ve been depressed for so long.)

However, if there is another cold spell, there could be a natural gas shortage, and that’s with the increased supply enabled by fracking. In addition to the jobs squeeze, this propane issue may make those cities that banned fracking regret their decision.

*     *     *

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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