Will Bakken Man Camps Disappear?

April 16, 2015 Elizabeth Alford

As low crude prices continue to ravage the industry, the latest victims may be the man camps throughout the Bakken. These camps that have housed thousands are slowly emptying, and some are folding for good.

Read about Bakken Housing, Lodging, Hotels, & Man Camps

Man camps provide temporary employee housing to oilfield workers and have been a prominent feature dotting the landscape since the oil boom brought an influx of people to the region. These camps often provide dining, laundry, and recreational facilities and were given as a perk when things were hopping. But with energy companies tightening their belts, providing housing for workers is quickly on the chopping block for some companies. Instead of offering these perks, some employers are asking workers to cover their own rent, clothing, and transportation.

“Jeff Zarling, president of Williston (N.D.)-based Dawa Solutions Group told Bloomberg, “It was a necessity of recruiting. But today, what we’re seeing is companies want to get out of the housing business.”

Several companies have recently announced intentions to get out of the man camp business including Capital Lodge, one of the largest man camps in the Bakken that has plans to downsize and become a commercial hotel-style operation. Civeo Corp reported an 89% decline in their share price this year. The company slashed its workforce on Monday and said revenue could fall by a third.

Crude by Rail Facing Tougher Standards

April 15, 2015 Elizabeth Alford

Train Derails in North Dakota — NTSB Calls for Stricter Rail Standards

The National Transportation Safety Board (NTSB) is urging tougher standards for oil tankers carrying Bakken crude.

In a 10 page letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA), the NTSB outlined its findings from their study of recent train derailment accidents and concluded that the current fleet of DOT-111 tank cars rupture too quickly and result in spillage and ignition. The agency also found that performance of the industry’s enhanced CPC-1232 rail car is unsatisfactory.

Controversy over the safety of moving crude by rail has skyrocketed as several high-profile accidents have recently made headlines. This combined with a sharp increase in crude by rail since the start of the oil boom has many concerned.

Related: Crude by Rail Up 1700%

“We can’t wait a decade for safer rail cars,” said NTSB Chairman Christopher A. Hart. “Crude oil rail traffic is increasing exponentially. That is why this issue is on our Most Wanted List of Safety Improvements. The industry needs to make this issue a priority and expedite the safety enhancements, otherwise, we continue to put our communities at risk.”

Based on their study, the NTSB gave the following recommendations that would require:

All new and existing tank cars used to transport all Class 3 flammable liquids be equipped with thermal protection systems that meet or exceed the thermal performance standards
All new and existing tank cars used to transport all Class 3 flammable liquids be equipped with appropriately sized pressure relief devices that allow the release of pressure under fire conditions and that minimizes the likelihood of energetic thermal ruptures
An aggressive, intermediate progress milestone schedule, such as a 20 percent yearly completion metric over a 5-year implementation period, for the replacement or retrofitting of legacy DOT-111 and CPC-1232 tank cars to appropriate tank car performance standards
Establishment of a publicly available reporting mechanism that reports at least annually

Bakken Production Expected to Decline

April 14, 2015 Elizabeth Alford

For the first time since the Energy Information Administration (EIA) began tracking drilling productivity, the agency reported on Monday that oil and gas production will decrease for the Bakken and other shale formations across the country.

Shale production has been a major player in boosting US output to more that 4 million bpd and has played a key role in the collapse of oil prices worldwide in 2014.

Production from the Bakken formation has increased 28% year-over-year despite declining rig counts across the area.

The EIA estimates that the Bakken will experience a decline of 23,000 barrels of oil a day to 1.3 million in May. Natural gas will also decline by 21 million cubit feet per day.

“Speaking with Bloomberg, Carl Larry, head of oil and gas for Frost & Sullivan LP said, “We’re going off an inevitable cliff because of the shrinking rig counts. The question is how fast is the decline going to go. If it’s fast, if it’s steep, there could be a big jump in the market.”

PHMSA Offers Pipeline Safety Grants

April 13, 2015 Elizabeth Alford

As oil pipeline safety concerns escalate across the country, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) is ramping up its efforts to meet the growing demand for innovation.

In addition to hiring more that 100 new safety inspectors this year, the PHMSA will also be awarding $2 million in grants for students and faculty to research pipeline safety solutions. These grants designed to expose new engineers and scientists to the technical side of the energy transportation sector.

“We’re not simply offering grants through the CAAP; we’re demonstrating to engineering and technical students that their disciplines are in demand in the energy pipeline sector,” said PHMSA Acting Administrator Timothy Butters. “PHMSA provides safety oversight for the country’s 2.6-million-mile pipeline network, and we need out-of-the-box thinkers.”

Grant proposals will be evaluated on scientific merit, quality, management plans, work tasks, budgets and schedules. The PHMSA is specifically seeking projects that address technical gaps in the following areas:

Preventing and Mitigating Pipeline Corrosion
Developing Locatable Plastic Pipelines
Developing Inspection Tools to Quantify Pipe Strength and Toughness

“U.S. Senator for North Dakota John Hoeven, commented“As we work towards building a comprehensive ‘all-of-the-above’ energy plan for our country, it’s important to ensure that we build the right kind of infrastructure to support our energy needs, now and into the future,” Hoeven said. “We must ensure that our infrastructure is reliable, safe and efficient, and this grant will enable universities to do the innovative research that will do just that.”

The debate around the safety of cruse pipelines has heated up since the shale oil boom in 2008. Most recently, President Obama delayed the Keystone pipeline when he vetoed bill saying he wants to hold off a final decision until further environmental reviews are complete.

ConocoPhillips Reveals Plan to Stay Flexible

April 9, 2015 Elizabeth Alford

ConocoPhillips announced yesterday the company's strategic plans through 2017 that are designed to increase flexibility and returns while reducing costs.

In what the ConocoPhillips calls their “disciplined approach for the new world” the company will shift capital allocations to unconventional shale plays because of the low supply costs and flexibility for growth. The long range plans set out in a recent company presentation include:

Spending 50% more over the next three years
Focusing on the Eagle Ford, Bakken and Permian basins
Capital spending will stay at $11.5B/year through 2017 but shift from long-term, expensive projects into relatively cheap and immediate shale wells
Boosting production by 6.3% to 1.7M bbl/day by 2017.
Cost reduction programs to source $1B of reductions in 2016 compared to 2014

“Ryan Lance, chairman and chief executive officer noted “The energy landscape has changed dramatically as a result of the recent decline in commodity prices, but we responded quickly to position the company as a core energy holding in a lower, more volatile price environment.”

ConocoPhillips’ strategy for the Bakken includes tapping into the highest value part of the play, increasing drilling and completion efficiencies and optimizing field development through pilot programs for the following:

Testing fluids, proppant loading and cluster spacing
2 pilots in execution testing Middle Three Forks well placement
5 pilots underway testing tighter spacing