basin resources fall 2014

Fall 2014 • www.basinresourcesusa.com

BASIN RESOURCES4

www.basinresourcesusa.com • Fall 2014

Fall 2014

ENERGY OUTLOOK 40U.S. increased energy production helps stabilize prices

ENERGY CORRIDOR 30Agencies seek input on best location

NEW FACILITY 48Union Pacific Railroad celebrated opening of railroad hub

AGREEMENT REACHED 50PRC to rule on TECO Energy’s purchase of NM Gas Co.

16 PERCENT GAIN 52Navajo Nation Oil and Gas reports steady growth

ENERGY NEWS 54Across the Nation

STATE LAND OFFICE RECORD YEAR 44$817 million for schools, universities and hospitals

PERMIAN BASIN 46Six formations responsible for surge in crude oil production

contents

10

20

14XTO/Exxon Mobil donationFarmington Museum now has one of country’s best textile collections

Operators and landownersNMOGA champions voluntarywater testing program

NEW HOME, GREAT FUTURESchool of Energy a model foreducational public, privatepartnerships

3424 PNM Group questions plans for San Juan Basin

JOBSArea has shortage of qualified workers

BASIN RESOURCES6

Editor’s note

A recent survey by MOTOVOTO.COMranked our state second with the most peo-ple who are proud of the state in which theylive.

The company checked everyone’s favoritesocial media site, Facebook, and looked atwhat percentage of the population of eachstate (based on 2010 U.S. Census data)“Liked” their home state.Here are the rankings:

1. Ohio 6. Montana2. New Mexico 7. Vermont3. Alaska 8. Colorado4. Maine 9. Texas5. Utah 10. WyomingSecond is not bad, and here in Northwest

New Mexico we have always had a lot ofpride – especially in the amount of revenue,hard work and history our oil and gas in-dustry has contributed to the Basin and toour state.

As we move closer to the opening of ournew School of Energy we can start to seethe big picture of just how much this newfacility will bring to the area.

Randy Pacheco, dean of the School ofEnergy summed up many of the reasons tobe proud of this new facility.

“The School of Energy is more thanclasses, training, labs and staff. The new fa-cility stands for more than the importantand needed growth of San Juan College. Itstands for industry, partnerships, and com-munity. But most importantly, it stands forstudents. For the classes, the training, thelabs and the staff are nothing without ourstudents. And the School of Energy,whether it’s housed in the new facility orthe three satellite sites it currently uses, isdedicated to the growth of the oil andgas/energy industry and to the students weeducate and train to be part of it,” he said.

In January 2014 the New Mexico TaxResearch Institute released the Fiscal Im-pacts of Oil and Natural Gas Production inNew Mexico study. According the study,31.5 percent of New Mexico’s GeneralFund Revenues were attributed to the oiland natural gas industry for fiscal year2013. That’s more than $1.7 billion inGeneral Fund revenues that are attributed tooil and natural gas of the nearly $5.6 billion

in total General Fund revenues received infiscal Year 2013.

In New Mexico, the General Fund is theprimary source of funding for the operatingcosts of public schools and higher educa-tion. In addition, the General Fund pays forstate public welfare programs, environmentalprotection, tourism support, state-led eco-nomic development efforts and many otherfunctions of state government.

T. Greg Merrion, owner of Merrion Oiland Gas, told a group of Koogler MiddleSchool students during an Energy Day pres-entation that one thing is certain, “The de-mand for energy is great. There is moredemand for all energy than we can pro-duce,” he said, and that is what will keepthe energy companies eyeing the San JuanBasin.

Optimism remains high that the MancosShale development could provide a bigturnaround in state oil production.

New Mexico is working hard on windand solar power and with our abundance ofnatural gas we are also optimistic about ex-ports.

U.S. Senator Tom Udall, D-N.M., recentlypushed for the export of liquid natural gasin order to support natural gas explorationin the state.

Udall wrote in a letter, sent to the De-partment of Energy and signed by 33 otherU.S. Senators, asking the Energy Depart-ment to consider exporting LNG to Europeand Japan, both nations in need of naturalgas to “fuel their economies.”

Rio Grande Foundation President PaulGessing agreed that LNG can be the energyof the future, which increases revenues forthe nation, reduces carbon emissions overother energy sources, reduces trade deficits,and shows the government has a principledsupport of free trade with a desire to de-velop closer relations with foreign peopleand governments.

New Mexico does have it all – a beautifullandscape, a great history of energy produc-tion and, above all, great hardworking people who take pride in where they live.

I’m surprised we weren’t number one onthe list.

Hometown love, pride nothing new

Don Vaughan

puBliSHER

Cindy Cowan Thiele

EDiTOR

Debra Mayeux

Dorothy Nobis

CONTRiBuTiNG WRiTERS

Josh Bishop

CONTRiBuTiNG pHOTOGRApHER

Suzanne Thurman

DESiGNER

Shelly Acosta

DeYan Valdez

Aimee Velasquez

SAlES STAFF

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Basin Resources magazine is published four times ayear by Majestic Media. Material herein may not bereprinted without expressed written consent of the pub-lisher. Opinions expressed by the contributing writersare not necessarily those of the publisher, editor orBasin Resources magazine. Every effort has been madeto ensure the accuracy of this publication. However thepublisher cannot assume responsibility for errors orommissions. © 2014 Basin Resources magazine.

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Cindy Cowan Thiele


BASIN RESOURCES8

www.basinresourcesusa.com •Fall 2014

This is a very exciting time for the San Juan College School of

Energy.

With the steel framing going up for the new facility, the colors

selected for the interior and exterior (a major discussion!), the de-

sign for the donor wall and the veterans memorial being com-

pleted, and the last minute attention to detail under control, we

are eagerly awaiting the day when the ribbon can be cut, the

doors opened and the fun to begin.

While it has been exciting, challenging and worthwhile, the

new School of Energy will be more than 65,000 square feet of

classrooms, meeting rooms and training labs. The new equipment,

the new coffee bar, the new mineral display and the newness of

all of it is wonderful. But the real reward comes when the instruc-

tors and staff of the School of Energy work with the school’s

most valuable resource – its students.

For all the exciting bells and whistles the new facility offers, it

has been built with one thing in mind – to prepare our students

for success in the oil and gas/energy profession they have chosen.

As the Dean of the School of Energy, I enjoy being able to pro-

vide instructors, staff and students with the best tools available for

them to do their jobs and earn their degrees and certificates. But

my priority – and it is a priority shared by everyone associated

with the School of Energy – has been and always will be the stu-

dents. Our partners in the industry – those companies who count

on the School of Energy to provide the necessary training to stu-

dents who will be employed by them – have given their resources

to help make the facility happen, and students are entering a ca-

reer that will enable them to provide for their families help make

their dreams come true.

An article in the June 4 issue of Investor’s Business Daily discussed

the need for trained professionals in the oil and gas/energy indus-

try. “A study issued in May (2014) by the employment agency

Manpower found that 58 percent of energy employers report fac-

ing difficulties in finding the right talent, and 74 percent believe

the problem will get worse over the next five years. Jobs in the oil

and gas sector alone are expected to almost double by 2020,” the

article states.

“As global demand for energy increases, particularly in Asia and

India, the U.S. and Canada are poised to supply it – if they can

find the workforce to support the industry’s growth,” the Man-

power report said in the article. “If they can’t, the lost opportunity

is high.”

The jobs available in the oil and gas/energy industry are good

jobs with good companies. There are countless promotional op-

portunities and job security is stable. Those seeking those jobs,

however, need the education and training that make them invalu-

able employees. The Investor’s Business Daily article also states that

community colleges – such as San Juan College’s School of En-

ergy – are proving to be better training grounds for the industry

than four-year colleges.

ranDy Pacheco

Dean of School of energy

San Juan college

Industry, partnerships and community

* Pacheco 32

School of Energy will bring new growth, education to Basin

BASIN RESOURCES10

Dorothy Nobis

Josh bishop

Basin Resources

When representatives from

Xto/ExxonMobil visited the

Farmington Museum in August

of 2014, no one knew what

great rewards that visit would

reap – for the museum and for

the community.

“they walked in one day

and looked around,” said tom

Cunningham, curator of ex-

hibits for the museum, “and

they talked to bart (Wilsey, di-

rector of the museum) and told

him what they were thinking

about. he was very excited.”

Wilsey’s excitement came

when Emily snooks of Xto

said they had a collection of

21 Navajo blankets the com-

pany planned to donate to

seeral museums.

“the collection was pur-

chased around 1981 by Mobil

oil in an effort to add educa-

tion and cultural content to

employee artwork displayed at

our Fairfax, Va., and Farmers

branch, texas, facilities,”

snooks said. “they were part

of an art collection and the

person who helped Mobil ac-

quire the blankets passed away

about a year ago, and our

knowledge of the origins of

the collection is limited.”

the blankets in the collec-

tion range in age from 1870 to

1900, and contain two third-

phase Chief ’s blankets, a small

wearing blanket and other ex-

amples of early Navajo weav-

ing from the blanket period.

“the appraisal ($175,000)

provides a fair amount of infor-

mation and periods based on

the detail and type of weav-

ing,” explained snooks. Exxon-

Mobil hired an art consultant

from New york to assist in in-

ventorying the blankets and

preserving them with the

mountings in which the blan-

kets were delivered.

originally, the collection

was to have been shared with

several museums, snooks said.

“We decided to donate the

collection to the Farmington

Farmington Museum Director Bart Wilsey.

XTO/ExxonMobil donation

Farmington Museum now has one of country’s best textile collections

Blanket #1Third Phase Chief’s Blanket Variant62” x 77 1/2” Handspun wool, natural and synthetic dyes1890-1900

The blanket is made of handspun red and brown/black dyedwool in addition to natural tan and white handspun wool. Thedyes are a mixture of aniline and natural dyes. Lazy lines areoften more obvious on a tightly woven blanket of solid, whitewool background. The central design consists of two large, widediamonds, stacked vertically. The red diamonds are also stripedvertically with unusually narrow black bands. The blanket is un-usual because the stripes inside the diamonds are vertical. Thespine on blankets runs parallel with the human spine almostmaking them one.

Blanket #3Transitional Zigzag Variant blanket50 1/2” x 73” Natural and aniline dyed handspun wool1890

Zigzagged horizontal lines are woven on brown warpthreads. Red, natural, brown-black, tan and white handspunyarns create the pattern.

At first, the blanket appears to be covered in connected butrandomly placed blocks. Only when viewed from a distance, theblocks form horizontal zigzags; a version of the common designelement in blankets of the late 1800s.

Blanket #4Spider Woman, Storm Pattern49” x 82”Handspun Germantown wool and handspun aniline dyed and

natural wool1870-1890

This blanket is made with blue-grey and dark red handspun,Germantown wool. Aniline purple and natural white handspunwool appear in smaller quantities. Spirit lines of turquoise and apurple eggplant color run through the weaving and along oneend.

Four boxes probably represent the four sacred mountains ofthe homeland with Spider Woman in the center. The stormstrikes suggest the gift of water and blessings. The legs of thestrikes are spread as they leave the center of the blanket,headed for their respective corners.

BASIN RESOURCES12


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Museum to ensure the artifacts

are preserved and accessible to

the public in a community

where the Navajo culture is

appreciated and celebrated.”

Nate Duckett, a member of

the Farmington City Council,

said the donation by

XTO/ExxonMobile is appreci-

ated. “XTO’s donation of its

collection of Navajo blankets

goes right in line with its long

history of community support

here in San Juan County,”

Duckett said. “The collection

and its condition are amazing

and we are very fortunate to

have it in our museum and on

display for both our residents

and out-of-town visitors.”

“The fact that they decided

to donate the entire collection

to the city of Farmington

proves that it pays to build

strong relationships with our

partners in the oil and gas in-

dustry,” he added.

Preservation of the blankets

is a concern and a priority for

the museum staff. Cunningham

said. “They colors are strong

and have been protected from

the sun and the elements,” he

said. “When the exhibit is over,

we’ll wrap the blankets around

acid free tubes, with layers of

acid free paper to protect them.

Then they will be wrapped

with a special wrap that allows

air in but keeps dirt out, and

elements, including water, out.”

An exhibit of the blankets,

titled “Diyogi” – which means

“Navajo blanket or rug” – will

remain on display at the mu-

seum through Labor Day. A

public reception for the exhibit

will be held at 5:30 p.m., Aug.

29, in conjunction with the

Totah Festival.

Cory Styron, the director of

the Parks, Recreation and Cul-

tural Affairs department of the

city, said the donation of the

blankets is “a spectacular gift to

our community. The collection

allows us to share the rich cul-

tural heritage and preserve the

history of our area.”

“The collection, along with

the Native American Museum

recently acquired downtown,

provides a centerpiece in our

community for all to see the

artistic design and technical

skill of the native craftsmen,”

Styron added.

XTO Energy Vice President

John Baker, in a prepared state-

ment, said, “Our priority is to

ensure these rare weavings (are

From left, Jullian Fleming, Exxon\Mobil spokeswoman and Emily Snooks, XTO spokeswoman were instrumental in arranging the donation. Snookssaid the companies wanted to donate the collection to the Farmington Museum to ensure the artifacts are preserved and accessible to the publicand in a community where the Navajo culture is appreciated and celebrated.

BASIN RESOURCES 13


available to) a community where the Navajo culture is celebrated. XTO

Energy has been a part of this northwest New Mexico community for

nearly 20 years and we are proud to partner with the Farmington Mu-

seum for this special donation.”

While area residents are certain to take advantage of the exhibit and

enjoy the collection, it is expected that the exhibit will entice visitors to

the area, as well.

“Word of mouth and good marketing is going to be important in

growing everyone’s overall awareness of what our museum offers,”

Duckett said. “The fact that this collection has important local connec-

tions should spur more visitors to the museum to see it and provides Bart

(Wilsey) and his team the opportunity to show all of the good things

that our museum offers.”

“This collection is just the beginning of some amazing displays that

will be coming to Farmington in the coming months, and I look forward

to watching the use of our museum grow,” Duckett added.

“When other museums get word of a collection like this, the word

spreads pretty fast,” Cunningham said. “This collection puts us on the

map as having one of the best textile collections in the country.”

The collection may be viewed from 8 a.m. to 5 p.m. Monday through

Saturday, through September 1. The Farmington Museum is located at

Gateway Park, 3041 E. Main St.Matthew Gusdorf, engineering manager for the San Juan District of XTO Energy,addresses the crowd at a sneak preview of the exhibit at the museum in June.

BASIN RESOURCES14


Dorothy NobiS

Basin Resources

For more than 30 years, the San Juan

College School of Energy has held classes

and offered training at off-campus facilities.

offices at 800 S. hutton rd., 3535

30th Street, Kutz Canyon in San Juan

County and at the Quality Center for busi-

ness on the San Juan College Campus have

all provided offices and training opportu-

nities for students in the School of Energy.

that will all change, however, when the

School of Energy’s new facility opens just

north of the Quality Center for business

on College boulevard, on the college’s

main campus next summer.

the 66,000-square-foot facility will

New home, great future

School of Energy a model for educational

public/private partnerships

Courtesy photos

BASIN RESOURCES 15


bring the School of Energy’s instructors,

staff and students together under the same

roof. With classrooms, training rooms, labs

and meeting rooms, the new school will

also provide the much needed space for

the ever-increasing number of students

who are looking for the training and edu-

cation they want and need.

Jaynes Corp. design and build

Jeremiah Hayes is the project manager

for Jaynes Corporation, which received the

bid from San Juan College to build the fa-

cility. For Hayes, managing this project is a

unique opportunity. “This is a

‘design/build’ project, which means Jaynes

is a partner with Dekker/Perich/Sabatini

for the design and construction,” Hayes

explained. “The ‘design/build’ delivery

method is a growing trend and is relatively

new to our area. It means that, as the de-

sign builder, we’re responsible for the de-

sign and the construction. That adds to the

complexity of it, but it also adds to the

challenge.”

Jaynes was awarded the project in No-

vember of 2013 and immediately began

the planning process. The dirt work began

in February and several weeks ago, the

framing of the new building began. With

all the countless hours of meetings, work-

ing with designers, construction, San Juan

College staff and all of the support em-

ployees that make buildings happen, Hayes

said his job has been exciting.

“It’s been a blast,” he said. “We don’t

often get to help manage the design com-

ponents of a building. It’s always more

complex than you expect and it’s been fun

to be in the position.”

Hayes is one of several Jaynes Corp. em-

ployees who call Farmington and San Juan

County home. A 2001 graduate of Farm-

ington High School, Hayes is excited to be

involved in the construction of the new

high school, as well as other major proj-

ects throughout the area.

Vision and commitment

Randy Pacheco, the dean of the School

of Energy, is pleased with the work Hayes

and the Jaynes Corp. have done with the

project. “Jaynes sees that this new facility is

good for San Juan College and good for

the community,” Pacheco said, “and it’s es-

pecially good for our students. I’m grateful

that Bill Florez (executive vice president of

Jaynes Corporations Farmington Opera-

tions) assigned Jeremiah to our project and

shows his (Florez) understanding of our

college and our community.”

For Pacheco, the new facility will be the

result of the vision and commitment of

many in the community. ”The Board of

Trustees of San Juan College clearly saw

the need to bring the School of Energy

under the same roof. They saw the poten-

tial of our programs and they saw the op-

portunities for the School of Energy to

help change the lives of its students and

help them achieve their dreams.”

BASIN RESOURCES16


The new facility is much more to

Pacheco than a larger place to hold classes

and offer training. It’s not the “newness” of

the building that is important to Pacheco –

it is the goals of the students who come to

the School of Energy to begin – or con-

tinue – a career.

“It’s all about the students,” Pacheco

said. “I believe that 90 percent of the peo-

ple are good. The training and education

provided by the School of Energy is avail-

able to everyone. We don’t care what a stu-

dent has done in the past. We help them

look forward to the future. Our students

aren’t looking for a handout – they’re

looking for opportunities and careers to

provide for themselves and their families.”

The new school is also a testament to

the industry partners and to the State of

New Mexico for their belief and support

of what the School of Energy provides. “I

don’t want to disappoint the community or

industry that has waited so long for this

facility,” Pacheco said. “The energy indus-

try is important and we understand that.

We want to provide the education and

training for the industry and make this

school a school others will want to mimic

and copy. And we need to get it right.”

Public, private partnershipKen Hare, a longtime member of the

San Juan College Board of Trustees, be-

lieves they “got it right.”

“The new School of Energy serves as a

model for public-private partnerships for

higher education,” Hare said. “Over half of

the $15 million raised has come from the

private sector to meet local, state, national

and international workforce needs in the

energy sector.”

“Randy Pacheco is to be congratulated

for developing an early vision and a strate-

gic goal several years ago to establish San

Juan College as a leading energy work-

force development training center in the

world,” Hare continued. “The new School

of Energy is a monument and a milestone

in achieving that strategic vision. San Juan

College is now recognized as a global

leader in energy workforce training and

the new School of Energy will enhance

that reputation even further.”

“This is an amazing accomplishment for

a community college,” Hare added. “All

community colleges, and even schools

within the community colleges, have the

potential to develop programs to become

global leaders in chosen sectors. Very few

ever rise to the level of the San Juan Col-

lege School of Energy.”

“The expansion of the School of Energy

demonstrates the commitment that our

state, community and industry partners

have to San Juan College and to economic

development in this region,” said Dr. Toni

2303 Bloomfield Hwy Farmington, NM 87401 • 505-326-9144

When it comes to service we’re not playing!

“Your Hose and Fitting Outfitters”

BASIN RESOURCES 17


Hopper Pendergrass, president of San Juan

College. “I am pleased that we will be able

to increase enrollment in our energy pro-

grams and strive to meet the workforce de-

mands of the energy sector.

Vision for the future

Former San Juan College President Dr.

James Henderson was one of the visionaries

who recognized the importance of provid-

ing education and training to those in the

oil and gas/energy industry. In the 1980s,

Henderson invited industry companies to

bring their equipment to San Juan College

so students and the public would have the

opportunity to get a better understanding

of the industry that has given so much to

San Juan County.

“They put equipment in front of the Hen-

derson Fine Arts Center,” Henderson re-

called, “so people could see it and learn

about the training we had available. I think

Randy Pacheco has done an outstanding

job of putting it all into place and moving

it forward.”

The new School of Energy is expected to

be completed in the early spring of 2015.

Gayle Dean, the executive director of the

San Juan College Foundation, was instru-

mental in helping raise the more than $15

million needed for the facility.

“Our campaign was successful, largely

due to the tremendous success of our

School of Energy programs and the partner-

ships the school has built,” Dean said.

“Time and time again, I am reminded how

fortunate we are to live in a community

with priorities firmly directed to education

and philanthropy.”

BASIN RESOURCES18


www.sjunitedway.org(505) 326-1195(505) 326-1195(505) 326-1195 .sjunitedwwww.sjunited g.orayy.orw.sjunited

Dorothy Nobis

Basin Resources

the san Juan College school of Energy

offers education and training for those in-

terested in a career in the oil and gas/en-

ergy industry. some of the classes are

available online, which gives those work-

ing full time the opportunity to take

classes and earn a certificate or degree in

their spare time and at their convenience.

the school of Energy’s instructors and

staff are committed to helping every stu-

dent achieve their career goals and are al-

ways available to answer questions, offer

guidance and extend a helping hand.

Classes offered include:

• Commercial Driver’s License

(CDL) – this class provides the training

and skills necessary for individuals to pass

the three-part CDL exam. students learn in

the classroom, on a simulator, in a truck on

the training course and in a truck on the

highway. Class A, b, and C training and

trucks are available. the demand for CDL

drivers is great and our students have little

difficulty in finding the kind of work they

are looking for. Certification is achieved

with completion of this class.

• Industrial Maintenance Me-

chanic – the industrial Maintenance Me-

chanic program prepares students for

entry-level positions as maintenance me-

chanics of power generation, mining, natu-

ral gas, refinery, water treatment,

semiconductor, petrochemical, and phar-

maceutical process. students receive hands-

on experience in pump rebuilding, pump

alignment, fabrication, hydraulics, vibra-

tion analysis, rigging, lubrication, mechan-

ical seals, precision measurement tools,

piping systems and welding. this class of-

fers an Associate of Applied science de-

gree.

Lots of optionsPrograms offer hand-on, online energy education

* Programs 32

BASIN RESOURCES20


DebrA MAyeux

Basin Resources

The New Mexico Oil and Gas Associa-

tion is encouraging oil and gas operators

and landowners to vol-

untarily test water wells

that exist within a quar-

ter mile of new oil and

gas wells.

The association, also known as

NMOGA, encourages water testing before

and after an oil or gas well is drilled in

order to provide objective data to

landowners regarding possible impacts

well sites could have on ground water.

NMOGA asked for the testing in a June

17 document titled “Voluntary baseline

Sampling Guideline,” which also points

out that “with over a million fracture treat-

ments performed by the oil

and gas industry, there has

never been a documented

case of groundwater im-

pacts from such operations,”

it stated.

“No documented case of groundwater

contamination has occurred from the thou-

sands of hydraulically fractured wells in

New Mexico,” NMOGA President Steve

Henke said. “The process is safe and we

encourage member companies to work

with landowners to collect the data to

prove it.”

The document also pointed out that

there is no oversight regarding water test-

ing at these sites. “One also should under-

stand that drinking water rights are not

regularly conveyed in oil and gas leases

and operators can only offer such sampling

as authorized by the owner of such rights.”

While this baseline sampling guidance

is voluntary, NMOGA pointed out in a

press release about the document that it

can be required by landowners when leases

For operators and landownersNMOGA champions voluntary water testing program


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or surface owner agreements are negotiated with oil and gas pro-

ducers.

NMOGA is promoting this testing protocol as a best practice

to verify the safety of hydraulic fracturing for all interested par-

ties. It would satisfy three objectives: inform landowners that have

concern about potential impact to water well quality; generate

baseline data representative of groundwater well conditions in the

area prior to the start of drilling activities and following comple-

tion; and provide a framework for a program that generates con-

sistent and accurate data to ensure no impact from hydraulic

fracturing operations.

Participation in the baseline sampling program is voluntary, ac-

cording to NMOGA officials, who also “strongly recommend” the

use of an “independent, qualified environmental consulting firm

to promote credibility and transparency.”

It is recommended that the operators indentify water wells reg-

istered with the New Mexico Office of the State Engineer for the

use of domestic water supply as well as agriculture and stock

wells within ¼ mile of the surface location of an intended oil or

gas well. Then the operator would seek a written authorization

from the well’s owner to allow for testing and to acquire a base-

line water sample.

BASIN RESOURCES22


“It is important to collect the initial samples prior to

the spud, but not more than six months before the spud

date, to allow the results of analytical testing to be eval-

uated and shared with the land owner,” the document

states. “A post-completion water sample should be col-

lected from the same water well locations not less than

six months or more than one year following well com-

pletion and stimulation.”

The laboratory performing the tests needs to comply

with EPA testing protocol, according to NMOGA, and

should test for the presence of the following substances:

“Alkalinity, bicarbonate and carbonate of CaCO3;

phosphorus; (cations) boron, iron, calcium, magnesium,

manganese and sodium; (anions) bromide, chloride, sul-

fate, nitrate, and nitrite as N; dissolved methane gas;

(VOC) benzene, toluene, ethyl benzene and total

xylenes (BTEX); and total dissolved solids,” the docu-

ment states.

It is the hope that through this testing NMOGA can

establish documentation showing that in New Mexico

hydraulic fracturing and the extraction of oil and gas

from wells does not adversely affect well water, accord-

ing to the document.

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BASIN RESOURCES24

Trained worker shortage

Dorothy Nobis

Basin Resources

With business picking up in

the oil and gas/energy indus-

try, industry professionals are

wondering if there will be

enough people to fill the esti-

mated 2.5 million jobs that will

be available in 2015.

An article in the June 4 issue

of Investor’s Business Daily states

that a study conducted in May

by Manpower, an employment

agency that has offices in 80

countries and territories, ac-

cording to its website, found

that 58 percent of energy em-

ployers said they have difficulty

finding trained employees and

74 percent of them believe the

situation will not improve, but

will get worse, in the next five

years.

Local oil and gas/energy

businesses said there are jobs

available here, but most of

them are in the area of skilled

labor.

John roe, the engineering

manager at Dugan Production,

said that while he’s hearing

about the lack of qualified em-

ployees in the industry across

the country, Dugan Production

has a stable staff that has been

with the company for some

time.

“We don’t have that prob-

lem (needing employees) here

at Dugan Production,” roe

said. “We don’t have much

turnover here. We have about

170 employees and they like

our benefits and that it’s a nice

place to work.”

riley industrial services,

inc., however, is almost always

looking for employees.

“We’re always looking for

CDL (Commercial Driver’s Li-

cense) drivers,” said Alicia Mc-

Some oil field companies having trouble finding qualified employees

BASIN RESOURCES 25


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McCuller, an employee of the

company her family owns. “If

someone has a CDL with

HAZMAT certification, we can

hire them on the spot.”

Applicants for positions with

Riley Industrial must have a

driver’s license and be drug

free. It is the “drug free” part

that eliminates many appli-

cants, McCuller said. “There’s a

consortium available that pro-

vides us with information

(about applicants),” she said. “If

someone has tested positive

(with drugs) at another com-

pany, they can’t work anyplace

else. It’s all in a data base that

all of the companies participate

in.”

Applicants who can’t pass

that drug test – and lack other

“life skills” – constitute a chal-

lenge that local businesses con-

tinue to fight, said Ray

Hagerman, Chief Executive Of-

ficer of Four Corners Economic

Development Service.

Four Corners Economic

Services recently completed a

survey of oil- and gas-related

companies, Hagerman said.

“We probably called on 80 per-

cent of the companies who

have 50-plus employees and

we’ve identified at least 800

jobs that can’t be filled (by

qualified applicants),” Hager-

man said.

“People don’t have the skill

sets or the life skills many com-

panies are looking for. One of

our members of Four Corners

Economic Services said ‘Bring

me a decent human being and

I’ll hire them and train them,’”

Hagerman added. “And this

isn’t just a local problem, it’s a

national problem.”

Hagerman defined “life

skills” as the ability to pass a

drug test, get to work on time

and have a positive attitude.

“Those are garden variety val-

ues that many of us learn at

home, but a lot of people just

aren’t getting,” he said.

The community needs to

join together to find a solution

to that ever-growing problem,

said Hagerman. “We need to

get everybody together to wrap

our arms around how we’re

going to fix broken people and

help keep others from break-

ing,” he said.

With the oil and gas/energy

industry regaining speed, and

manufacturing also taking an

up-turn, the shortage of skilled

labor in the community will

create challenges for local busi-

nesses.

“Business is picking up,”

Hagerman said. “In the next

couple of years, we could need

200 people for every oil rig

“People don’t have theskill sets or the life skillsmany companies are look-ing for. One of our mem-bers of Four CornersEconomic Services said‘Bring me a decent humanbeing and I’ll hire them andtrain them,’” Hagermanadded. “And this isn’t just alocal problem, it’s a nationalproblem.”

– Ray Hagerman, Chief ExecutiveOfficer of Four Corners

Economic Development Service


SIERRA CHEMICALS

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that’s operating. That will mean more jobs, but it also means if

we’re going to grow we need more infrastructure and better

housing to attract a better work force.”

Jobs in the oil and gas/energy industry aren’t limited to just

white males, according to a report by the American Petroleum

Industry.

A summary in the report states that its baseline projection

shows employment in the oil and gas and petrochemical indus-

try operations increasing by 202,000 in the years 2010 and

2030.

In addition, the report states that the need to replace current

workers who retire from the industry over that same 20-year

period will create an additional 579,000 jobs.

Minorities will be sought to fill many of those jobs. The re-

port predicts that there will be more than 400,000 job oppor-

tunities for minority workers and a net increase of 90,000 in

female employment in the industry.

The Investor’s Business Daily’s article states that education

and training is critical for those seeking well-paying jobs in the

industry. With community colleges providing better training

grounds for the industry than do four-year colleges, it is easier

to get the training needed for those jobs.

Attracting young people to the industry is also a challenge,

the Investor’s Business Daily article said. “It comes down to

convincing enough young people that energy is an attractive

field – one in which they can make a good wage and help raise

a family – and getting the right education first is worth their

effort,” the article states.

The San Juan College School of Energy offers a variety of

training and associate degrees to help people get those good

jobs, said Randy Pacheco, the dean of the School of Energy.

“We put the student first and offer our total commitment to

helping them succeed and move forward in their careers,”

Pacheco said. “San Juan College and the School of Energy

offer affordable training and education and many of our

courses are offered online. The oil and gas/energy industry has

asked us to provide them with quality employees, and that’s

our priority and our goal.”

BASIN RESOURCES 27


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WASHINGTON – The Ameri-

can Petroleum Institute has pub-

lished a first-of-its-kind industry

standard for community engage-

ment in areas of the country

where horizontal drilling and hy-

draulic fracturing have opened

new energy development oppor-

tunities.

“America’s energy revolution is

creating millions of jobs and

reenergizing communities from

coast to coast,” said David Miller,

API Director of Standards. “The

energy revolution is now occur-

ring in areas of the country where

oil and natural gas exploration

doesn’t have the same history as

First-of-its-kind planAPI issues ‘good neighbor’ standards for oil, natural gas developers

BASIN RESOURCES28


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Texas or Oklahoma. API’s commu-

nity engagement guidelines will

serve as a gold standard for good

neighbor policies that address com-

munity concerns, enhance the long-

term benefits of local development,

and ensure a two-way conversation

regarding mutual goals for community

growth.”

Dubbed ANSI/API Bulletin 100-3, the

standard provides a detailed list of steps

that oil and natural companies can take to

help local leaders and residents prepare for

energy exploration, minimize interruption

to the community, and manage resources. It

includes recommendations for how to con-

duct public meetings on safety, work with

local educational institutions to discuss

training for new job opportunities, develop

relationships with mineral owners, and en-

sure that oil and gas production is done in

way that complements community goals.

“Like all our guidelines on hydraulic

fracturing, the new standard will be avail-

able for free on our website and shared

with regulators at every level of govern-

ment,” said Miller. “Our standard will pro-

vide a roadmap for oil and natural gas

operators seeking to build lasting, success-

ful relationships with local residents wher-

ever energy development takes place. It

incorporates best practices and proven

models that have been developed by indus-

try participants over more than 65 years of

safe, responsible hydraulic fracturing.”

API first began publishing standards in

1924 and currently has more than 650

standards and technical publications. More

than 100 of them have been

incorporated into U.S. regu-

lations, and they are the

most widely-cited industry

standards by international

regulators. The program is

accredited by the American

National Standards Institute (ANSI), the

same body that accredits programs at sev-

eral national laboratories.

API is the only national trade associa-

tion representing all facets of the oil and

natural gas industry, which supports 9.8

million U.S. jobs and 8 percent of the U.S.

economy.

API’s more than 600 members include

large integrated companies, as well as ex-

ploration and production, refining, market-

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service and supply firms. They provide

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BASIN RESOURCES30


The Bureau of Land Management, U.S.

Forest Service and the Department of En-

ergy are working together to develop an

11-state energy corridor that includes

New Mexico.

The three agencies put together a work

group that is seeking assistance from the

public to develop the federal energy cor-

ridor, which also encompasses Arizona,

California, Colorado, Idaho, Montana,

Nevada, Oregon, Utah, Washington and

Wyoming.

A solicitation for public comment went

out on March 28, as the agencies hope to

develop the Section 368 Corridors pol-

icy, which will not only determine the

lands’ uses, but also how those uses

could better be modified to suit the pub-

lic interests, according to the Bureau of

Land Management.

“Through this outreach, the agencies

hope to engage government agencies,

tribes, industry, and the general public in

designating the location and use of Sec-

tion 368 Corridors,” the BLM stated in a

prepared release.

The corridors were designated in

2009, as required by Section 368 of the

Energy Policy Act of 2005. This was

done in response to the resolution of a

lawsuit filed by several non-profit agen-

cies that challenged the corridor designa-

tion decisions.

Throughout this process, the agencies

want to gather new Geographic Informa-

tion System data, or GIS, information

and assess the effectiveness of Inter-

agency operating procedures with regard

to siting, permitting and the review

EnErgy CorridorAgencies seek input on best location, use of West’s federal land

BASIN RESOURCES 31


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processes. The agencies also will look at

the types of projects considered for de-

velopment within these energy corridors,

and this includes projects with transmis-

sions of 100 kilovolts or larger, as well as

oil, gas and hydrogen pipelines 10 inches

or more in diameter that already have

been authorized on federal lands, the

BLM stated.

On a regional basis, the agencies will

look at any laws or regulations possibly

implemented in January 2009, which

need to be reviewed. They also will look

at stakeholder engagements within the

corridors.

This Request for Information seeks to

gather information relevant to specific

provisions set forth in the settlement. The

RFI can be found at

http://corridoreis.anl.gov.

The information sought by the RFI

covers two major areas:

1. Section 368 Corridor Study, and

2. Regional Periodic Review of Sec-

tion 368 Corridors.

Section 368 Corridors Study

1. Advances/Updates in GIS Data. Be-

cause the original corridors were de-

signed with data available prior to 2009,

the Agencies are interested in obtaining

new GIS information that may affect the

location of Section 368 Corridors.

2. Types of Projects Considered. The

Agencies are focused on 100kV and

larger transmission projects, and oil, gas,

and hydrogen pipelines 10 inches or

more in diameter that have been author-

ized on Federal lands. The Agencies are

interested in knowing if the public thinks

that there are other types of projects that

they should consider in assessing use of

Section 368 Corridors.

3. Method for Assessing Inter-Agency

Operating Procedures or IOPs. The

Agencies will assess the effectiveness of

the IOPs in expediting the siting, permit-

ting, and review process and are inter-

ested in receiving suggestions of methods

for assessing the effectiveness of IOPs.

Regional Periodic Review of Section

368 Corridors

1. Additional Public Information. The

Agencies have listed several studies and

reports they are considering and are in-

terested in learning if there is other pub-

licly available information that the

Agencies should consider as part of the

initial Regional Periodic Review of Sec-

tion 368 Corridors, including review of

the IOPs.

2. New Laws and Regulations That Af-

fect Section 368 Corridors. The Agencies

are interested in learning if there are any

laws, regulations, or other requirements

* Corridor 33

BASIN RESOURCES32


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• Industrial Process Operator –

the Industrial Process Operator program

prepares students for entry-level positions as

operators of power generation, mining,

water treatment, natural gas, refinery, semi-

conductor, petrochemical and pharmaceuti-

cal processes. Process operators are

employed by plants that produce electricity,

commodity gases (natural gas, propane, and

butane), gasoline, diesel fuel, industrial

chemicals, plastics, ultra-pure water, pharma-

ceuticals and other products. This class offers

an Associate of Applied Science degree.

• Lease Operator – The Lease Oper-

ator program provides technically oriented

students with the knowledge and skills of

oil and gas production processes and equip-

ment operation required to monitor, trou-

bleshoot and operate wells safely and

efficiently. A lease operator’s skills and abili-

ties have a direct impact on production levels

and profits. This class offers an Associate of

Applied Science degree.

• Natural Gas Compression – This

program provides students with the basic

knowledge and skills of gas compression

equipment and maintenance. Natural gas

technicians operate and maintain a variety of

natural gas-fired engines and compressors.

This class is a selective program, with spe-

cific requirements needed for enrollment,

and offers an Associate of Applied Science

degree OR a certificate.

• Occupational Safety Online –

San Juan College and the School of Energy

have joined with the Texas Engineering Ex-

tension Service and Texas A&M University-

Commerce to offer safety professionals the

opportunity to earn a college degree, while

holding down a full time job. The comple-

tion of this class adds to the value of the stu-

dent as they move forward in their career.

An Associate of Applied Science degree OR

a certificate is the reward for completing this

course.

• Well Control – The International

Association of Drilling Contractors (IADC)

has certified this class for drilling,

workover/completion. The course is recom-

mended for all oil field and gas production

supervisory level personnel, engineers, com-

pany personnel, toolpushers and drillers.

Classroom and simulator training is offered.

Classes are offered twice a month and cer-

tificates are awarded at the completion of the

class.

• Safety Certificates – In order to

keep current with the ever-changing indus-

trial environment, the School of Energy also

offers certifications in Basic Environment

Safety Training (BEST), forklift safety and

theory, hazardous waste operation, emer-

gency response (HAZWOPER), defensive

driving, off-road defensive driving, safety

awareness (OSHA topics), CPR and first aid,

and hydrogen sulfide (H2S). In addition,

School of Energy instructors can provide

customized safety training for its industry

partners.

For more information on these programs

and classes, call 505.327.5705. Scholarships

are also available.

Programs continued from 18

Pacheco continued from 8

And the partnerships formed with indus-

try leaders by the School of Energy plays

into the training/employment scheme of

things. “PNM Resources, an Albuquerque,

N.M.-based holding company, built an ap-

prenticeship program with San Juan College

in order to provide a continuing pipeline of

employees,” the article stated.

The School of Energy is more than classes,

training, labs and staff. The new facility

stands for more than the important and

needed growth of San Juan College. It stands

for industry, partnerships, and community.

But most importantly, it stands for students.

For the classes, the training, the labs and the

staff are nothing without our students. And

the School of Energy, whether it’s housed in

the new facility or the three satellite sites it

currently uses, is dedicated to the growth of

the oil and gas/energy industry and to the

students we educate and train to be part of it.

BASIN RESOURCES 33


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that have been implemented after January

2009 that the Agencies should consider

when reviewing Section 368 Corridors.

3. Stakeholder Fora. The Agencies are

interested in learning if there are any ad-

ditional fora that could be considered for

stakeholder engagement during Regional

Periodic Reviews.

4. IOP Modifications. The Agencies

are interested in learning if there any ad-

ditions, deletions, or revisions the Agen-

cies should consider making to IOPs.

5. Comments on New IOPs. The

Agencies have committed to considera-

tion of new IOPs submitted by the plain-

tiffs who are parties to the settlement.

The new IOPs are available at

http://corridoreis.anl.gov . The Agencies

are soliciting comment on these new

IOPs.

Corridor continued from 31

The Independent Petroleum Associ-

ation of New Mexico met for their an-

nual meetingearly this month at

Sandia Resort and Casino in Albu-

querque. During the event

members heard from state

officials and regulators re-

garding the financial im-

pact of the industry on

the state of New Mexico.

Other speakers included former U.S.

Senator Pete Domenici, R-N.M., now

with the Bipartisan Policy Center, as

well as keynote speaker Steve Gore-

ham with the Heartland Institute and

the Climate Science Coalition of

America.

Goreham spoke of climatism, which

also is the topic of his newly pub-

lished book Mad, Mad,

Mad World of Climatism:

Mankind and Climate Change

Mania. All in attendance

receive a copy of the

book.

In addition to social activities such

as a golf tournament, networking and

visiting, members heard from Director

Karin Foster about the various govern-

mental issues facing the industry.

IPANM hosts annual meeting


BASIN RESOURCES34

PNMwoes

With rate hike

looming, renewable

energy group

speaks out

The solar electricity industry in

New Mexico has expressed concerns

about Public Service Company of

New Mexico’s future plans in the

San Juan Basin.

New Mexico Solar Energy Presi-

dent Gary Vaughn is worried the de-

commissioning of San Juan

Generating Station and Public Serv-

ice Company of New Mexico’s plans

to build a natural gas peaking plant

in the Four Corners area could estab-

lish a new set of rules for connecting

solar panels to the PNM’s grid. If

that is the case, the industry and re-

newable energy associations are

warning there will be a fight.

PNM’s plan will cost upwards of $1 billion, and in order to

pay for the decommissioning and the new gas plant, there has

been talk about rate increases. Should PNM request an approval

from the New Mexico Public Regulation Commission for these

rate increases, a net metering fee could be charged to homeowners

as a premium to connect their solar panels to the electricity grid.

“We’re trying to get the word out,” Vaughn said. “It could kill

the rooftop business.”

With net metering, homeowners are credited for the electricity

they generate with solar panels or other methods. A net metering

fee could eliminate those financial benefits, Vaughn said.

PNM, however, has not made any rate-increase proposals. Any

changes in the fees would need to be approved by the New Mex-

ico Public Regulation Commission in a rate case, and PNM has

not filed for one. Its plans in the Four Corners are expected to

take several years to complete, the company said.

The last rate increase sought by PNM was in 2011. It included

net metering fees, but they were later removed.

However, net metering fees are becoming a bigger concern

again for solar supporters, Vaughn said. PNM is expected to file

for a rate increase due to the increased cost of adding pollution-

control equipment at the San Juan Generating Station and build-

ing a new natural gas plant near Farmington.

“This is something that is a really big deal,” said Peter Page, a

board member of the Renewable Energy Industries Association of

New Mexico. “It is something that could be a big concern because

it’s right around the corner.”

Some fees would be accepted by the renewable groups, accord-

ing to Page. “There’s an interconnection fee. There’s a credit fee.

That’s fine. That’s normal. Then there’s sort of a maintenance fee,

which is 50 cents, for people that connect. That’s OK, too.”

The fear is that the costs of a net metering fee, which could be

assessed per kilowatt hour, would outweigh the benefits of adding

solar panels. “But what we’re really talking about is the net meter-

ing fee, where your avoided cost is being degraded. That will be a

massive fight when it happens,” Page said.

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��

BASIN RESOURCES36


(505) 402-8944

Bureau of Land Management

Director Neil Kornze shared

information with industry rep-

resentatives about the agency’s

efforts to increase oil and gas

inspection capacity. In a talk at

the American Petroleum Insti-

tute, Kornze cited a shortage of

inspectors, declining budgets,

and a record number of wells

on public lands as issues of

critical common interest.

In speaking to the API’s

Upstream Committee, Kornze

emphasized that the agency’s

efforts to address these issues

through a proposed fee system

would allow the BLM to be

more responsive to the indus-

try’s operational needs.

“The BLM takes its role in

the nation’s energy economy

very seriously. A properly - re-

sourced BLM oil and gas pro-

gram means better service for

companies and more certainty

for the public that operations

are being conducted in an envi-

ronmentally sound manner.”

The BLM is responsible for

inspection and enforcement on

a record 100,000 wells nation-

wide, with tens of thousands of

new wells coming online in re-

cent years.

At the same time, the budget

for the BLM’s oil and gas pro-

gram has declined 20 percent

since 2007 when accounting

for inflation.

“It is critical that we in-

crease our inspection efforts to

ensure that taxpayers are get-

ting a fair return on public re-

sources,” Kornze said.

BLM estimates that the fee

system proposed in the presi-

dent’s budget, similar to the

authority already granted for

offshore oil and gas develop-

ment, would allow the agency

to recruit more than 60 new

inspectors throughout the

country. Without additional re-

sources to meet this critical

need, the BLM may be forced

to consider drawing scarce re-

sources from other high prior-

ity efforts such as permitting

and leasing.

The API’s Upstream Com-

mittee focuses on upstream reg-

ulatory policy, legislative issues,

and industry technical stan-

dards and recommended prac-

tices. They emphasize efforts to

ensure that operations are con-

ducted in a safe, efficient and

environmentally responsible

manner. The committee is open

to companies producing oil or

natural gas in the United States.

The BLM manages more

than 245 million acres of pub-

lic land, the most of any fed-

eral agency. This land, known

as the National System of Pub-

lic Lands, is primarily located

in 12 Western states, including

Alaska.

The BLM also administers

700 million acres of sub-sur-

face mineral estate throughout

the nation. The BLM’s mission

is to manage and conserve the

public lands for the use and en-

joyment of present and future

generations under our mandate

of multiple-use and sustained

yield. In fiscal year 2013, the

BLM generated $4.7 billion in

receipts from public lands.

Increased wells, declining budgetBLM director wants more money for oil and gas inspections

“The BLM takes its role

in the nation’s energy

economy very seriously. A

properly - resourced BLM

oil and gas program means

better service for compa-

nies and more certainty for

the public that operations are being con-

ducted in an environmentally sound manner.”

Neil Kornze

BASIN RESOURCES 37


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Prepaid gas contractProgram could save Farmington Electric Utility more than $1.3 million a year

The Farmington Electric Utility Sys-

tem, or FEUS, is projected to save

more than $1.3 million per year or

over $6.6 million over the next five

years thanks

to the negoti-

ation of a

new prepaid

natural gas

contract with the New Mexico Munici-

pal Energy Acquisition Authority, or

NMMEAA, in cooperation with the

Royal Bank of Canada.

The prepaid gas program is a means

by which municipal utilities can pur-

chase natural gas at prices substantially

below market index prices or, in the


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case of FEUS, below its long-term con-

tract price.

Similar prepaid gas programs are de-

livering substantial savings to consumers

in several states across the nation. NM-

MEAA was formed in 2008 to implement

the prepaid gas program in New Mexico.

Since 2009, the city of Farmington, the

city of Las Cruces, and Los Alamos

County have purchased natural gas from

NMMEAA. The program has provided

over $8.5 million in savings over the last

five years to FEUS electric customers in

San Juan County and Rio Arriba County.

The newly restructured agreement, re-

quired by recent changes in banking reg-

ulations resulting from the 2008 financial

crisis, ensures continued savings for the

utility’s electric customers. The natural

gas purchased under this agreement is

used as fuel for the utility’s electric gen-

eration facilities.

Mike Sims, FEUS Electric Utility Di-

rector, praised the new agreement. “This

very important agreement insures stable,

low-cost electricity to our community.”

And “The city’s representatives on the

NMMEAA Board, Sue Nipper and Jay

Burnham, deserve tremendous credit for

the success in negotiating this new agree-

ment.”

Rob Mayes, Farmington City Manager,

in an email to the mayor and City Coun-

cil on Wednesday, stated “I want to ex-

press my gratitude and admiration to the

Farmington Public Utility Commission

(who unanimously recommended in both

instances) and to those on the governing

body that voted in favor of the FEUS gas

prepay previously in 2009 and the very

recent revision last month.”

For more information please contact

Farmington Electric Utility Director Mike

Sims at 505.599.1165.

BASIN RESOURCES38

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Officials: U.S. increased energy productionstabilizing prices during global strife

Debra Mayeux

Basin Resources

Crises around the world are

not having a negative effect on

oil prices, partly because North

america has become more en-

ergy independent than ever be-

fore.

Total u.S. energy production

reached 81.7 quadrillion british

thermal units (quads), in 2013.

That was enough to satisfy 84

percent of the total u.S. energy

demand, which was 97.5 quads.

The u.S. also is buying its oil

and gas from Canada, instead of

looking abroad and to the Mid-

dle east for energy, according to

the u.S. energy Information ad-

ministration, or the eIa.

With what’s happening in

Iraq, Israel and ukraine, the

world’s oil prices have remained

stable. Wally Drangmeister, di-

rector of communications for

New Mexico Oil and Gas asso-

ciation, said that is a “testament”

to our production at home.

“While we are not as depend-

ent on the world’s oil, we are

producing more energy in the

Western Hemisphere,” Drang-

meister said.

In 2012, Iraq was the sixth

largest net exporter of petroleum

BASIN RESOURCES40

Holding steady

liquids in the world, with the

majority of its oil exports going

to the United States and to re-

fineries in Europe. Iraq has the

fifth largest proven crude oil re-

serves in the world and passed

Iran as the second largest pro-

ducer of crude oil at the end of

2012, the EIA stated.

The U.S., in 2012 produced

11.11 million barrels of oil per

day, while Saudi Arabia pro-

duced 11.73 and Russia pro-

duced 10.40 million barrels of

oil per day. China was fourth in

production and Iraq was fifth,

according to EIA statistics.

The crisis in Iraq has led to

some energy producers pulling

out of the country.

“Everything has got to shutdown (in Iraq). Halliburton andWeatherford are moving out.They can’t leave their people inthere,” Texas oilman T. BoonePickens said in an interviewwith Money News. “So where

are we? We are using 19 million(barrels of oil per day), produc-ing 8.5 million, importing 10 or11 million.”

The U.S. imports 4.5 millionbarrels from Canada, 4.5 millionfrom OPEC and 1.7 million

from Saudi Arabia, Pickens said.

Pickens, founder of BP Capi-

tal Management, has taken the

media stage once again to pres-

ent his plan for the future of our

nation’s energy industry. Pickens

has pointed out that China has

an energy plan, but the U.S. does

not. He has been promoting an

energy plan for the past six years

– a plan, which he said would

boost energy development in

this country and get the U.S. out

of OPEC once and for all. There

are five principles to the plan,

which Pickens outlines on his

Website: pickensplan.com.

Those principles include “clear

responsibility and accountability

for energy decisions; injecting

There are five principlesto the plan, which Pick-ens outlines on his Web-site: pickensplan.com.Those principles include“clear responsibility andaccountability for energy

decisions; injecting real fuel competitioninto the transportation mix; meeting ourown energy needs before we worry aboutother countries, pursuing a North AmericanEnergy Alliance, remembering: Energy isnot a free market.”

T. Boone Pickens

Wally Drangmeister, directorof communications for NewMexico Oil and Gas Association,said that the world’s oil pricestability is a “testament” to our

production at home. “While we are not as de-pendent on the world’s oil, we are producingmore energy in the Western Hemisphere.”


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real fuel competition into the transportation mix; meeting our

own energy needs before we worry about other countries, pursu-

ing a North American Energy Alliance, remembering: Energy is

not a free market.”

This plan also includes the U.S., Canada and Mexico making

an oil alliance – the North American Energy Alliance. “Then you

don’t have to worry about what happens to Iraq and the rest of

the world,” he said. “There is plenty of oil around the world. We

have the solution in North America if we just had the leadership

in Washington to step up and say, ‘Let’s make a deal,’ with

Canada and Mexico.”

WTRAG Economics Energy Economist James Williams told

Reuters that a disruption in the Iraqi oil supply could spark a

price increase for crude. “Right now the market is looking for a

comfort zone.”

There also could be a shortage in Europe, if there are moves to

place tougher sanctions on Russia as Russian President Vladimir

Putin continues to support Russian separatists in Ukraine.

The U.S., however, has poised itself to succeed despite possible

world shortages of oil, should the conflicts continue, and if the

Pickens’ Plan is brought into play, the nation could be even bet-

ter places in light of shortage.

Pickens not only has called for the creation of a plan and an

energy alliance, he also is pressing President Barack Obama to

build the Keystone Pipeline, which would create jobs and a di-

rect line for transporting oil to Canada.

The Keystone XL Pipeline is a proposed 1,179-mile, 36-inch

diameter crude oil pipeline that would begin in Hardisty, Alberta,

and extend south to Steele City, Neb. “This pipeline is a critical

infrastructure project for energy security of the United States and

for strengthening the American economy. Along with transport-

ing crude oil from Canada, the Keystone XL Pipeline will also

BASIN RESOURCES 43


support the significant growth of crude oil

production in the United States by allowing

American oil producers more access to the

large refining markets found in the American

Midwest and along the U.S. Gulf Coast,” ac-

cording to TransCanada, the company be-

hind the construction and

management of the pipeline.

This pipeline would result in in-

creased energy production in the

U.S., which would build upon the increases

already seen in 2013, according to oil and

gas producers and some economists

throughout the U.S.

Domestic production increased in 2013,

as the nation was more dependent on do-

mestic production for the energy 97.5 quads

of energy it consumed.

Of that energy – 82 percent of which was

fossil fuels, 10 percent renewable and 8 per-

cent nuclear – according to the EIA, which

said “natural gas was the largest domestically

produced energy resource for the third year

in a row.”

The continued need for natural gas is

good for the San Juan Basin, which is rich in

natural gas. Production, however, has been

stalled because of the low cost for natural

gas on the world market.

Natural-gas prices hit an eight-

month low in July, according to Wall

Street Journal reports. Gas prices slid

24 percent from mid-June to mid July with

futures dropping 10.2 cents or 2.6 percent

to $3.849 a million British thermal units on

the New York Mercantile Exchange as of

July 21. This was the lowest since Nov. 26,

2013.

The Journal stated that the cooler-than-

normal temperatures reined in the use of air

conditioners. Natural-gas prices typically in-

crease in the hot summer months as electric-

ity consumption increases.

The lack of additional demand on the na-

tion’s natural-gas fired power plants has left

prices low.

Drangmeister said that is not as good of

news for the San Juan Basin as producers

would hope. “Anything that would cause an

up-kick in prices would create more activity,”

he said.

The San Juan Basin is a gas-dependent

with several acres – both inside and outside

of the Mancos Shale – dedicated to natural

gas production.

While the Mancos is a “great develop-

ment,” according to Drangmeister, there are

other gas-rich areas ripe for development in

the future.

“If natural gas prices came up, it would

have an impact on the region,” Drangmeister

said.

In the meantime, the community waits

and prepares for the next natural gas boom,

which industry officials say is coming. The

only question is when?

Related Story

Pg. 49

BASIN RESOURCES44


SANTA FE – The highest amount ever

earned in one year at the State Land Office

was recorded in fiscal year 2014, which

ended June 30. Almost $817 million was

earned on behalf of public schools, univer-

sities, and hospitals throughout the state,

surpassing the previous record of $653

million which was raised in 2012.

Since Commissioner Powell took office

in January 2011, the New Mexico State

Land Office has earned about $2.3 billion

for the state land trust. This revenue gener-

ated by the State Land Office has saved the

average working household more than

$850 a year in taxes each year.

“We are working hard at the

State Land Office to optimize

revenues to support New Mex-

ico’s public schools, universi-

ties, and hospitals. In addition,

we are working with local communities,

the private sector, New Mexico’s tribes,

and other governmental agencies to en-

hance economic development that will cre-

ate good jobs for New Mexicans,” said Ray

Powell, State Land Commis-

sioner. “Each of our divisions at

the Land Office has reported

increased revenues and we are

making decisions in a manner

that will protect the long-term

health and productivity of our working

Trust lands.”

State Land Office record year: $817 million for public schools, universities and hospitals

BASIN RESOURCES 45


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To put this record revenue in context,

this $817 million could pay salaries equiv-

alent to 17,000 teachers or about two-

thirds of New Mexico teachers.

The high revenue is attributed to a

strong oil and gas sector, combined with

healthy revenue streams for leases for re-

newables, surface resources, and potash

production.

The New Mexico State Land Office is

responsible for managing state trust lands

to generate income for 22 beneficiaries

and for taking care of the lands so they are

healthy and productive for the future. After

accounting for the State Land Office’s op-

erating budget, which is paid through the

revenue it generates, during this last fiscal

year:

• More than $718.5 million went to

support public schools in New Mexico.

• More than $21.5 million went to state

colleges and universities.

• More than $17.6 million went to spe-

cial schools, such as the School for the

Blind Visually Impaired in Alamogordo,

and the School for the Deaf in Santa Fe.

• About $15.7 million went to hospitals,

including Miner’s Colfax Hospital in

Raton, and special hospitals such as Carrie

Tingley Hospital in Albuquerque.

• The remaining $26.5 million went to

other institutions, including the State Peni-

tentiary and public buildings, water reser-

voirs, Rio Grande Improvements, and other

beneficiaries.

In fiscal year 2014, earnings from the

State Land Office amounted to over 87

percent of the operating budget for the

New Mexico School for the Blind in

Alamogordo, more than 72 percent for the

New Mexico School for the Deaf in Santa

Fe, 56 percent for New Mexico Military

Institute in Roswell, and almost 21 percent

of the operating budget of public schools

throughout the state.

Revenues from nonrenewable use of the

trust lands, such as the royalties from oil

and natural gas extraction, are deposited

into the Land Grant Permanent Fund.

They are invested and a percentage of the

fund is paid to the beneficiaries.

Revenues from the renewable resources

uses, such as grazing, rights of way, inter-

est on earnings and bonuses paid to ac-

quire oil and gas leases, are distributed

directly to the beneficiaries, minus the

State Land Office’s operating budget and

other administrative expenses.

BASIN RESOURCES46


United States Energy

Information Administration

The Permian Basin in Texas and New

Mexico is the nation’s most prolific oil

producing area. Six formations within the

basin have provided the bulk of Permian’s

60 percent increase in oil output since

2007. Crude oil production in the Permian

Basin has increased from a low point of

850,000 barrels per day (bbl/d) in 2007

to 1,350,000 bbl/d in 2013.

Largely as a result of this growth, crude

oil production from Permian Basin coun-

ties has exceeded production from the

federal offshore Gulf of Mexico region

since March 2013, making the Permian

the largest crude oil producing region in

the United States. In 2013, the Permian

Basin accounted for 18 percent of total

U.S. crude oil production. The recent in-

crease in Permian crude oil production is

largely concentrated in six low-permeabil-

ity formations that include the Spraberry,

Wolfcamp, Bone Spring, Glorieta, Yeso,

and Delaware formations. Production from

these formations has helped drive the in-

crease in Permian oil production – particu-

larly since 2009 – despite declining

production from legacy wells.

Almost three-quarters of the increase in

Permian crude oil production came from the

Spraberry, Wolfcamp, and Bone Spring for-

mations. Counties in these three formations

have driven the increase in the Permian

Basin’s horizontal, oil-directed rig activity in

recent months. Production from these three

formations collectively increased from about

140,000 bbl/d in 2007 to an estimated

600,000 bbl/d in 2013, increasing their

share of total Permian oil production from

16 percent to 44 percent. Three other for-

mations – the Delaware formation and the

adjacent Glorieta and Yeso formations – also

increased production from 2007 to 2013,

but to a lesser extent. Production from these

three formations rose from 61,000 bbl/d in

2007 to an estimated 112,000 bbl/d in

2013.

The Permian Basin region encompasses

an area approximately 250 miles wide and

300 miles long, and it contains many po-

tentially productive low-permeability oil

formations. Although oil production has

previously come from the more permeable

portions of the Permian formations, the

application of horizontal drilling and hy-

draulic fracturing has opened up large and

less-permeable portions of these forma-

tions to commercial production. This is

especially true for the Spraberry, Wolf-

camp, and Bone Spring formations, which

have initial well production rates compara-

ble to those found in the Bakken and

Eagle Ford shale formations.

Six formations responsible for surge

in Permian Basin crude oil production

BASIN RESOURCES48


SANTA TERESA, N.M. – A new rail-

road hub in Santa Teresa was celebrated

with a grand-opening ceremony May 28

at the 2,200-acre site.

Governor Susana Martinez and Union

Pacific CEO Jack Koraleski were present

at the event, which recognized the Santa

Teresa hub as part of a 23-state network

developed by the railroad. The Sunset

Route includes 760 miles of rail line run-

ning from El Paso, Texas to Los Angeles,

Calif.

“Our new rail facility in New Mexico

is a key part of our relentless effort to

create value for our customers through

safety, service and efficiency,” Koraleski

said. “Union Pacific’s $400 million in-

vestment in New Mexico will improve

the fluidity and efficiency of the Union

Pacific network and will have a positive

long-term economic impact in the re-

gion.”

The new hub is west of Santa Teresa

Airport, and it includes a fueling station,

crew change buildings and an intermodal

ramp with an annual lift capacity of ap-

proximately 225,000 containers. The

railroad and state government hope this

new hub will make the Southern region

of New Mexico a strategic focal point

where shippers can leverage the eco-

nomic and environmental benefits of

shipping freight by rail.

The facility has created jobs in the re-

gion. There were 3,000 jobs created dur-

ing the construction phase of the facility

from 2011 to 2014. Now that the site is

open there could be as many as 600 per-

manent jobs at the site. The estimated

overall economic impact for the state is

estimated to exceed $500 million, with

Union Pacific’s investment highlighting

the company’s commitment to enhancing

the nation’s transportation infrastructure

and setting the standard for outstanding

customer service.

Union Pacific also is planning to invest

approximately $4.1 billion in 2014 capi-

tal investment that is part of a long-term

strategy to provide safe, efficient service

across its 32,000-mile network.

New facilityUnion Pacific Railroad celebrated opening of railroad hub

BASIN RESOURCES 49


CALGARY, ALBERTA -

TransCanada Corporation re-

leased a statement on April 21

expressing disappointment in

further delays toward construc-

tion of the Keystone Pipeline.

“We are extremely disap-

pointed and frustrated with yet

another delay. American men

and women will miss out on an-

other construction season where

they could have worked to build

Keystone XL and provided for

their families. We feel for them,”

said Russ Girling, TransCanada’s

President and Chief Executive

Officer. “We are also disap-

pointed the United States will

continue to rely on regimes that

are fundamentally opposed to

American values for the 8 mil-

lion to 9 million barrels of oil

imported every day. A stable, se-

cure supply of oil from Canada

and from the U.S. makes better

sense and I am sure a majority of

Americans agree.”

Pipeline critics say the project

would be an environmental

nightmare. “Along its route from

Alberta to Texas, this pipeline

could devastate ecosystems, pol-

lute water sources and jeopard-

ize public health,” said Friends

of the Earth, on its Website:

foe.org.

The Environmental Impact

Statement on the pipeline stated

“the total direct and indirect

emissions (of the project) would

contribute to cumulative global

GHG emissions.” But in its final

analysis, it said the proposed

pipeline is “unlikely to signifi-

cantly affect the rate of extrac-

tion in oil sands areas.” Still

President Barack Obama has

stalled the project, which already

is partially constructed.

The first leg of the Keystone

pipeline began shipping oil to

refineries outside of St. Louis in

2010, according to Girling, who

said “it took just 21 months to

study and approve.”

The continuation of the proj-

ect, however, has undergone vast

scrutiny. “After more than 2,000

days, five exhaustive environ-

mental reviews and over 17,000

pages of scientific data Keystone

XL continues to languish. Our

Keystone pipeline has safely de-

livered more than 600 million

barrels of crude oil to U.S. re-

fineries, replacing foreign off-

shore oil,” Girling said. “The

Nebraska routing situation is

being managed appropriately.”

However, there was a notice

of appeal filed by Nebraska’s At-

torney General in February, but

on the same day a lower court

ruled that the Keystone XL re-

route in Nebraska is valid. It was

evaluated by the Nebraska De-

partment of Environmental

Quality and OK’s by the gover-

nor and remains in effect.

Girling said North American

oil production continues to rise.

“That means without Keystone

more oil will be shipped by rail

and by barge. As the State De-

partment concluded in its recent

Final Supplemental Environmen-

tal Impact Statement, not ap-

proving Keystone XL will lead

to higher greenhouse gas emis-

sions through other oil trans-

portation options and greater

public risk,” he said.

Frustrations fly over Keystone Pipeline decision

BASIN RESOURCES50


DEbRa MayEux

Basin Resources

an agreement has been reached in the

proposed acquisition of New Mexico Gas

Company by TECO Energy, a subsidiary

of Tampa Electric Company, a Tampa,

Fla.-based company. under the terms of

the agreement, which must be approved

by the New Mexico Public Regulations

Commission, the rates will freeze

through the end of 2017 and job reduc-

tions will be limited to 99 positions

within the first three

years.

under this agreement,

New Mexico Gas Com-

pany customers will

benefit from anticipated

savings early through a

credit on their bills. an

immediate $2 million

reduction in customer bills will occur in

the first year after the transaction closes,

and that reduction will

increase to $4 million a

year, until the company’s

next rate case.

The agreement was

reached between TECO

Energy, New Mexico Gas

Company and Continen-

tal Holdings, the company’s current

Agreement reached

PRC to rule on TECO Energy’s purchase of N.M. Gas Co.


owner, the New Mexico Industrial Energy Consumers, and the

New Mexico Attorney General’s Office. Public Regulations

Commission staff does not oppose the settlement.

“Our customers will benefit from a rate freeze, as well as the

savings of economies of scale under TECO’s ownership. In ad-

dition, we look forward to continuing to provide safe and reli-

able service to more than half a million New Mexico

customers,” said New Mexico Gas Company President Annette

Gardiner.

“This agreement is a win-win-win for New Mexico, for the

customers of the New Mexico Gas Company and for TECO

Energy Investors,”

said John Ramil,

president and chief

executive officer of

TECO Energy. “We

are pleased to be able

to work together to

provide certainty for

customers. The settle-

ment also keeps us

on track for the trans-

action to be accretive

a year after closing.”

TECO is an energy-

related holding com-

pany serving 700,000

customers in West

Central Florida and

350,000 customers in

most of Florida’s

major metropolitan

areas under the name

of Tampa Electric and Peoples Gas System. Other TECO En-

ergy subsidiaries include TECO Coal, which owns and oper-

ates coal-production facilities in Kentucky, Tennessee and

Virginia.

The company, on July 1, reported that it entered into an un-

derwriting agreement for the sale by the company of 15.5 mil-

lion primary shares of its common stock to the public at

$18.10 per share through underwriters led by Morgan Stanley,

Citigroup and JP Morgan. The sale was to raise approximately

$271 million to fund the acquisition of New Mexico Gas

Company and for general corporate purposes, according to a

company press release.

The PRC still must decide whether the settlement is in the

public interest and whether to approve the transaction. The de-

cision is expected soon because, if approved, the sale should

close in the third quarter.

“This agreement is a win-win-win

for New Mexico, for the

customers of the New Mexico Gas

Company and for TECO Energy In-

vestors.”

— JOHN RAMIL,

TECO ENERGY

PRESIDENT AND CEO

BASIN RESOURCES52


ST. MICHAELS, Ariz. – Navajo Nation Oil and Gas Company

showed positive results in the release of its fourth quarter financials

for the fiscal year ending March 31, 2014.

The company reported $156.3 million in total revenue, a 16.8

percent gain, as compared to $133.7 million from the previous year.

Total assets for the company grew from $437 million to $458

million, while total liabilities for Navajo Nation Oil and Gas

Company, or NNOGC, shrunk from $207 million to $179 million,

demonstrating a steady gain in total net assets.

Despite challenges in FY2014, Vice President of Finance Reuben

Mike said the latest numbers demonstrate management’s

commitment to run a profitable business, while focusing the core

values of leveraging economic growth for the Navajo Nation.

NNOGC, since 2010, has experienced steady annual growth at

12.1 percent. This increased to 37 percent in FY2014, with a

growth in operating income from $39.3 million to $53.8 million.

There was, however, a net income decrease of 8.1 percent, because

of operational spending.

“Since joining the company a year ago, our executive manage-

ment team has worked hard to stabilize the company financially,”

President and CEO Robert Joe said. “I’m particularly proud of our

latest financial performance and the significant growth to the com-

pany’s net income, which demonstrates NNOGC’s commitment to

managing cost and promoting fiscal responsibility. Our team of com-

mitted employees dedicated to creating the premier American Indian

energy company achieved these financial performance results.”

The leadership has been focused on the business’s chartered

authority to operate a for-profit entity that will maximize its prof-

itability and provide benefits to the Navajo people, according to Joe.

“We are doing this while maintaining our goal of ensuring that

the company remains aligned with the Navajo’s true culture of K’é,”

Joe said.

NNOGC has diversified operations in all aspects of the oil and

gas industry, with presence in upstream, midstream and downstream

sectors of the industry.

Core activities of NNOGC: Exploration, development and

production of oil and gas properties in the United States, primarily

in the Aneth Field in Utah; transportation of crude oil and gas;

wholesale distribution of refined fuel products; and management of

convenience-store operations.

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BASIN RESOURCES54


E N E R G Y N E W S. . . . . . . . . . . . . . . . . . . . . . . . . .

Across the Nation

ConocoPhillips recently invested $3

million in the Colorado School of Mines

for the establishment of the Water-Energy

Education, Science and Technology

Center, or Sustainable WE2ST, which will

focus on research and education that will

promote joint sustainability of unconven-

tional energy production and water

resources.

“By establishing this unique center at

Colorado School of Mines, Cono-

coPhillips demonstrates the value it places

on educating students about the technical

aspects of energy and water resources, and

exposing them to the critical sustainability

questions that arise

around unconven-

tional energy pro-

duction,” said Bill

Scoggins, president of the

Colorado School of Mines.

“The center will advance our

expertise in earth, energy and

environment, and further

strengthen our longstanding

partnership with Cono-

coPhillips.”

Mines Associate Professor

of Civil and Environmental Engineering

Terri Hogue will serve as director of the

ConocoPhillips Center for a Sustainable

WE2ST at Colorado School of Mines,

which will focus on education; community

acceptance, communication and corporate

social responsibility research; and

integrated water resources assessment

research, according to a press release from

ConocoPhillips. “The research and

educational initiatives undertaken at the

center will benefit not only unconven-

tional energy producers and water-reliant

industrial stakeholders,

but also the general

public,” it stated.

“We cannot be a

leading Exploration and

Production company without

also being a great water com-

pany,” said Al Hirshberg,

executive vice president,

Technology & Projects,

ConocoPhillips. “The

ConocoPhillips Center for a

Sustainable WE2ST is an im-

portant extension of our existing global

efforts around water sustainability.”

ConocoPhillips takes a comprehensive

approach and implements action plans to

respect water resources and support the

company’s sustainable efforts. In 2013,

the company’s actions included reducing

water use per well for hydraulic fracturing

in Eagle Ford by about 45 percent and

establishing a Water Solutions group to

ensure it has the technology and technical

capability to meet future water manage-

ment goals, the company stated. In Doha,

Qatar, the company’s Global Water

Sustainability Center uses state-of-the-art

analytical capabilities to advance the

science around produced water treatment,

seawater desalination and water reuse and

recycling. Research is then shared across

the company.

“Challenges presented by water are

diverse and highly specialized,” says Fran

Vallejo, vice president and treasurer,

ConocoPhillips, and a Colorado School of

Mines graduate. “They require innovative

ideas and solutions from the best and

brightest minds, which is why we are

proud to collaborate with Colorado

School of Mines to develop this state-of-

the-art center.”

ConocoPhillips has a longstanding

commitment to Colorado School of Mines.

By supporting education, charitable giving,

volunteerism and civic leadership, the

company helps build skills critical for the

future. Through this and other educational

contributions, ConocoPhillips aims to

advance research in secondary and techni-

cal education; support diversity of the tal-

ent pool in math, science and engineering

disciplines; and improve effectiveness of

primary education.

Colorado School of MinesConocoPhillips invests $3 million for water energy tech center

BASIN RESOURCES 55


HOUSTON – ConocoPhillips, during

its May annual meeting, reported marginal

growth and reaffirmed its goal to deliver

double digit annual returns to its share-

holders.

“ConocoPhillips is set for growth,”

Chairman and Chief Executive Officer

Ryan Lance said. “Our goal is to deliver 3

percent to 5 percent growth in both vol-

umes and margins, with a compelling divi-

dend. We believe there is clear demand for

this kind of energy stock.”

During the meeting, the company high-

lighted several key accomplishments in its

first two years as an E&P company. These

include: generating proceeds of $12.4 bil-

lion from the sale of non-core assets; deliv-

ering several major project startups;

ramping up development drilling programs,

primarily in the unconventionals; partici-

pating in four deepwater Gulf of Mexico

exploration successes; and achieving a two-

year average of 167 percent organic reserve

replacement ratio. The company also raised

its dividend in 2013 and remains commit-

ted to increases over time.

The company outlined a plan including

five strategic priorities that allow for sus-

tainable future growth by delivering 3 per-

cent to 5 percent compound annual

production growth and growth in reserves

through global drilling programs, in legacy

assets, unconventional assets and major

projects. Also, it will actively pursue con-

ventional and unconventional exploration

opportunities. In order to generate growth

ConocoPhillips management said it plans

to shift the company’s production mix to

higher value products.

There are plans to offer compelling divi-

dends to provide predictable annual returns

while enforcing capital discipline within

the company. In addition to this there will

be a focus on improving financial returns

through capital discipline, ongoing cost ef-

ficiencies and by shifting capital invest-

ments to high-value, low-risk development

programs over the next several years.

Keeping with its core values, the com-

pany also plans to focus on safety and exe-

cution, while renewing focus on organic

growth, applying technology across their

Double digit returnsConocoPhillips reports marginal growth, elects Bunch to its board

* Conoco earnings 56

Ryan Lance Charles E. Bunch


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diverse portfolio and operating in a safe and socially responsible

manner at all times, according to a ConocoPhillips press release.

“We are proud of all our accomplishments, but we are particu-

larly proud of the fact that if you were a shareholder of Cono-

coPhillips when we spun off the downstream and kept your

shares through 2013, you achieved more than a 22 percent re-

turn,” Lance said. “This return exceeded the S&P 500 and was in

excess of our integrated and independent peers.”

The company expects to spend an average of about $16 billion

per year over the next several years to deliver its margin and vol-

ume growth. Over the next few years, the company will allocate

95 percent of its capital toward investments that deliver margins

greater than the company’s current average.

ConocoPhillips also announced that Charles E. “Chuck”

Bunch, chairman and chief executive officer of PPG Industries,

has been elected to serve on the ConocoPhillips board of direc-

tors. Bunch has a 34-year history with PPG and also serves on

the board of PNC Financial Services Group, as well as being a

member of the University of Pittsburgh’s board of trustees. He

previously served as a director of H.J. Heinz Company and as

chairman of the Federal Reserve Bank of Cleveland, the National

Association of Manufacturers, and the American Coatings Associ-

ation.

“Chuck’s extensive international business experience with a

large, multinational public company, as well as his operational

and financial expertise, will add great value to our board of direc-

tors,” Lance said. “We look forward to his contributions as we ex-

ecute on our plans for growth and returns.”

With the election of Bunch, the ConocoPhillips board has 10

members, nine of which are independent directors. He will serve

on the Audit and Finance Committee of the ConocoPhillips

board of directors.

Conoco Earnings continued from 55


BASIN RESOURCES 57

The American Petroleum In-

stitute expressed its support for

the new Oil and Natural Gas

Information Sharing and

Analysis Center, or ONG-

ISAC, which will help protect

infrastructure from cyber at-

tacks.

While API helped form the

center, it will exist as an inde-

pendent organization to facili-

tate the exchange of

information, help evaluate risks,

and provide up-to-date security

guidance to U.S. companies.

“Computer-based attacks are

one of the fastest-growing

threats to American businesses

and infrastructure,” said API

Vice President Kyle Isakower.

“The center builds on existing

programs to help companies

quickly identify and respond to

threats against energy produc-

tion and distribution systems

such as refineries and pipelines

and stay connected with law

enforcement agencies.”

An industry-owned and op-

erated organization, the ONG-

ISAC will be structured similar

to other industry ISACs in

order to:

• Allow participants to sub-

mit incidents either anony-

mously or with attribution via

a secure Web portal;

• Circulate information on

threats and vulnerabilities

among ONG-ISAC members,

other ISACs, vendors, and the

U.S. government;

• Provide industry partici-

pants with access to cyber se-

curity experts;

• Alert participants of cyber

threats deemed “Urgent” or “El-

evated” in near real-time; and,

• Coordinate industry-wide

responses to computer-based

attacks.

Headquartered in Washing-

ton, D.C., the ONG-ISAC

will serve as a central hub for

the rapid collection and dis-

tribution of intelligence on

cyber threats against U.S. en-

ergy networks.

API is the only national

trade association representing

all facets of the oil and natural

gas industry, which supports

9.8 million U.S. jobs and 8 per-

cent of the U.S. economy. API’s

more than 600 members in-

clude large integrated compa-

nies, as well as exploration and

production, refining, market-

ing, pipeline, and marine busi-

nesses, and service and supply

firms.

They provide most of the

nation’s energy and are backed

by a growing grassroots move-

ment of more than 20 million

Americans.

API backs programOil and natural gas industry forms organization to strengthen cyber security

Debra Mayeux

Basin Resources

a comprehensive plan to manage public lands in central

Wyoming has been approved by the bureau of Land

Management and Wyoming Governor Matt Mead. The plan

limits extractive industries to areas outside of the greater

sage-grouse habitat in an effort to preserve the animal,

which could be placed on the endangered species list by

2015.

The Lander resource Management Plan updated a

30-year-old document and was based on the best available

science, landscape-level planning and public comment,

New

master

plaNWyoming, BLM approve

plan to limit production

in greater sage-grouse habitat

BASIN RESOURCES58


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according to the BLM, which wanted to

revisit the plan and set forth a better

management of sage-grouse habitat

within the state. It also protects congres-

sionally designated scenic and historic

trails, while balancing the development

of energy resources within Wyoming and

protecting “biologically important lands

and natural areas,” the BLM stated in a

prepared release.

“When you take a place as rich with

history, culture, beauty and natural re-

sources as the Lander region, it’s ab-

solutely critical that we manage these

public lands in a way that makes sense

for Wyoming now and far into the fu-

ture,” said Neil Kornze, BLM director.

“We appreciate the close cooperation of

the state of Wyoming and other partners

in developing this balanced plan that

provides opportunities for energy and

minerals development, as well as protec-

tion for wildlife, cultural properties, and

special areas.”

Three resource-rich areas, according to

the BLM were approved for use by ex-

tractive industries. All three are outside of

core greater sage-grouse habitat. The Gas

Hills Uranium District would allow for a

new uranium mine, recently approved by

the BLM, while Beaver Creek and Lysite

contain moderate to high potential for

oil and gas development.

“By prioritizing development outside

of core habitat, we can reduce conflicts

between resource extraction and wildlife

conservation and benefit both,” BLM

Wyoming State Director Don Simpson

said. The plan closes the Dubois area to

leasing, consistent with the community’s

vision and wilderness management of ad-

joining U.S. Forest Service and tribal

management.

The approved plan, last revised in

1987, provides direction for managing

about 2.4 million acres of BLM-adminis-

tered surface land and 2.8 million acres

of BLM-administered sub-surface mineral

estate, primarily in Fremont County,

Wyoming.

”This is a reasoned plan that recog-

nizes multiple-use for these public lands.

The plan strikes a balance between en-

ergy production, livestock grazing, recre-

ation and conservation. It incorporates

Wyoming’s plan for protecting greater

sage-grouse,” Governor Mead said. “The

BLM has worked closely with Wyoming

for the best use of public land. The Lan-

der Resource Management Plan repre-

sents another step forward in a

productive relationship between the

BLM, the state and the public interest.”

The region provides habitat for

wildlife with 99 percent of the Lander

area providing habitat for the greater

sage-grouse and 70 percent of the plan-

ning area identified as priority habitat

warranting special protection.

As part of the joint effort by the fed-

eral government and western states to de-

velop and implement a landscape-level

conservation plan for the greater sage-

grouse, the Lander plan actively adopts

policies and measures that are designed

to minimize disturbance in key habitat,

according to the BLM. The U.S. Fish and

Wildlife Service has until the fall of

2015 to determine whether to propose

the greater sage-grouse for protection

under the Endangered Species Act.

“This region is home to pronghorn an-

telope, mule deer, sage grouse and other

wildlife that are central to the Wyoming

economy and way of life, so preserving

the integrity of key wildlife habitat has

to be a part of the big picture,” Simpson

said. “We applaud the state of Wyoming

for a taking an early leadership role not

only to identify and protect important

“These trails are packed full of

history and are widely considered

to be among the most pristine

and intact in the country.”

— Don SimpSon

BLm Wyoming State Director

BASIN RESOURCES 59

Fall 2014• www.basinresourcesusa.com

Solving challenges.™

The San Juan Basin’s EliteService Provider Since 1951.

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habitat, but also to implement a strong

border-to-border regulatory program that

is a critical tool when it comes to

conserving the greater sage-grouse and

other iconic species.”

The Lander plan also includes the

BLM’s first-ever master leasing plan,

designed to promote smart planning up

front with the help of a wide range of

stakeholders. The Beaver Rim MLP

balances development of oil and gas

minerals with protection for important

natural and cultural resources, such as

habitat for elk and mule deer and

important archeological sites.

The resource management plan also

adopts a National Trails Management

Corridor to protect the setting, nature

and purpose of the congressionally

designated trails found within the

planning area, including segments of the

Continental Divide National Scenic Trail

and four National Historic Trails

including the California, Mormon

Pioneer, Oregon, and Pony Express.

“These trails are packed full of history

and are widely considered to be among

the most pristine and intact in the

country,” added Simpson. ”We used an

innovative program to make sure that we

protected the places of special high

interest or important viewscapes, a model

that we’ll look to replicate as we develop

other land management plans.”

The revision of the Lander resource

management plan is the result of a robust

public comment process, starting in

2007, which included a public scoping

session, public meetings and multiple

comment periods on the draft and final

Environmental Impact Statements. The

BLM worked with cooperating agencies

and the state of Wyoming to develop the

range of alternatives analyzed and to

develop the resource management plan.

“By prioritizing development outside

of core habitat, we can reduce

conflicts between resource extraction

and wildlife conservation

and benefit both.”

— Don SimpSon

BLm Wyoming State Director

BASIN RESOURCES60


U.S. Energy Information Administration

Crude oil production in the United

States will range from 6 million to 8 mil-

lion barrels per day (bbl/d) over the next

30 years as projected in the Annual En-

ergy Outlook 2013 (AEO2013) Refer-

ence case projection. However, under

greater supply assumptions, crude oil

production is sustained at a higher level

of about 10 million bbl/d between 2020

and 2040 (see chart above).

In this higher resource scenario, total

U.S. liquid fuels production (which in-

cludes crude oil, natural gas liquids

(NGL), refinery gains, biofuels, and other

liquid fuels) increases to more than 18

million bbl/d in 2040, compared to 12

million bbl/d in the Reference case. That

level of domestic production reduces net

imports to 7 percent or less of total de-

mand compared to 40 percent in 2012.

Production projections inevitably reflect

many uncertainties regarding the actual

level of crude oil resources available, the

difficulty or ease in extracting them, and

the evolution of the technologies (and as-

sociated costs) used to recover them.

EIA developed a High Oil and Gas

Resource case as part of the AEO2013 to

examine the effects of higher domestic

production on energy demand, imports,

and prices. This alternative case presents

a scenario in which U.S. crude oil pro-

duction continues to expand after 2020,

driven primarily by tight oil production.

This increased production results from

assumed greater technically recoverable

tight oil resources, as well as undiscov-

ered resources in Alaska and the offshore

Lower 48 states. In addition, the maxi-

mum penetration rate for gas-to-liquids

(GTL) is increased and kerogen (oil shale)

is assumed to begin development. In the

High Oil and Gas Resource case, NGL

production increases from 2.2 million

bbl/d in 2011 to 5.0 million bbl/d in

2040, compared to just under 3 million

bb/d in 2040 in the Reference case. GTL

output reaches about 0.6 million bbl/d,

compared to about 0.2 million bbl/d in

the Reference case (see chart below).

Estimates of technically recoverable re-

sources from the rapidly developing tight

oil formations are particularly uncertain

and can change over time as new infor-

mation is gained through drilling, pro-

duction, and technology

experimentation. Projections embody

many assumptions that might not prove

to be valid over the long term and over

all tight and shale formations. In the

High Oil and Gas Resource case, the

tight oil resources are increased by

changing the estimated ultimate recovery,

or EUR, per well and assuming closer

well spacing.

U.S. crude oil production could reach

10 million barrels per day by 2040

BASIN RESOURCES 61

Fall 2014• www.basinresourcesusa.com

BASIN RESOURCES62


Energy Information Administration

Since the mid-1970s, the United Stateshas run a deficit in merchandise trade,meaning that payments for imports ex-ceeded receipts for exports. This large andgrowing deficit on the merchandise tradebalance reached a maximum of $883 bil-lion in the second quarter of 2008.

As a result of the recession, dramatic de-clines of imports in excess of exports dur-ing the fourth quarter of 2008 and thefirst quarter of 2009 reduced the merchan-dise trade deficit by 49 percent to $449billion in the second quarter of 2009. Thistrend of declining imports resulted in the

Looking up:

Source: U.S. Bureau of Economic Analysis (BEA) balance of payments adjustments to Census Foreign Trade data

Note: Petroleum and products includes crude oil, fuel oil, other petroleum products, natural gas liquids, and manu-

factured gas. The articles from February 2014 used monthly Census payment data that did not include the BEA ad-

justments.

Recent improvements in petroleum trade balancemitigate U.S. trade deficit

BASIN RESOURCES 63


lowest quarterly deficit level since early

2002. The merchandise trade deficit then

increased to $686 billion in the fourth

quarter of 2013, with much of the differ-

ence from the 2008 level ($131 billion) at-

tributable to a $158 billion increase in net

exports of crude oil and petroleum prod-

ucts.

Crude oil and petroleum products play a

significant role in the balance of U.S. trade

accounts, and the value of petroleum trade

is sensitive to both changes in price and

volume. The United States has historically

imported more petroleum and petroleum

products than it has exported. The deficit

reached a maximum of $452 billion in the

third quarter of 2008, as a result of a sharp

run-up in prices. By the first quarter of

2009 the petroleum trade deficit improved

to $174 billion as energy prices and do-

mestic demand fell and U.S. production

increased. From the first quarter of 2009

to the second quarter of 2011, the deficitSource: U.S. Bureau of Economic Analysis (BEA) balance of payments adjustments to Census Foreign Trade data

BASIN RESOURCES64


increased to $346 billion, because of

continued economic recovery in the

United States and higher crude oil

prices. Since then, prices have remained

high as exports of petroleum products

have increased while crude oil imports

have declined. As of the fourth quarter

of 2013, the deficit was $203 billion.

Trade in petroleum and petroleum

products contributes to the overall U.S.

goods deficit, but this deficit would

exist even if the United States did not

import oil. The graph below shows the

effects of petroleum imports and ex-

ports on the goods trade deficit. Since

2009, exports of petroleum and petro-

leum products have played a growing

role in reducing the overall merchan-

dise trade deficit. While there have

been recent increases in crude oil ex-

ports, nearly all of the petroleum ex-

ports through 2013 were refined

petroleum products.

Source: U.S. Census International Trade in Goods and Services (FT900)

Note: Energy fuels is a sub-category of total goods that includes crude oil, petroleum products, natural

gas, coal, nuclear fuel materials, and electricity.

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advertisers directoryAllstate ....................................................52Viviana Aguirre900 Sullivan Ave., 505-327-4888B J Brown3030 E Main St., Ste X9, 505-324-0480Kelly J. Berhost1415 W. Aztec Blvd, Ste. 9, Aztec, NM505-334-6177Harold Chacon8205 Spain Rd. NE, Suite 209 CAlbuquerque, NM505-296-2752Dennis McDaniel, 505-328-0486Matt Lamoreux4100 E. Main St., 505-599-9047Johnnie Pete817 W. Broadway, Ste. B, 505-325-0297Silvia Ramos2400 E. 30th St., 505-327-9667

Animas Environmental Services .................53Farmington, NM505-564-2281Durango, CO970-403-3084www.animasenvironmental.com

Animas Valley Insurance..............................72890 Pinon Frontage Rd.Farmington, NM505-327-4441www.aviagency.com

Antelope Sales & Service Inc. ....................215637 US Hwy 64Farmington, NM505-327-0918www.NMASSI.com

Armstrong Coury Insurance.......................23424 E. MainFarmington, NM505-327-5077www.armstrongcouryinsurance.com

Bailey’s Welding .......................................456175 Hwy 64Bloomfield, NM505-632-3739

Basin Well Logging Wireless ........................92345 E. MainFarmington, NM505-327-5244

BM Technology & Supply...........................162303 Bloomfield Hwy.Farmington, NM505-326-9144

Brady Trucking, Inc. ..................................685130 S. 5400 EVernal, UT 84078435-781-1569Farmington, NM Division505-598-5580Grand Junction, CO Division970-263-8791Williston, ND Division701-572-1522

Calder Services.........................................28#7 RD 5859Farmington, NM505-325-8771

City of Farmington....................................351300 W. Navajo St.Farmington, NM 505-599-1395www.IflyFarmington.com

Edward Jones/Dennis Gross.......................622713 E. 20thFarmington, NM505-325-5938www.edwardjones.com

Elite Promotional & Embroidery ................421013 SchofieldFarmington, NM505-326-1710

Encana.....................................................63www.encana.com/sanjuan

Four Corners Community Bank...................15505-327-3222 New Mexico970-565-2779 Coloradowww.TheBankForMe.com

Foutz Hanon.............................................322401 San Juan Blvd.Farmington, NM505-326-6644

Halliburton ...............................................60www.halliburton.com

Hands on Safety Service ...........................121901 E. 20th St.Farmington, NM505-325-4218

Henry Production .....................................473440 Morningstar Dr.Farmington, NM505-327-0422

Hi Country ................................................37Fleet TeamB. Baldwin505.947-6036Bill Stockert505.330.1098David Stockert505.360-.0103

Highlands University.................................26505-454-3004nmhu.edu/energy

IEI Industrial Ecosystems ..........................3149 CR 3150Aztec, NM505-632-1782www.industrialecosystems.com

Kozi Homes ................................................5505-327-9008

Largo Tank ...............................................25505-327-6281www.largotank.com

Mechanical Solutions, Inc. ...........................21910 Rustic PlaceFarmington, NM505-327-1132

Mesa West Directional ...............................36505-402-8944www.mesawestdirectional.com

Metal Depot..............................................432001 San Juan Blvd.Farmington, NM505-564-8077www.metaldepots.com

Midwest Soil Remediation............................3(847) 742-4331www.midwestsoil.com

Miller & Sons Trucking ..............................391110 W. Sategna Ln.Bloomfield NM 87413505-632-8041www.powerinnovations.com

New Image Powder Coating .......................582792 Inland StreetFarmington, NM505-326-2797

Odessa Pumps..........................................13940 Hwy 516Flora Vista, NM505-334-1330

Parkers Office Products ............................51Farmington, NM505-325-8852www.parkersinc.com

Partners Assisted Living ...........................22313 N. Locke Ave.Farmington, NM505-325-9600www.partnersassistedliving.com

Pumps and Service ...................................47505-327-6128www.pumpsandservice.com

QuickLane Tire & Auto Center ....................275700 East Main St.Farmington, NM505-566-4729

RA Biel Plumbing & Heating ......................33505-327-7755www.rabielplumbing.com

Reliance Medical Group .............................383751 N. Butler Ave.Farmington, NM505-324-1255 Occupation Medicine505-324-1255 Urgent Care1409 Aztec Blvd.Aztec, NM505-334-1772www.reliancemedicalgroup.com

Rush Truck Centers of New Mexico ............296521 Hanover Road N.W.Albuquerque, NM 87121505-875-3410www.rushtruckcenters.com

San Juan Casing Service ............................566101 E. Main St.Farmington, NM505-325-5835

San Juan County Fair .................................65www.sanjuancountyfair.net

San Juan United Way .................................18505-326-1195www.sjunitedway.org

Sierra Chemicals .......................................26104 Bison TrailAztec, NM505.334.0447www.sierrachemicals.com

Southwest Concrete Supply .......................592420 E. MainFarmington, NM505-325-2333www.southwestconcretesupply.com

The Spare Rib...........................................211700 E. MainFarmington, NM505-325-4800www.spareribbbq.com

Sunray Casino...........................................28Farmington, NM505-566-1200

TJ’s Diner .................................................59119 East Main StreetFarmington, NM

Twin Stars, LTD.........................................67100 Iowa Ave.Bloomfield, NM505-632-92027169 Roswell Hwy.575-746-6690

Treadworks ..............................................644227 E. Main St.Farmington, NM505-327-02864215 Hwy. 64 Kirtland, NM505-598-1055www.treadworks.com

Uncle Bob’s Auto & Truck..........................563995 Cliffside Dr.Farmington, NM505-436-2994

U.S. New Mexico Federal Credit Union ........493024 E. Main St.Farmington, NM505-599-3610usnmfcu.org

Wagner Equipment....................................62905 Hwy 516Flora Vista, NM505-334-5522

X-Chem, LLC .............................................19855-829-0001www.x-chem.com

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