Let there be no doubt — and you will see on the pages that follow — that the energy industry in Acadiana is robust.

Aisle-crowd

At the helm of the Louisiana Gulf Coast Oil Exposition for the first time this year — having replaced longtime Executive Director Sally Ware after the 2011 show — Angela Cring says attendees young and old will see a freshness to this year’s show, the 29th time the biennial oil and gas exposition has come to Lafayette since its founding in 1955.

“We are excited about all the programs we have added this year, but the most exciting thing for me is engaging multiple generations of people at LAGCOE,” Cring says. “This year, we are working hard to involve the young professionals who are moving up and taking over as leaders in the industry, and learning from the core group of oil and gas workers that has been past LAGCOE volunteers, attendees and exhibitors.”

This year’s show marks another significant first — for Lafayette Convention and Visitors Commission Executive Director Ben Berthelot, who took over the tourism marketing agency last year. “I have not spent a great deal of time at the show in the past, but my impression was that I was in awe at the enormity of the event. It is impressive,” Berthelot tells ABiz. This year, however, will be different, as Berthelot has already volunteered to register international guests (he’ll be doing some fast-talking to get them to return as tourists) and plans to spend a significant amount of time attending the show and its related events.

“LAGCOE puts Lafayette on the stage to tens of thousands of visitors every year, while shining the spotlight on the oil and gas industry, which is such a huge part of our economy,” Berthelot says. “This is our Super Bowl, and, fortunately, we get to host it every two years. In addition to selling out our hotels, we know our visitors look forward to ‘Eating Lafayette’ (a reference to the annual Eat Lafayette campaign), and their presence here has a significant impact on many sectors of the economy. We are looking forward to a record-breaking crowd.”

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Into the Deep

Regional oil and gas companies are feeling bullish about the future of deepwater drilling as new investments and technologies come online.

By JEREMY ALFORD and KELLY CONNELLY, LaPolitics News Service

It has been three years since President Barack Obama issued a moratorium on deepwater drilling in the Gulf of Mexico and later lifted it as part of his reaction to the unforgettable 2010 oil spill. While that period was marked with animosity and a loud war cry from the oil and gas industry, today we’re seeing the same companies securing leases, pursuing permits, upgrading deepwater operations and pushing new technologies like never before.

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 A member of Chet Morrison Contractors' in-house commercial dive team installs a large X-Brace on an oil and gas platform in the Gulf of Mexico. The diver is working at a depth of 120 feet and is wearing a video camera on his dive helmet that documents all the work performed.

By the end of September, deepwater drilling permits issued in the Gulf had reached 807, a new record. Additionally, more than 60 rigs were active as October gave way, a four-year high and a nice stretch compared to when there were only a dozen or so drilling in deepwater during the summer following the oil spill.

The Gulf is back in a major way, and the big boys are dropping money that is practically unparalleled. For instance, Royal Dutch Shell has reportedly scored seven permits in the central Gulf this year alone, after bidding more than $144 million in federal lease sales.
The world’s energy giants, however, aren’t the only ones benefitting from the boom.

A Lone Wolf

The marketplace in the Gulf’s deeper waters is not for the feint of heart. It takes money — millions — to see a successful operation through to its end and sometimes bold thinking that scares many executives and investors away. So it’s no wonder that it’s mostly the majors, and very few independents, making moves out there.

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Morris Hankins

Among the few exceptions is Lafayette-based Stone Energy Corporation, which is enjoying a very unique niche as a strategic partner and serious player. “We have a strong technical team that can complement a partner,” says Kenneth H. Beer, executive vice president and chief financial officer. “In the deepwater, everyone likes to have another pair of eyes looking at the prospect. We have partnered with Conoco, Exxon, Apache, ENI, Anadarko and others.”

Right now Stone is operating two deepwater platforms in the Mississippi Canyon area: the Pompano platform and the Amberjack platform. Beer says these platforms allow the company to look at projects and prospects in the area, knowing that it has a place to tie-back and produce if it’s successful. “Having this infrastructure is a huge advantage,” he says.

The company produces between 12,000 and 14,000 barrels of oil equivalent per day. While that’s not as large as the majors, Stone’s persistence has helped it attract technical professionals with deepwater experience from Shell, BP/Amoco, Exxon, Dominion, Unocal, Ocean Energy and Murphy, to name a few, which is among the reasons it has sustained such impressive growth for an independent.

“We believe we are well staffed,” Beer says.

The biggest issue for Stone moving forward may be to make sure it has a strong balance sheet to finance growth and success in deepwater. “Every well and project is extremely expensive, so we want to keep our powder dry,” Beer says. “We currently have about $200 million in cash and an unused bank credit line of $400 million. So we are trying to make sure we can follow through on exploration successes with development [capital expenditures].”

Making Changes

With deepwater activity picking up, some companies are trying to reposition to take advantage of the wave. One example is General Fabricators in Delcambre, which was acquired recently by oil and gas industry veteran Morris Hankins. He’s taking a gamble on the formerly bankrupt offshore construction company and has assumed the roles of owner and president.

Since the acquisition, General Fabricators has completed domestic projects along the Gulf Coast, in deepwater and offshore the coast of Africa. “We may have kept the name, but my leadership and our commitment to hard work, determination and craftsmanship make General Fabricators an entirely new company,” says Hankins. “If you don’t know us yet, you will.”

Hankins took over the modest, struggling company in 2010 and soon after assumed management duties. “With the help of a few hand-selected craftsmen, we’ve transformed this formerly undersized company into a construction, fabrication and installation powerhouse,” he says.

In August 2012, General Fabricators broke ground on its 20,000-square-foot fabrication shop less than a half mile from its first base of operation in Delcambre. More recently, the company achieved several new industry certifications stamps with the American Society of Mechanical Engineers, and each vessel it builds is registered with the National Board of Boiler and Pressure Vessel Inspectors.

Technology Catches Up

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General Fabricators' TIG welding can be done onshore and offshore (and in deepwater applications).

Chris John, president of the Louisiana Mid-Continent Oil and Gas Association, says many companies are in the process of planning projects that they don’t even have the technology to carry out because they know in the next two to five years they probably will. He believes that speaks to the “confidence in the industry,” that companies are so willing to invest with that leap of faith. “The demand of crude isn’t going away,” he says. “That drives the industry more than anything else.”

It’s easy to get excited about technology, John points out, like remotely operated underwater vehicles. “ROVs go to depths we couldn’t imagine. We’re able to go not only into the depths of water, but then into the earth. Just a few years ago we couldn’t do this,” he says, likening the burst of advancements to what the general public has experienced with smart phones over the past few years.
Chet Morrison Contractors, based in Houma, has been touting one of its own developments lately. It’s called SHARC, or Subsea Hydraulic Abrasive Rotating Cutter. It was developed to make subsea work safer for divers by eliminating the need for hand cutting — known as jetting — and reducing the time divers spend underwater performing this job by 60 percent.

SHARC needs only a diver or ROV to position it over the pipe opening, then operations can be controlled and monitored from the surface. SHARC can make clean, even cuts on pipes 2 inches and larger, handle walls up to 3 inches thick with multiple strings and can cut any size caisson or jacket leg from surface or subsea to depths up to 500 feet. It can all be deployed from the company’s workboat, the Joanne Morrison.

Not only is SHARC a safer option for divers, but it’s also better for the subsea environment, says Chet Morrison Engineering Manager Ryan Vestal. Unlike other methods, it does not require the use of explosives or hand jetting.

The prototype for SHARC was developed last year during a subsea project for Helix ERT of Texas in three fields in the Gulf of Mexico. It proved so successful that Chet Morrison Contractors made the decision to further develop and refine the technology for use on other projects.

“Using this new cutting tool, they completed four wells for us at about half of the expected cost. Chet Morrison saved ERT and partners many millions of dollars,” says Rod Hebert, a consultant with Helix ERT.

Looking Ahead

Deepwater action has taken off in the Gulf, as opposed to other places like the coast of Africa, John says, chiefly because the U.S. does provide more government certainty than other locales. That’s not to say government regulations don’t create uncertainty here, he adds; it’s just not enough to stifle the more than $8 billion that has been invested in the Gulf by energy companies over the last few years of federal lease sales.

Slowly, but surely, the deepwater marketplace has gotten better, says Stone’s Beer. But government regulations, especially those implemented after the 2010 oil spill, are still challenging. “Permits still take a long time,” Beer says, “but are getting better and there are known expectations now.”

Within the next three years, some energy lobbyists expect the overall number of rigs in the Gulf of Mexico’s deepwater to at least double. That’s an outlook that has investors, innovators and everyone else in the energy game feeling bullish about an area that just a few years ago had more uncertainty than anything else.

“The future is bright for deepwater,” says John. “Since 2010, investment in the Gulf has exploded.”

The UL Connection

University’s College of Engineering shoulders much of the responsibility for letting LAGCOE visitors know just how much potential the area has for the energy industry.

By Wynce Nolley

The Louisiana Gulf Coast Oil Exposition owes much of its success to its bond with UL Lafayette’s College of Engineering by not only welcoming its faculty and students to help orchestrate and enhance the event, but also by opening the door to the companies and industry leaders in the world’s energy community to the many possibilities of a union with them, the college and the region as a whole.

“LAGCOE and UL have had a storied relationship ever since the exposition was in town. It’s been tied to the college, and really to the department of petroleum engineering, but over the last two years we’ve expanded our interaction greatly,” says Dr. Mark Zappi, dean of the UL College of Engineering and director of the UL Engineering Institute.

One example of that expanded integration is a student outreach program at LAGCOE sponsored by UL College of Engineering that takes a group of approximately 100 students in grades 11-12 from various local high schools across Acadiana and gives them a briefing on what’s happening in the energy industry before breaking them up into groups of five. One of LAGCOE’s Young Professionals members is then assigned to each of these groups and walks students through the expo, explaining to them the various technologies being featured as well as the environmental booths that are set up.

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Photo by Robin May
Dr. Mark Zappi, dean of the UL College of Engineering and director of the UL Engineering Institute 

“The idea behind it is catching young people as they are ending their high school career with hopes that they will consider a future in the energy industry, whether it’s in business, engineering, geology or education,” says Zappi. “We’d like them to have a much better understanding of the energy industry.”

According to Zappi, this approach can also have a reciprocal effect on the industry as a whole.

“Over the years, the energy industry has been under attack for various spills or for some technical issue that’s controversial, so the more we can educate the young people the better the industry’s going to be,” he says.

Another option that university-level attendees have at LAGCOE this year is a student research paper competition that pits 10 students hailing from UL, LSU and the University of Houston against each other as each of them must present a 15-minute presentation on a research project related to the energy industry that they’ve been working on. The competition features its own panel of judges composed of attending energy experts, which will reward the first place winner with $1,000, runner-up with $500 and third place with $250.

“We’re probably talking juniors and seniors and grad students, so this will allow us in the energy industry to see what the very next string of professionals are interested in and what they’re working on,” says Zappi. “With the big shift change, the average professional in the energy industry is about 60 years old, so we really need to work with our young people at all levels and start backfilling these boards we’re going to have in years to come.”

Another contribution that the college has made to LAGCOE’s global open-door policy is initiating a dialogue with Oil & Natural Gas Corporation Limited, an India-based energy company that ranked at #155 on this year’s Forbes Global 2000 list.

Zappi says in order to establish this dialogue he and his staff have been working with the U.S. Chamber of Commerce, their point man being Louisiana native Nolty Theriot, director of energy policy advocacy for the U.S. - India Business Council.

“We’ve reached out to [ONGC] through the U.S. Chamber of Commerce and we’ve been in a dialogue for months now about ‘how can UL and the Acadiana region, which is so rich with oil companies and service companies, form a relationship?’” says Zappi. “And the best way it looks like we’re going to form a relationship is to provide training and technical informational transfers.”

Zappi and his staff were even in talks to have ONGC Chairman and Managing Director Sudhir Vasudeva attend this year’s LAGCOE. However, due to the fact that the relationship is still so young, in addition to India’s current political climate, Vasudeva was unable to make it this year.

According to Zappi, the ultimate goal of the continuing dialogue is to build a formal relationship with the university, the region and ONGC that extends beyond LAGCOE.

“Ideally, we’d like to see in the near-term several short courses offered where they’ll send their professionals and they’ll learn more about the natural gas industry,” he says. “They have a fairly new natural gas resource, and here in Louisiana and the U.S. we have years and years of experience in that area, and the Acadiana region really is a leader in many aspects of the natural gas industry.”

Eventually, formal training classes will be offered to ONGC employees through the faculty and staff of UL’s Department of Petroleum Engineering, where they will learn more about the theory and science behind the industry before being given the chance to meet with other members of the energy sector.

“The idea is they’ll come in and get some formal training, possibly in the morning, and then in the afternoon go out and meet a company who supplies a service related to the theory they learned that morning,” says Zappi. “So it’s much more meat I guess you could say then simply getting to show at LAGCOE and speak.”

It is a welcome idea to a college that’s already seen its enrollment nearly double in the last few years. And with Zappi’s approach to fully integrating UL College of Engineering with LAGCOE operations, the opportunities for industry growth in the region were mounting even before this year’s expo got under way.

“LAGCOE is such a melting pot of so [much] different expertise and technology and I wanted to see that reflect on the university,” says Zappi. “It’s a true win-win for us and LAGCOE and they’ve been really great. It’s similar to one of those many times in Acadiana — whether it’s Festival [International] or the various festivals that we have — this is kind of like an energy industry festival. And it’s an exposition where it’s really great to be an industry professional or student and be a part of it.”

 

Super Interns

UL Lafayette students help a Canadian company’s local operations improve inventory control.

McCoy Global’s Rick Bellomy says UL summer interns did “a lot of great work” helping update how the company tracks its inventory and fabrication process. “We couldn’t have made this much progress without them,” he adds.

A Canadian company with Lafayette operations hired a dozen UL Lafayette student interns this summer for a major undertaking: revamping how it keeps track of its inventory and fabrication process for tools used in the oil and gas industry.

Rick Bellomy, materials manager for McCoy Global’s drilling and completions division in Lafayette, says the students’ performance exceeded expectations.

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McCoy Global's Rick Bellomy says UL summer interns did "a lot of great work" helping update how the company tracks its inventory and fabrication process. "We couldn't have made this much progress without them," he adds.

“We asked them to do a really big job. Turns out, even we underestimated its scope,” Bellomy says. The student team was asked to merge multiple software programs into a centralized system to track fabrication and purchases of parts, including purchases from vendors and sales between divisions of the international company.

“They helped us get a more realistic picture of what will be needed to fully implement the new system,” Bellomy continues. Two other employees also supervised the students: Enterprise Resource Planning Specialist Harold Ducote and Controller Vickie Kolder.

The company tracks about 10,000 parts, including some 2,000 that it manufactures. Over 10 weeks, working 40 hours a week, students collected and organized information for about half of those. They created spreadsheets that provide detailed information about each part, for example, such as a description, the vendor, cost and where the part is manufactured. For parts that are fabricated by McCoy Global, the data collection was even more detailed because it included information about how these parts are manufactured.

The information was then incorporated into the new, comprehensive software system.

The students set up an infrastructure to follow the supply chain, including the amount of time required to get parts where they are needed. Bellamy says the students’ efforts resulted in “a lot of great work. We couldn’t have made this much progress without them.”

Twelve students from a variety of disciplines completed the internship. The students who participated were:

•  Mayur Sushajith Sampath, who is pursuing a master’s degree in mechanical engineering;
•  Kabir O. Sanni, who is working toward pursuing a master’s degree in petroleum engineering;
•  Drew Landry and Lecretia Toussaint, seniors majoring in accounting;
•  Mitchell Hutchison, a senior majoring in chemical engineering and chemistry;
•  Cassi Drexel and Casie Gaskin, seniors majoring in chemical engineering;
•   Tyler Bergeron, a junior majoring in mechanical engineering;
•  Stephen Coats, Riantae’ Freeman and Eric Phillips, seniors majoring in industrial technology; and
•  MeSha Prejean, a junior majoring in informatics

Informatics is a broad academic field that combines areas of study such as computer science, human-computer interaction, information technology and information science. Students learn about information collection, storage and retrieval. They also learn how to bring people, information and technology together in ways that are effective and useful for individuals and organizations.

UL Lafayette’s Informatics Program teaches students to apply information technologies and to design, maintain, and adapt information systems that solve problems with an understanding of human needs and context.

Prejean, who previously worked as a recreational aquatic therapist, says the internship convinced her that informatics is the right choice for her second career. She’s pursuing a bachelor’s degree with a concentration in media technology.

During the Fall 2012 semester, Prejean completed an informatics course, Human Computer Interaction, taught by Dr. Sonya Hsu.

“It focused on enterprise resource planning, which is exactly what the internship required,” Prejean says. “Because of that course, I was fully prepared, and it helped me get this internship opportunity.”

Toussaint says the experience helped her appreciate the importance of working as a team: “In school, I’m only responsible for me. If I don’t perform well and I get a grade I don’t like, it only affects me. That’s not the case here. In this situation, I rely on the next person doing it right, and they rely on me in the same way. If one of us doesn’t do well, it affects all of us.”

Bergeron notes that classroom experience with computer-aided drafting was helpful and says the internship has given him insight into how a business runs. “No project is ever complete,” he says.

Phillips toured the company’s manufacturing facility in Broussard, where it produces oilfield tongs. “We documented how a tong is built, step by step, so that information could be included in the software package,” he says, noting that the internship has given him exposure to multiple facets of the industry, including manufacturing.

McCoy Global, which began in 1914, operates internationally through direct sales and distributors. It provides drilling equipment line for oilfield service contractors, drilling contractors and rig manufacturers. The company’s operations are based out of the Western Canadian Sedimentary Basin and the U.S. Gulf Coast. McCoy’s corporate office is located in Edmonton, Alberta, Canada, and branch offices are in Alberta, British Columbia, Louisiana and Texas.

A Gavel Gusher

When it comes to litigation and other legal issues, Louisiana’s oil and gas industry could be on the cusp of a major watershed moment.

By JEREMY ALFORD and KELLY CONNELLY, LaPolitics News Service

The BP trial is in the midst of hearing testimony regarding exactly how much oil escaped into the Gulf of Mexico following the 2010 spill, with experts from BP and the federal government expected to be on the stand possibly past Halloween. Meanwhile, another legal battle is playing out between a New Orleans area levee board and 97 oil and gas companies.

If that weren’t enough, the Louisiana Legislature is actively preparing to once again tackle the always controversial legacy issue.

So-called legacy lawsuits involve litigation filed by a landowner claiming that oil and gas operations caused their property to become polluted and contaminated.

While there is plenty more action going on in Bayou State courtrooms regarding the energy industry, these issues in particular—specifically the levee board trial and legacy topic—are going to establish serious precedents and everyone is waiting and watching to see how they will turn out, says Chris John, president of the Louisiana Mid-Continent Oil and Gas Association.

As major source of tax revenue for the state, he says the industry has played a role in helping Louisiana make significant economic strides in recent years, all of which would be muted if the courts turn against them. “Louisiana has always been a litigious state,” John says, adding that the volume of litigation hasn’t necessarily increased, but the issues are as high profile as ever. “And litigation is a serious negative cloud over Louisiana.”

Levee Lawsuit Questioned on Different Fronts

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 Attorney General Buddy Caldwell

In the ongoing debate over an already-historic lawsuit filed by a New Orleans area levee board against 97 energy companies, the Louisiana Oil and Gas Association is accusing Attorney General Buddy Caldwell of breaking the law.

By authorizing the Southeast Louisiana Flood Protection Authority-East to hire its own special counsel to pursue the lawsuit, LOGA, some of whose members are targeted, contends Caldwell violated constitutional and legislative provisions.

Earlier this fall, LOGA’s executive committee voted to send a petition to Caldwell asking him to reverse the authorization. LOGA President Don Briggs says such a decision “would bring an end to the lawsuit effective immediately.”

However, if Caldwell doesn’t comply, Briggs says LOGA has hired the law firm of Mahtook and Lafleur in Lafayette to move forward with a declaratory judgment against the attorney general, which would pinpoint a legal position on the laws in question.

Specifically, LOGA contends Caldwell is ignoring a state law that mandates that he and his assistants shall serve as representation for the levee board or retain special counsel on its behalf. The petition also accuses the attorney general of usurping legislative authority by allowing state money be to be used for the lawsuit.

The levee board turned heads and incurred the opposition of Gov. Bobby Jindal when it filed its lawsuit in Civil District Court in New Orleans in July seeking no specific dollar amount, but demanding that the oil companies immediately restore damages to wetlands caused by decades of energy exploration, including dredge work and the criss-crossing of canals through coastal marshes.

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Robert Mahtook

Speaking for the flood protection board has been John Barry, the author of Rising Tide, who says the suit was brought because coastal land loss due to oil exploration makes it harder and more expensive for the agency to maintain the area’s flood protection system. Jindal announced last month that Barry was not being reappointed to the board,  although he remains active in the case.

Barry says the board is carrying out its mandate to help protect southern Louisiana by strengthening its first line of defense against catastrophic flooding. “The industry has taken about $470 billion of the state’s natural resources during the past 20 years, and we ask that it pick up its share of the increased costs of flood protections required to offset the loss of protective coastal wetlands,” he adds.

Being questioned is the board’s authority to take unilateral legal action. Jindaland others argue it does not have the legal ground to do so. Barry and other supporters, however, are unfazed. “We will welcome a challenge to our authority to file the suit,” he says, recognizing that the issue could eventually face the state Supreme Court.

Rhetoric Already Heated

During August’s SONRIS to Sunset Conference sponsored by the Department of Natural Resources, the luncheon speech by Briggs was about as routine as they come. That is, until Briggs started to wrap up his talk and transition into the question-and-answer period.

That’s when First Assistant Attorney General Trey Phillips walked up to the podium unannounced and started offering rebuttals on various lawsuit issues involving the New Orleans-area levee board, legacy cases and other topics. “I was shocked. When he got done all I could tell people was that’s exactly what’s wrong with state government,” says Briggs. “I guess I have to be concerned now that everywhere I go Trey is going to show up and give his own speech.”

Phillips tells ABiz that he was not scheduled to speak by the conference organizers, nor did he run it by his boss, Caldwell, a co-sponsor of the conference. “That was an on-the-spot call on my part,” he says. “It was not cleared in advance by anyone.”
He adds that he was not speaking on behalf of Caldwell. “I was speaking as the first assistant attorney general,” Phillips says.

During his impromptu remarks following Briggs address, Phillips told attendees, “The attorney general will never let anyone misstate

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 Photo by Robin May
 Don Briggs

the facts. We will always set the record straight.”

Phillips sought to clarify in his remarks that it was Caldwell’s predecessor, former Attorney General Charles Foti, who filed suit against the industry in regard to legacy oilfield contamination cases. He likewise pointed out that Caldwell is “not at all happy with certain parts of that contract” that the Southeast Louisiana Flood Protection Authority-East used in its hiring of attorneys to sue 97 oil and gas companies.

Long Live the Legacy Issue

Just when you thought it was safe to go back into legislative committee rooms, the legacy lawsuit issue is looming in the shadows again.

“It’s like Lazarus coming back to haunt us,” says one member of the House Natural Resources Committee, recalling past debates that were marked by aggressive robocalls in lawmakers’ districts and hordes of lobbyists on each side.

As this year’s regular session started to wind down, final approval was given to Senate Resolution 84 by Sen. Bret Allain, R-Franklin, to have the Louisiana Law Institute study the feasibility and constitutionality of alternative dispute resolutions. “We’ll see what they say, but I like the idea of having an independent body look at the issue,” Allain says.

How and when such lands should be cleaned, and property owners compensated, has been the source of highly-contentious bills debated and adopted by the Legislature in 2006 and again in 2012. While some may have thought the issue was resolved, lawsuits continue to be filed, particularly in southwest Louisiana. Allain says the institute could come back with recommendations before the 2014 regular session to help resurrect the topic.

Chris John says the Louisiana Mid-Continent Oil and Gas Association is working with the Louisiana Chemical Association, the Louisiana Association of Business and Industry and the governor’s office to bring forward other tort reform legislation as well for 2014. But right now they are still “pinpointing reforms” and John did not want to get into specifics.

As for the legacy issue, Allain’s resolution targets alternative dispute resolutions, which refer to legal procedures for settling claims that do not involve lawsuits, such as arbitration, mediation or a mini-trial.

Gifford Briggs, vice president of the Louisiana Oil and Gas Association, says it remains to be seen how fair and balanced the findings will be, but added that something needs to give. “The regulations and procedures that are in place now are not providing what industry feels is a reasonable conclusion to these lawsuits,” he says. “We’re still being hammered in courts all over Louisiana and we may be worse off today than we were in 2003,” which is when the Legislature went to work trying to craft an initial solution.

 

Problem Solved

How a ‘$1 million washer’ inspired a local entrepreneur to end an age-old dilemma.

By Patrick Flanagan

Mark DeRouen’s Open Hole Net is one of LAGCOE’s 2013 Spotlight on Technology Winners, and though the concept behind the tool is simple, it marks the first real solution to a problem that has plagued the oil and gas industry throughout its existence.

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 Photo by Robin May
5D Oilfield Magnetics President Mark W. DeRouen Sr. and Vice President Wade A. Hargrave with their Open Hole Net device.

From the time the first oil well was drilled, the potential for dropping tools and other debris into the well hole has posed a dangerous problem — one that remained unsolved until now.

A remedy is now in the making and will be on display as one of six technological innovations being featured during the Spotlight on Technology portion of the 2013 Louisiana Gulf Coast Oil Exposition.

The device, called an Open Hole Net, is the brainchild of Mark DeRouen, president of the Eunice-based company 5D Oilfield Magnetics.

The idea, says DeRouen, came to him in 2004 while working as the operations manager for a major drilling company at a remote location in Chad, Africa, when a small washer fell into the well bore, halting operations and ultimately costing the company more than $1 million before work could resume.

“What catalyzed the idea is when the company engineer walked into my office in Chad, and said, ‘Would you like to see a $1 million washer?’ And he threw it on my desk,” recalls DeRouen. “I went to grab it, but he grabbed it first and wouldn’t give it to me because it was a memento, a reminder, and I’ve always thought about that $1 million washer ever since.”

Over the next several years, the memory of the washer incident stayed with DeRouen, eventually spawning his idea for the Open Hole Net and the start of his company, 5D Oilfield Magnetics. The Open Hole Net, which DeRouen featured recently at the Petroleum Engineers Conference in New Orleans, is about to enter the field testing stage, and from there will go into full-on production as demand increases, says DeRouen.

“Our tool is designed to catch metal that is either dropped in or metal that is coming out of the well bore,” explains DeRouen. “Say there’s a piece of drill pipe stuck in the well bore, and we’re turning it to drill, well, that pipe is rubbing against the casing wall, and when they’re rubbing against each other, one is eating away at the other, and with our device, we’re able to catch all that metal that otherwise would get into the fluid being used in the operation, which would eventually circulate throughout the whole system. This metal can have great consequences for the surface and down-hole measuring equipment. At times, this metal can result in the drill strain having to be pulled out of the hole, and when pulled out, that’s a trip, and trips cost money.”

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Award-winning E&B Green Solutions' G-Clean products are formulated for tank cleaning, oilfield rig and equipment cleaning and degreasing, well stimulation, and oil and fuel spill remediation.

The Open Hole Net, according to DeRouen, requires no operator, no special crew for setup and no power source.

“Typically, when equipment like it is sent to a rig, onshore or offshore, a group of technicians has to follow to set it up on location,” says DeRouen. “When we send our tool to a location, the roughnecks on the rig install it. It’s very simplistic, and anybody in the business will understand that right there will save them money.”

The way it works, notes DeRouen, largely centers around the use of magnets, the placement of which determines whether the device is on or off.

“Envision two big magnets around a cylinder,” says DeRouen. “When you have those magnets against the cylinder, the magnetic force is applied to that cylinder, and it will catch anything dropped in — like tools, chains, bolts, nuts, tong ties — as well as anything coming out. But if you swing open those doors, then the magnetic field is taken out of the area of the tube, and it doesn’t act on it anymore. So the physical location of the magnetic system determines whether or not it is operating just by simply redirecting the magnetic field.”

DeRouen’s Open Hole Net, along with new technological developments from five other companies, will be featured Oct. 23 as one of LAGCOE’s Spotlight on Technology Winners. DeRouen’s 5D Oilfield Magnetics was the only local company selected among this year’s winners and will be joined by Baker Hughes, E&B Green Solutions, Hickman Sales & Service, Newpark Mats and Integrated Services and Zahroof Valves.

 

 

 

A Gray Matter

The energy industry is aging — especially among highly skilled employees like engineers — and it needs to hustle if it wants to avoid a human resources crisis.

By Walter Pierce

Petroleum might be black, but the industry is going gray, and any oil/gas exec worth his bonus knows a crisis looms for the industry if it can’t lure enough highly skilled workers to meet the myriad demands.

The phenomenon — an aging workforce on the cusp of retirement yet not enough young employees to fill the void — is being called “the Big Crew Change.” And it’s coming.

iStock_000022278922Medium
An aging oil and gas workforce, especially among skilled workers, poses a problem for the industry. 

“There are 10,000 Baby Boomers that are retiring every single day [across the U.S. economy],” says Doug Douglas, managing director and partner at Providence Energy Partners. “Last year alone there were 10 million skilled labor positions that went unfilled in the U.S., so there’s already a labor shortage for skilled labor, which certainly includes oil and gas.”
Douglas will be one of the panelists participating in a LAGCOE-sponsored workshop, “Challenges of Recruiting in the Oil & Gas Industry,” on Wednesday, Oct. 23, at LITE.

Douglas’ Austin, Texas-based firm specializes in employee recruitment in the energy industry. Also a member of the American Society for Human Resource Management, Douglas has been hearing about the Big Crew Change for years. He says much of what’s driving the shortage are cultural differences between workers entering the workforce today and their parents’ and grandparents’ generations.

“You have these older workers who grew up in a different day and age, and they like getting their hands dirty and they like figuring things out  — mechanical type things,” he says. “And then you have this new generation that comes along and what makes them unique is they’re the first generation to have the Internet accessible to them every single day of their lifetime. And so, it’s reformed and reshaped how they look at careers and how they look at communication, how they look at problem solving; it’s reshaped everything about them.”

A 2012 summary of the situation produced by Penn Energy compiles some alarming facts.

• From the research firm IHS: Around the year 2000 the median age of professional employees in oil and gas was 43; it rose to 50 by 2005 and now stands at about 60 years old.
• Schlumberger Business Consulting’s eighth annual “Oil & Gas HR Benchmark Survey” found that the industry will need to replace more than 22,00 geoscientists and petroleum engineers by 2015.  

Here in Acadiana the problem is muted thanks to a local resource, says Misty Watson, a corporate recruiter at Frank’s International: “Thank goodness we live in Lafayette and we have UL,” Watson says. “UL has an amazing mechanical engineering course. We scoop up a lot of the UL mechanical engineers.”

In fact, the day we spoke Watson had just returned from a Frank’s-sponsored job fair and was preparing to comb through the transcripts of candidates who will be graduating in December. Frank’s, however, is a little different than your typical oil patch company, relying heavily on mechanical engineers for tool design and less on petroleum engineers. But Watson is also aware of the Big Crew Change phenomenon and says it’s definitely an industry concern. “It is extremely hard. From an engineering standpoint there is a market shortage, and it’s only going to get worse here,” she says.

“The challenge is you need to be able to reach [recruits] earlier in their life so that they can start to consider a role within an oil and gas company where it can be something that’s a good, long-term fit for them,” Douglas notes. “If you wait until they’ve gone off to college and then you start to introduce oil and gas to them, oftentimes that’s too late because they already have their eye on a white-collar type position.”

But is the industry being aggressive enough in luring highly skilled workers? Douglas says it’s a mixed bag: “They talk a good game; they’ve talked about it for years. But when it comes down to it, a lot of oil and gas companies are pretty dysfunctional in their recruiting efforts,” he says, adding that some forward-thinking companies and trade groups have increasingly turned to creating scholarships to get engineers and other skilled workers in the industry pipeline, so to speak.

But, he says, timing isn’t on the industry’s side as retirees sidle off with their gold watches without having taught young workers the ropes.

“The problem is that they’ve got these highly skilled veterans of the oilfield and they have all this knowledge and all these tricks of the trade over 20, 30, 40 years, and now they’re about to walk off the oilfield and you’ve got these young ones and they just don’t have that knowledge yet,” Douglas says. “So, if you wait too long, with 10,000 of them retiring every single day, you’re not going to have any overlap there.

“It’s really kind of at a critical stage right now where they have to bring on additional younger workers and start to let them be mentored by some of those older workers, those more experienced workers, so they can start to pick up some of that knowledge and expertise before it walks out the door.”

“Challenges of Recruiting in the Oil & Gas Industry”
1:30-3:30 p.m.
Wednesday, Oct. 23
LITE
Free admission

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