Webinar | Saving Money In Operations: Preparing For Future Successes

Introduction

Cameron Croft:

Hello everyone. Welcome to our series. This is our second episode in our series, Preparing for Future Successes, with Alyssa Arnold. This series is saving money in oil and gas operations. The reason what we wanted to do with this series is there's a lot of uncontrollable factors right now. Election year would already be nerve-wracking for oil and gas, but now we got election year on top of COVID. Oil and gas prices look like they got shot in the foot, and then we got a series of protests going on, so it's like a lot of anxiety building.

Cameron Croft:

So we created this webinar series to figure out the things that we can control. Now, we want to interview subject matter experts to try to share the knowledge, build out what we can, focus on the tips and tricks of the things that we can control. So, let's get started.

Cameron Croft:

Now, before, we got a little housekeeping that we want to do. If you're new to Zoom, there is a questions box that you'll can actually be answering asking those questions along with it. Now, we're going to have a Q&A section at the end, but if there's a specific thing, question that you'll have during one of the presentation, put that in a box. I'm going to be trying to get with Alyssa during it, so that way she can be trying to answer those questions as we go along.

Cameron Croft:

Now, if something goes wrong, a lot of us are working remotely. If a kid walks in, knocks down your computer, power goes out, something like that, don't worry about it. We're going to be posting this on our blog with the transcript, so you'll all be able to get to see and hear everything Alyssa's saying, and we'll be uploading it to our YouTube channel.

Cameron Croft:

Now, my name is Cameron Croft. I'm the Chief Executive Officer of Croft Production Systems. I got my bachelor's and master's degree from the University of Houston for mechanical engineering and project management. Going on to get my black belt in Six Sigma.

Cameron Croft:

Now, the person that you actually came to this webinar to hear about is Alyssa Arnold. She got her civil engineering degree from A&M. She is a P.E. and she actually runs her own consulting firm, ATex Energy Consulting. So we're going to ... She put a list together for us today that I'm actually really excited about. Is a series of topics and highlights, things that she really wanted to cover, and that she speaks with great passion too with her clients.

Cameron Croft:

Now, again, as we're going through these, if you see anything that you're really particularly interested in or have a certain question on, go ahead and put that into the question box so that way we can either answer it during that, or we can catch it on the Q&A section at the very end. Alyssa, this is your introduction. So, what was the purpose of this presentation? What made you want to come here today and talk?

Alyssa Arnold:

When the price of oil really hit negative, we've got a lot of our operators shutting in. So we wanted to create some items that we could be utilizing and our employees for whether it's the lease operators or the in-office guys. We wanted to make sure to keep everyone utilized. And we knew that this was an artificial low. We know that the price of oil is going to go back up. We don't know when, but we know it will go, and so we wan to be ready to start operating and doing our best to clean up our fields and get ready. So, that was the purpose of all this information and all these ideas ,is to be able to go and apply it and improve your fields, take this time to actually make some improvements with the manpower that you already have on overhead.

Cameron Croft:

Well, it was a hard thing to do also because I put this to you and I said, "Alyssa, can you tell us everything that you would want to tell a client? Except you have one hour to do it in." So, we're going to try to get that fit in. Your first topic was lease operator utilization, so what do you mean by that? Expand on that.

Lease Operator Utilization

Alyssa Arnold:

Yeah, so the people who are the most underutilized right now if you do have a shut-in field and you have employees is going to be your lease operators, your pumpers, and the guys making your everyday rounds. We wanted to make sure to give them some points to focus on every day. So whether it's go check your tank grounding, we wouldn't be able to use them to inspect and to review facilities on a much higher detail level than what would they do on a normal day when they have full routes to run and they have production to look over. So we want to take this time to really utilize, teach them, take a pause and make sure everything's in good order while the price of oil is low, while they're underutilized.

Cameron Croft:

Well, that's the big thing, it's that shift mindset of going from high momentum, get it done and then all of a sudden portable capex budgets are cut, slashed in the house. And now it goes into maintenance mode and got to maintain what we have. Don't go over that. So it's a huge mindful shift that we're getting from a lot of our clients, of what's the big things that we need to focus on now? So yeah, lease operator utilization I believe is retooling it for the what we're seeing.

Surface Maitenence

Cameron Croft:

Your second topic was surface maintenance. I know this is a big thing for you, so yeah, expand on.

Alyssa Arnold:

We want to go through and check for any kind of erosion. This is a good time getting a bulldozer and improving your pad or doing some remediation work that you might've be holding off on. It's pretty cheap, the expensive part is the labor but now you have some lease operators that could possibly complete some of the labor side of it, and makes that a little bit cheaper and more doable.

Alyssa Arnold:

Then housekeeping, just clean up all the trash so that if you do get a railroad commission inspection or an EPA inspection, it just, it looks better. And there's no reason why right now is not going to be a good time for the guys to throw some extra valves that are sitting around, or spool pieces that are sitting around on the back of their truck, bring it to the yard and dispose of it properly or put in inventory.

Alyssa Arnold:

Cleaning up oil staining, this is huge. We don't want to have oil standing all over the site when an inspector shows up, because that's just going to say that we've been poor operators. So we want to focus on that. And a lot of the times this is older sites, things that there hasn't been as much TLC because there's no time. Now we have time. We want to make sure all of our containments are pumped down. So if there's been rainwater, whether that's your chemical pump containments, or your large storage tin containments, check the external integrity of your piping, look for bras, we're going to be painting which can also be done by lease operators. Not the most fun job, but it can be done.

Alyssa Arnold:

And then weed control is another huge thing, especially having to do with your secondary containment. If it's in earth and berm around your tanks is just making sure there's not weeds growing through it that's destroying the integrity of that berm. And then again, that recommission of drilling pads, or facilities that have been out of service, and taking out of service equipment out of service properly so that they don't leak or they don't cause issues for you down the road.

Cameron Croft:

Well and that's what you were saying earlier about oil stain. So like if there is a little stains out there, I mean, what do you recommend for your clients? Is that a full rail recommission, or I guess what are the railroad commission's protocol for that?

Alyssa Arnold:

It really depends on the extent of the oil staining of course. If it's inside the berm and it can be cleaned up, go for it, if it's a larger spill there's some testing and things about it that might be required. So it just depends on the quantity.

Cameron Croft:

Okay. Awesome. Well, that's what I know. On your second one, you pretty well dive down a little bit harder into this, is like a facility and equipment maintenance and how that goes along with the service but this is getting inside the equipment, is that right?

Alyssa Arnold:

Yeah. And this one's huge because you should have a maintenance program whether it's inspecting heater once a year or twice a year or every other year or whatever it may be depending on your service. This is a great time just to do it. Then you don't have to take a shut down in the future. Again, if you've already done it in May then obviously now it's not the great time to do it because only been a month. But if you're coming up on a year and it's going to be in the fall, just go ahead and get those maintenance items done and out of the way.

Alyssa Arnold:

It's also a good time to teach your operators about these maintenance items, so they can be doing them, they can be looking for them. This is a great time for trainings or webinars, while we're not all chasing our tails, and you still might be chasing your tails. I mean who knows. It' a little busy, I'm sure but it's not as busy as is the idea.

Alyssa Arnold:

Tank clean outs, where there might be standard paraffin issues, this is something that we normally don't ever stop to do, but if you've known a facility has a sand issue it can prevent issues down the way. So if you have an oil lout or a water pump or anything like that, cleaning those tanks out to prevent failures of those pieces of equipment it's huge. And if you are shut-in making sure that you are doing flow line maintenance.

Alyssa Arnold:

If you get have the paraffin [inaudible 00:09:57] each to a service, doing your integrity management plan and really focusing on that during this times would be huge. You can possibly reduce the back pressure on your wells if you have wells and flow lines. You can reduce that back pressure by cleaning that flow line out and reducing any friction losses across the flow line so when you come back online you can look online better.

Alyssa Arnold:

Of course, clean your flame arresters, flares, [inaudible 00:10:26], anything that has a flame arrestor that can cause back pressure which can cause issues at the facility.

Cameron Croft:

Well, we're having some clients that are doing in oil and gas prices. What they're doing is they've putting things on pause. They're actually shutting down some wells, they'll kick them back on when the oil and gas prices are a little bit better. So the ones that are shutting down right now, what's your advice on that and the facility maintenance?

Alyssa Arnold:

So it depends on your type of service. You can go as far as tickling all your vessels in your well, and a lot of my clients are just washing out. And if they have high paraffin that's where we're saying if you're not going to be recycling your well. So if you're recycling your well every other week or so, it's probably enough movement through there, enough heat from your reservoir that you're not going to have a huge issue. But the worst thing would be to come back to [inaudible 00:11:24] depth flow lines and your flow line is going to be, because it's underground. And so it doesn't get the summer heat like some of your external equipment, your flow line is going to be your points of the highest chances of a paraffin blockage.

Alyssa Arnold:

So I would spend the money on pushing that liquid through which can also help you in the long run again by reducing [inaudible 00:11:46] in the future.

Cameron Croft:

So saving a little bit money or spending the money now is going to save you a lot of heartache later when you're trying to come back on-

Alyssa Arnold:

Yeah, nobody like working flow lines. [inaudible 00:11:57] working over plucked up flow lines. There is no fun in that frustration.

Cameron Croft:

Absolutely. Well, is there anything else more you got on this?

Alyssa Arnold:

I do. One of the big things right now is equipment is cheap. There's a lot of inventory out there. There's been that some of the bigs had huge orders that they canceled. They had to pay like a 15% restock fee. These vendors are really just trying to look to get out what they put in. And so you're able to get equipment for so cheap. So there are tanks that you have holes in the tops and you've been putting off, this might be a good time to look at some of those replacements or even just buying inventory for future development projects. This is a really great time to look into that. Most vendors have inventory, the way that my group put together a huge list of 500 products that's on inventory, that's at highly discounted rates.

Alyssa Arnold:

I mean, some of the tanks are 50 to 60% off from the prices we were seeing prior to the slow down. So that's huge. It's a great opportunity. And then if you have capital spend this is a smart way to spend it.

Alyssa Arnold:

And then make sure your flow down lines have plugs, make sure that all the pipe is supported and there's not stresses on your skids or on your vessels. And that's going to cause issues later, maybe fix some of your pressure supports or your pipe supports to reduce those pressures.

Alyssa Arnold:

It's little things like that, and our idea is to give the pump, the lease operator every day items. So they're going to do the rounds anyways. So every day go ahead and especially look for those pipe supports. Let's show them what you're looking for, and what stresses and issues that could be found, and let's teach them that before they go out, and then let them go review it all, take photos, have an inspection sheet, mark it up, and then you guys can prioritize those types of issues.

Alyssa Arnold:

And a lot of them is not going to be spending a large amount of money, or even any money. In some cases some of it is going to be stuff you already are able to fix within your team.

Alyssa Arnold:

And then paint tanks and piping just to prevent any external corrosion. If you have the air soil interface, make sure you're taped up and that tape is still looking good to prevent that corrosion since that's their highest corrosion point. So yeah, I think it's a lot.

Cameron Croft:

It's a lot.

Cameron Croft:

Oh, the big one right now especially if you've got paraffin but if you're shutting down your wells, keep clearing out your lines to do a proper shutdown for maintenance to kick it off later.

Alyssa Arnold:

Yeah. I mean that to me is the biggest one. If you're going to be shutting down indefinitely, is to make sure that any kind of paraffin, asphaltene, any kind of solids that you see if there's a tendency for solids going in, just do a water pump through and just get it clean, as clean as you can, cheap couple hundred dollars maybe a thousand dollars to do it and blow it down with the facility and call it a day at the very least would be my hope.

Electrical / Automation

Cameron Croft:

Okay. What know in, okay, next step that's from the maintenance side it's going more into the electrical and automation. So, what do you mean, let's focus I guess on the electrical side first what are you talking about on that?

Alyssa Arnold:

So on the electrical side it's going to be like your tank grounding and things of that sort. If you have lightning protection, having the lightning protection, review it and make sure it's still properly installed and is going to operate the way you purchased it to operate. But the biggest and most important thing that I think a lot of operators miss is doing valve function tests. So specifically on ESDs or emergency shut down valves and things of that sort, this is a great time to be working those valves, testing those valves, ensuring that everything's calibrated properly especially on your safety systems.

Alyssa Arnold:

And if your facility is shut down, then working to shut down valve or checking the shut down valve function is not going to be an issue. You're not going to have to take a shut down for it. So this is a great time to do that. If you have IME staff or automation staff, it can be done in house potentially and free and just be utilizing those guys, which I think is huge, and it's going to help you in the longterm. It's something that a lot of operators miss on their maintenance plans and this is a great time to do it.

Cameron Croft:

Well, when you have an emergency shutdown valve, that's a huge priority. I mean, I didn't have one that big but I had a piece of equipment that we were renting out for three years. They were doing some work on their facility. They wanted us to do some integrity checks and they've made us bypass our equipment. And that was the first time that our bypass valve was utilized in the three years. And I come to find out it didn't work. It was locked, ready to go. So $1,800 valve after three days worth of work two guys replacing it, out buying a new valve, cost us around $9,000, and it put a three day delay on their integrity tests. So what we learned from that on our back end stuff is when our technicians are going out now, we do a quick check on everything, all valves on a once a month basis especially if it's in use. And that's a cheap one. I can only imagine the emergency shutdown valve.

Alyssa Arnold:

I mean, it could lead to a catastrophic failure, right?

Cameron Croft:

That's right.

Alyssa Arnold:

So a lot of [inaudible 00:17:59] is spent on valves or on our well head in case the choke flows by to protect the flow line and to protect the facility down line. So those are the big guys. I would definitely prioritize it by any prevention of catastrophic failure and then move to the bypasses and things of that sort.

Alyssa Arnold:

And it is important to know that you can't overwork ESDs, they are not supposed to be worked at a constant level. So there's some API recommendations and my team can make recommendations as well as to how often to work those and in what frequency.

Cameron Croft:

Well, actually I do have a question for you. When you were talking about the ground rods, those types of things, I guess for lightening that's happening, we've seen every client do something different. They come down with different specs that we have to do. We get everything for our equipment ready to go out to their location. Then we go to location and they're wanting to make some modifications on location. Is there a master way of looking at it or who dictates that this is probably the safest way to do it?

Alyssa Arnold:

Well, lightening protection or grounding?

Cameron Croft:

Grounding. Yeah.

Alyssa Arnold:

There are some regulations and codes. I work with a lot of electrical consultants that can provide those recommendations, that's who I'd go to. I'd go to the regs and then go to your electrical consultants or your automation specialists who do the installations every day. Everyone has their own theories on it and their own teams just like everything else in this industry. I think there's a couple of principles that are pretty important. And again, I will I won't say go back to the regs. There's an API recommendation and guideline for that.

Cameron Croft:

Okay awesome. Well, and then so when you're talking about automation style, on the automation what do you, are you talking about call-outs or skater systems or?

Alyssa Arnold:

Yeah. Level transmitters just to make sure they're functioning correctly and they're reading the level correctly, pressure transmitters, anything like that that's operating something downstream especially, oftentimes your level transmitters are operating your transfer pumps or there's a pressure transmitter that's supplying information to a shut down valve. All of those systems need to be tested. I always suggest once a year, I've clients that do varying frequencies on those tests. And we know plenty of consultants that can go out and do that work, contractors. So if anybody needs help on that let us know because it to me it's one of my passions when I build a facility, I do a risk analysis based off what kind of safety systems are out there. And if the safety systems aren't tested, that risk analysis is no good and the risks could be very high. It's a small system that you don't really see and it's not in your face. So it's not reminding you, and some of the failures aren't going to be alarms. So it's it just put in the background but it's a really, really an important system. It's your last line of defense in a lot of cases other than PSVs but oftentimes it's your last line of defense and you want to make sure that it's doing what it needs to be doing and it's operating well.

Salt Water Disposal

Cameron Croft:

All right. We're good. I know that on that, you you then you'll approval of going in. I know you like talking about this, you have a whole slide dedicated to SWD, so expand on that. Why focus so hard on this?

Alyssa Arnold:

So SWDs I know is a very important piece of a lot of projects, especially Permian where they're just water hogs. So the real focus here is that you think it had, if there's in your future development plans, this is starting to transfer into some of the office workers and the engineers is their ideas to look ahead. If there's SWDs that are going to need to take additional water in the future, this is a great time to do this separate rate tests to understand how much water you can take and what it will take to upsize the pumps. And if additional hours could work or do an acid job to clean it out.

Alyssa Arnold:

This is just a great time to start development planning and understanding how your water systems are going to be able to handle the water that you're bringing on in the future because we're going to drill, baby drill, very soon.

Alyssa Arnold:

And then to understand the additional electricity usage with additional pumps and everything that goes with it. Oftentimes SWDs are the last part of the project. But oftentimes if a new SWD needs to be drilled and it's a six to 12 month lead time on the permit. So just getting out and planning, it's something it can make or break a project whether or not you have an SWD, a dollar 70 for trucking the water versus a dollar or 10 cents for disposing of it yourself. It's a huge economic maker of breakers.

Alyssa Arnold:

So just to remind everyone to think through your SWD systems or your disposal options for your development plan and now is a good time to test it, build on to it i you need to do some additions, or you need to take a shutdown to a T in so you can put additional tanks in it in the future, this is a good time to do it when you're shut down.

Cameron Croft:

On the top things if you have an existing location ready to go, I mean, what would be the top things that you would like to go out there and on your checklist? So just to double check how the integrity of the system is going on.

Alyssa Arnold:

So looking back at the injection profile, the pressure profiles, the rates, seeing if it's a loss, or if the pump is having to push harder and pressure up harder, if we're getting less water out in a way, those are things that would tell me that to start looking at maybe an acid job, a clean out, and this is a good time to call the pump company and have them do a complete pump maintenance. And just to make sure everything's functioning correctly.

Alyssa Arnold:

Again, when an SWD goes down, everyone is scrambling. So this is a great time to just go through and review everything, making sure that there's no lines plugged off internally. This is another good place to possibly do tank cleanups because you don't want your pump pulling on tanks full of gunk or full of sand. So these and oftentimes you'll have so much water moving through that there will be particulars to carry over. Obviously filter maintenance but everyone I'm sure is doing least a monthly basis checking the pressure differentials on either side of your filters to make sure that you're not plugging off and causing artificial back pressure that you don't need.

Cameron Croft:

What filters do you recommend? I mean, it's just a coalescing filter. I mean, you've probably seen a number of different ways.

Alyssa Arnold:

Yeah. Oftentimes most of the time we just do these filter pots, they are very simple. There's varying sizes depending on what you're expecting. But yeah, just a real simple filter pot is often what we use for us if you use.

Containment

Cameron Croft:

Okay. Well awesome. And I know your next topic that I know you're focusing on right now is the containment. Yeah, that's pretty big. I've been to a number of locations where you got it's perfect. Everything's pristine and you've got other ones where it just looks like someone just bulldozed everything down. So yeah. Tell us about that.

Alyssa Arnold:

For those who don't know, I do SPCC plants as well. And so I'm very passionate about containment and upkeep because I stamp those plans and certify that those containments are good and they will remain good. So just to show you the strength of it or the the validity of the SPCC plans and secondary containments, oftentimes at secondary containments, the only thing stopping you between an oil leak during a rainfall going into a natural body of water and in very major oil spill response occurring.

Alyssa Arnold:

So having those sized correctly, at least 110% of your largest vessel within that containment is huge. And then making sure that you don't have erosion if it's an earth and berm, or you don't have holes through it if it's a polylines or a steel corrugated wall berm.

Alyssa Arnold:

So it's something that's really easy to miss because as pumpers go every day, there might be a little slope that just slowly gets bigger and bigger and bigger. So this is where we really suggest engineers go down and do a full review of the fields and just walk each site and look at just containment. And I know in some cases it's a lot of sites and it's a really long day, but it can save you from a catastrophic failure and an oil spill response that goes into natural bodies of water is not anything I would wish on anyone. My dad was an oil spill response consultant and spent many of nights helping people respond to these things, going through lawsuits after lawsuits because someone's water was contaminated downstream or animals died. And those are just situations that are not necessary. And these containments can save you from that.

Cameron Croft:

Well, I'm actually curious about that. You go to some of these locations it's like they kick it like they're kicking a tire to a car and they're like, yeah, it's a good car. They go up to these earth and berms and they kick it a couple of times. And I mean, when you go out there, what do you look for? And then what are some signs of weeds growing up or?

Alyssa Arnold:

Yeah. You want to make sure weeds and any kind of roots, piping within the berm oftentimes if it's not taped up properly because there is an error on soil interface for piping, that can be an issue. It actually can cause the piping to rupture.

Alyssa Arnold:

And any kind of holes through it, and a lot of times on these newer, we want to cut a pipe through it through the containment so that we don't have to go up over it and cause that pressure and so if it's not done correctly, and it's not poly lined off, those holes will just be leak points. I've seen so much, I've seen virtually like, it looks like a tiny garden growing in there. It almost looks like they purposely like grassed it out. And when you start having vegetation in there, you start losing some of your containment capacity. So you no longer have 110%. So things like that.

Alyssa Arnold:

And then on earth and berms, you slowly will lose the hype of the berm as erosion happens, wind, water, whatever it might be. At that point you need to be measuring that height. And if it gets below the height of what's in your SPCC plants, you need to rerun it and make sure that there's still enough capacity. So if you do have a failure of one of your largest vessel, you'll have enough room for the vessel's full fluid or tank's full fluid plus some storm water. So earthen berms are, they take some upkeep and oftentimes earthen berms or older sites that produce less. So the up keep is harder to do, clients are less likely to want to spend money and it's like the A-class.

Alyssa Arnold:

But those tanks often sit there four or five days full of fluid before they call in a truck to come load out. And so those are oftentimes the largest risks. And a lot of times they don't have level control automation and things of that sort. So we don't even know when it's getting to a high level. So those are oftentimes your highest risk sites. So those are the ones that need to be up kept.

Cameron Croft:

So if a client I guess or someone has a question on this is, if he came in and said, "Hey I need some SPCC plans done by your firm." Do you all do that, does your firm do that?

Alyssa Arnold:

Absolutely. Yeah we'll go out and we'll do all the measurements, all the photos and everything associated. We even put together plot plans and things of that sort that are required, all the maps. And we've even at first sight in very far in rescue, we even proven there was 17 locations. We were able to prove that there was no natural bodies of water that these sites were threatening. So we were able to prove that SPCC site wasn't required. And we then stamped that documentation in case you there is an EPA.

Cameron Croft:

Right. I would see that to be a PR nightmare if you have leaks going on and then proving that it's going into the nearby Creek or yeah, even into the fields. I think that would be just terrible right now with all this stuff that's going on and then you have to deal with that.

Alyssa Arnold:

Yeah. In South Texas and then things got sour and we do a lot of work in South Texas in Permian. Oftentimes you don't know there's a creek until there's a hundred year flood and that's the issue, right? So we take demographic maps and we go back and look at historical data to see where the natural bodies of water are, which the definition of a US natural of a body of water is five pages long. So there's a lot of caveats to it. But we go in there and try to determine where your closest and highest risk point is. So that if there is a spill, you know where to stick those bulldozers and sandbags and whatever else you got up your sleeve and prevent that from getting to you the natural bloody water, which then becomes a national spill. And then the publicity is inevitable.

Cameron Croft:

Yeah. I didn't know your dad did that. Is that what made you want to get into that?

Alyssa Arnold:

That's what gave me the breadth of the SPCC. I do have an expert role in the API bulletin on writing SPCC plans. So I do a good amount of experience behind me on that. I live five minutes from home, so I utilize him a lot. So that combined with my facility engineering gives me the ability to look at these sites and get a little creative on some of the safety measures. And so I try to use that to help my clients as much as I can.

Cameron Croft:

Does that ever go to your head? It would just seem like if someone's heart like railroad commission arguing with you, you would just say my dad literally wrote the book and you just like drop it. You don't do anything that [inaudible 00:33:37] to combat it.

Alyssa Arnold:

I probably need to print it out, so I can just drop it on site. It would be helpful. But yes, I have had fights with people. The 110% seems to be a varying number but we've been able to cite it in inspector guidelines and things of that sort. But yes, I had had fights with people where I'm quoting things but I don't ever put my dad in, because I want to make sure it's nice to have an expert in the background to debate with.

Trainings

Cameron Croft:

Absolutely. Let's go on to, so your next one was trainings and I know you focus heavily on trainings and that's why you're even on here today. I know you have a passion for educating and trying to get the best success out there. So in your mind trainings I mean, what do you recommend to your clients for?

Alyssa Arnold:

I do have a passion for trainings, and especially I've been around a lot of really green lease operators. And so this is the perfect time. The perfect time to teach them anything that you haven't had time to teach them before. We've seen lease operators make really bad decisions. I've been a part of a couple investigations into very serious or deadly injuries that were caused because people didn't understand the systems. They don't didn't understand the purposes of lockout tag out. And so this is the time to really explain why these processes are so important and where the dangers are. So I mean, this is the perfect time, right? And you can do virtual trainings, you can do Zoom calls and just have just different subject matter experts to discuss how a heater treater works in the internals of it.

Alyssa Arnold:

Just very simple things that some of these operators just haven't had the joy of learning. So it's a great time for that. But even more than that, it's a great time to get your yearly SPCC training checked out. And my group can can do that training via Zoom if we need to, or you can do it internally. If you look comfortable enough with knowing your plan, it's a really simple checkoff but this is a good time that you can spend the time to really explain the importance of the SPCC plans. It's not just to check mark, it's really to prevent some major failures or catastrophes down the road.

Alyssa Arnold:

So this is a good time. H2S trainings, I work in fields 4,000, 15,000 parts per million. I've worked in 33% parts or 33% H2S fields. It's highly important, most companies require at least yearly H2S trainings. This is a good time to go ahead and push that out while we have time. Because once the oil prices kick back up, we're all going to be chasing them.

Cameron Croft:

Drilling.

Alyssa Arnold:

Drilling, and we're going to be completing anything that's been ducked. And we're going to be in a huge rush to get things back online and get capital flowing again. So taking this time to get all that stuff out of the way, all the housekeeping pieces, but for both fields and office is great. Flipboard pathogens and pandemic trainings that are now required, this is a great time to do it out of the way although I'm sure everyone knows to wash your hands and wear a mask but any OSA trainings, HSE trainings whether it's behavioral based safety programs, or safe work, this is the time to improve everyone. This is the time to teach them large volumes of information that they'll be able to go and take and fly. And if you do feel comfortable having your teams out on site, you can do onsite trainings and making sure they understand the valving and things like that on some of the facilities. So it's just a great time to educate.

Cameron Croft:

I think so right now also, of all the budgets that are getting cut right now, I don't think training is one of them. It just leads to many mistakes because I'm a Black Mountain and Six Sigma, we register all nonconformances and over the last five years 82% of our non-conformances in our organization it could be just, oh, I forgot, I told that guy but I forgot to follow up on it. We'll do an NCR on it because it's a process failure. What we're finding out it's really not on the employees that is the failure, it's communication based. So over 80% of our NCR is really just communication, not understanding, assuming. So if you have some basic trainings and they have at least a foundational guideline to follow back on, they can let's just say that SPCC like you were saying, is if they had a basic understanding of why they're doing that 110%, and they're seeing weeds grow everywhere, they're seeing these signs that at least pop or gauge, I mean he can call the office and say, "Hey I'm catching some things out here. We probably need to kick that back so we can get this thing fixed."

Alyssa Arnold:

Get them purpose to what they're doing, right. So it's not just a check mark. It's not just, "Oh have to do this." Let's just get this done on a monthly inspections or in your annual inspections. It's to give them like, I'm doing this so that I don't have to be up in the middle of the night with a shovel attempting to prevent oil from getting into another body of water, which can cause a lot of issues for the company. It's just putting some of that weight and gravity to the trainings.

Alyssa Arnold:

And then again we don't normally have time for it.

Compliance

Cameron Croft:

Well, in the trainings you also talk about your key compliance items and I know you really like compliance.

Alyssa Arnold:

I don't like compliance.

No one likes compliance but I really don't like when we're noncompliant and we get caught, that is definitely the worst case. And if that you're noncompliant on some pieces right now this is a great time to become compliant especially when things are shut down. A lot of times to get compliance, the rubber commission or whoever whatever agency you're in compliant with, it's going to require a shutdown. So you're already shut down, go ahead, take care of it. `

Alyssa Arnold:

Again, SPCC plans get compliance, which you'd be created within six months of startup. And then let me know if you have any questions on that because I know. A stress contingency plans is another piece. H9s, anything greater than a hundred PPM in Texas is required by the statewide rule 36. I have people that can help you with that. Not me, I have people that can help with that though.

Alyssa Arnold:

And then your [HCS 00:40:41] manual. A lot of small guys, obviously the big guys you guys got that stuff covered but a lot of small guys have just been sprinting so hard and so fast the use of HCS manual from a previous company that it's not all applicable. This is a good time to go through it, and really fine tune it, get your programs correct. Emergency response plans, air permitting, which a lot of times it's painful but making sure your air permitting is correct is huge. We see the rail commission doing flyovers. And I think I saw an article that the rail commission said in the Permian 50% of flares are used incorrectly, and are not effectively burning.

Alyssa Arnold:

And so just those pieces are huge. That's going to become a more important piece of business here shortly. If we're going to follow Colorado at all, which has really gotten strict on the air ranks. So to get up to our current spec is really important. Depending on what happens in selection year, we might be adding additional specs to it. So you want to make sure you're at the baseline at the very least.

Alyssa Arnold:

And then remediation, compliance on spills and everything of that sort, and DOT compliance, being ready for your internal audits, making sure that your operators are qualified and things of that sort. That's a whole another presentation worth of data but your DOT compliance is also huge if you have DOT pipelines.

Cameron Croft:

Well, so the railroad commission they asked all that article, they said one out of five is just not functioning at all, but they said 50% is not up to spec or not functioning properly. So one out of five it's just not usable. So if the railroad commission, it's almost like they're trying to give a warning out to everybody of like, "Look we know what the stats are and where we are coming. It might be next year, it might be the year after but we will have to do and push our through do our job." That'd be regulators enforcers of the code. So it's a good morning shot, right?

Alyssa Arnold:

Yeah.

Cameron Croft:

It's time to step it up. You did mention a couple of months ago you're telling me that you can almost tattletale on yourself to the railroad commission. You can say, "Look we know we're not in compliance but we got a mitigation strategy to get in compliance." Walk us through that. How is that even possible? What do you do there?

Alyssa Arnold:

You email him and tattletall on yourself, but I didn't say the most important thing is that all your documents are put together prior to that, and be okay with some sort of punishment, it might happen. And if it's a list of compliance items, oftentimes we suggest that you have a consultant email them and lay out what's going on and try to understand what they would suggest or what they feel like the ramifications would be, just to understand how deep you're going to be in.

Alyssa Arnold:

And certain compliance items have varying consequences. If it has to do with H2S, public safety and things of that sort, definitely is going to be a higher threshold of consequences. If it's something smaller and it can be fixed easily, potentially less consequences. I make no promises when it comes to railroad commissioner.

Cameron Croft:

That's right. It depends on [inaudible 00:44:24] of that day or something and they're mad.

Alyssa Arnold:

Yeah. It's definitely varying amounts of responses that you can get but they're usually really excited for people who are wanting to become compliant. They want to encourage that. Again, they know that once you've turned yourself in then going forward, you've learned your lesson, right. You're going to do the right thing. So they want to encourage that, and there's plenty of consulting firms. We have a couple of people who work for ATex that can help with that. But there's plenty of subject matter experts on compliance items.

Alyssa Arnold:

So just getting a quick consultation from one of them can significantly help put you together a timeline of what documents are necessary for the different compliance items.

Cameron Croft:

Well when I think about is all these companies buying new locations out, doing these different things. There's a lot of with oil and gas prices a lot of trading mergers acquisitions going on. So if you buy that, it's almost impossible to visit every field that you're buying. You're looking at production logs, what you're doing, but when you finally go out there, that'd be I think railroad commission would look at that as, look I just bought this. I found this, we're trying to get back into your compliance now.

Alyssa Arnold:

They usually acquisitions, there are some exceptions and an overall umbrella. They give you a little bit of leeway there. But I would say if you were buying an asset, please do a phase one or phase two review, have someone do a desktop review to understand what kind of compliance issues are currently standing, what kind of fines or negative feedback there is available for these sites. And if there seems to be a large amount, then go forward to phase two because remediation projects can cost millions depending on where you are, depending on how deep the spill is and how it's affecting the ground. So those types of items can give you some good leeway whenever you're acquiring to get the prices reduced because you will have to pay those in order to become within compliance.

Alyssa Arnold:

So compliance is one of those pieces that I would look at for sure before you close on a deal. There are plenty of teams including my own and I can get you in touch with hundreds of others that can help you with doing a phase one. I think it's really important. Lunchrooms, we don't look at surface when we're acquiring stuff and it comes to bite us in the butt.

Cameron Croft:

Yeah. Well on that compliance items you have a company initiatives. So I know you're focusing on that, you've been talking about that throughout, and a common denominator throughout this presentation but what company initiatives, what do you mean by that?

Company Initiatives

Alyssa Arnold:

This goes all the fields all way to Houston San Antonio Austin, wherever your program is in these. Field office initiatives, look at inventory and equipment, try to really understand what auto service equipment that you have to get refurbished. This is a good time to create that list so that whenever you do start developing, or you have replacement projects and you do down the line, you know what's in house and you can keep your spend low. Because I think 2020s will continue to be the year of keeping spending low.

Alyssa Arnold:

You want to focus on creating an opportunity bank. This is something that I did when I worked at another company and it was huge and make sure that you are comparing all the economics of these products on an apples to apples basis, so the same oil and gas prices, same price deck over time. And look at SMUD projects and gas optimization projects with compression along with your workovers and your recompetes and in your drilling projects just to see where you can really save money or spend money appropriately to make money.

Alyssa Arnold:

SWD reviews like we discussed, renegotiate contracts right now as I'm sure everyone knows what our hauling has gone way down from the areas I've been working in dollar 70, to a dollar 30. Focus on renegotiating contracts or compressor rental contracts and things of that sort. Create standards to streamline processes of future. It's easier to do bid work if you have standards in place, and then work on creating just work organized filing system. I've done this with my team, on our drive is really focused on filing and documentation and things of that sort, while we're a little bit slower that helps for sure.

Cameron Croft:

Absolutely. I know, I like what you said earlier about the opportunity bank. So how did that work? It just every time there was something like, we don't have time right now but in the future we can handle that. And then we'll just-

Alyssa Arnold:

Or we don't have money. Right? That's the real big. Is we don't have money right now but here's a really great project and make sure your cataloging it all in one central database. And the big thing oftentimes management wants to see this once a month. That would be a good initiative, just to see them growing to make sure everything's whether there's an NPV, or a rate of return, or whatever economic piece you want to tie this to make sure that it's all apples to apples. So you can really prioritize your projects. And maybe there's an SMUD project that's going to reduce your OpEx. And that might be smarter to spend money on a recomplete, just so that you can compare these projects appropriately.

Alyssa Arnold:

So when there is capital available, you know where to spend it. Artists are doing some of the design work in the project background. So that as soon as there is capital you can get going, or you can help build next year's budget with these things too whether it's maintenance work or things of that sort. We're almost halfway through the year, and we're create budgets against ceiling, and hopefully for a much better year. So all of those pieces is great to do right now.

Conclusion/ Q&A

Cameron Croft:

Absolutely. I know we got a Q&A section at the end but I didn't want to go over. We've got Chad Dorsett joining us in two weeks. He's a former production foreman and he's going to be looking at plunger lifts and LOE savings that from his past experience over the last 20 years. And then on July 21st we have Terry Nelson with WPI who will specifically be talking about glycol dehydration.

Cameron Croft:

Now if you're interested in being a webinar speaker or know of someone that would be a good fit, please reach out to us. Reach out specifically [email protected] Or you can go to our website. There's various ways of saying, "I know of someone that would like to do this or I want something to share it out to the industry."

Cameron Croft:

Now at the end of this presentation you're going to be getting a popup for our survey. It's a quick survey. Now again, I'm Six Sigma. So all of this is perfect feedback into us. So what are you looking for? More visuals? You want faster timing, you don't like the 11:00 AM, just give us that feedback and then we'll be shipping out a free hat or shirt to you.

Cameron Croft:

So ending that, I'd like to go to the Q&A section but our information, or my information and Arnold Alyssa's information it is on this, so reach out to us. If you have specific questions on LinkedIn you want to go out or you want it to get ATex onto some projects that you have going on. This is a good time to reach out to us. If you have any specific questions, now's the time. Again, go to Zoom, put in your questions but there is two questions that did pop up before this meeting that was entered. It says can ATex conduct evaluations on acquisition? So earlier you were saying I guess phase one, and phase two. Is that something that if they're looking at buying a facility or several fields you could go out?

Alyssa Arnold:

Yeah absolutely. We have a woman who does our regulatory who has extreme experience in phase one and phase twos. She actually used to work for the TCQ so she knows it. She knows the system pretty well. So yeah, we can do phase one, and phase two. So please let us know and we'd love to provide a proposal for that.

Cameron Croft:

Alright perfect. And then the second question I got is, where do you go to tell the railroad commission about issues?

Alyssa Arnold:

You can look and find email addresses for particularly people whether it's pipeline safety or oil and gas. Also, if we can help you find those people and we can be your mouthpiece until you're ready to say who you are, and what your issue is, which is the joy of being a consultant is we're not tied to any particular company. So it's a good opportunity to bring us in, and ask us questions. Or like I said, oftentimes on the railroad commission you can find specific emails. And right now emails is the best way to contact them since a lot of times they're not in office. I think they're working some really weird like, they go to the office on Monday they can't go Tuesday and then they go Wednesday.

Alyssa Arnold:

So email is really the best way to communicate with them. And then they can provide you their cell phone number if they feel like they want to have a discussion.

Cameron Croft:

Okay. Well, we have no more questions right now. We've got five minutes left, so we're going to end this webinar but Alyssa thank you for coming on and talking with us, sharing that information. Based on the feedback I'll be shipping that out to you.

Cameron Croft:

And again everybody if you all need to get a hold of Alyssa or me, our information is below. This will be going up on our blog and our YouTube channel. So thank you everyone for attending.

Alyssa Arnold:

Thank you everybody.

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