Darrell Heiden

8/10/2019 Darrell Heiden

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OIL & GAS

Darrell Heiden Manager, Energy & Environmental


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How to Locate Oil Deposits the OldFashion Way

http://youtu.be/NwzaxUF0k18


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Overview

Exploration and Extraction of Hydrocarbons

Production of Reservoir Fluids

Contracts

Insurance and Indemnification Requirements


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Oil & Gas Industry Segments

Upstream Exploration and Extraction of

Hydrocarbons

Midstream Transportation, Storage andMarketing

Downstream Processing Raw Materials into aFinished Product


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Upstream Segment

Mineral Lease Acquisition

Landman - Checks records for ownership andmineral interests. Once a Mineral Lease issecured the Lessee can obtain Drilling Permitsand Exploration can begin.

Seismic and Geophysical ExplorationApplication of surface methods to measure thephysical properties of the subsurface, looking

for anomalies in these properties, in order todetect the presence and position ofhydrocarbons


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Drilling Operations

Lease Operator - The individual responsible for theexploration, development, and production of an oil or gas well

or lease.The Operator:

1. Plans the Well

2. Obtains Permits3. Hires Drilling Contractor and other Service Contractors

4. Hires Well-Site Drilling and Completion Consultants


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Drilling Operations

Drilling Contractor Owns and Operates the Drilling Rig.

The Contractor maintains a crew to perform the work.

Rig Manager Responsible for the Rigs Operation andPerformance

Driller Operates the Drilling Rig

Roughnecks Handles the Drill Pipe on the Rig Floor


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Drillers on the Rig Floor


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Drilling OperationsSpecialty Service Providers

Mud Logger Creates a detailed record of

a borehole by examining the cuttings of rockbrought to the surface by the circulatingdrilling mud

Electric Log Engineer Monitors electriclog data for fluid parameters prior to casingbeing installed in the borehole

Drilling Fluids Engineer Monitors drilling

fluids (mud) to maintain hydrostatic pressurein the borehole.


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Drilling Operation

Well-Site Drilling Consultant Provides observe and

report services for the Lease Operator


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Drilling OperationsOilfield Contractors

Lease Work Preparation of the lease site for drillingoperations - build roads, grade location and digs mud pits


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Production

Well Completion

The Well is prepared for

Production (Completed) oncedrilling is finished

Casing Multiple concentric strings

of large pipe with production casingas the final string of casing.

Production Casing The casing is

cemented in place and extendsthrough the reservoir.


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Production Perforation The production casing is perforated to allow

formation fluids to enter the well bore

Production Tubing A small diameter casing that extends

into the reservoir to bring fluids to the surface


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Perforation


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ProductionProduction Contractors

Casing Contractor Runs production casing in the holeprior to removal of the drilling rig

Cementing Contractor Mixes specialized concrete

solutions and pumps a slurry down the borehole to seal eachcasing string to each other forming a seal.

Perforation Contractor The completion crew runs a

perforating gun down the borehole and sets off multiplecharges in the Production Casing


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ProductionHydraulic Fracturing The purpose of Fracing is to create multiple pathways in an

underperforming reservoir so that more fluid can beextracted.

Oil, water and other proprietary fluids are pumped into the

reservoir under pressure to create fractures in the reservoirrock.

Proppants in the fracing fluid remain in the fractures once

pressure is released creating a larger opening for reservoirfluids to flow.


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Horizontal Drilling & Hydraulic Fracing


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ProductionFlowback Contractor A flowback is a process in which

fracture fluid is recovered from the well to the surface. Thepurpose of the flow back is to:

1.Test the well for volume and pressure and gauge flow

capacity2.Transition the hydrocarbons of the well stream to a sales

pipe line or storage tank.


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Production

Pumper Gauger

Monitors well production, schedules removal of producedfluids and maintains production metering and flow charts.


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ContractsTypes of Contracts

Drilling Contracts Master Services Agreement

Contracts are how responsibilities are delegated, liability isallocated and indemnities are arranged.


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Contracts The Drilling Contractor works under one of three standard

contracts developed by the International Association of

Drilling Contractors contracts (IADC).

Day work Footage Turn-key

A contract will have a mutual hold-harmless clause asrespects injury to each others employees and

subcontractors.


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ContractsMaster Service Agreement A long term standing

contract between an Operator, Contractors andConsultants

The MSA achieves two important objectives:

1. Respond quickly to operational changes

2. Implementation of a risk allocation program formultiemployer work sites.


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Insurance Master Service Agreements have Minimum Insurance

Requirements for Consultants and Contractors

Commercial General Liability

Umbrella/Excess Liability Workers Compensation and Employers Liability

Automobile Liability


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Insurance General Liability

$1MM/$2MM Limits of Liability

ISO CGL Occurrence form, defense outside the limits

Action Over Coverage

Additional Insured Ongoing and Completed Operations


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Insurance Explosion, Collapse and Underground Property Damage

Blow Out and Cratering

Automatic Primary and Non-Contributory

Waiver of Subrogation

Sudden & Accidental Pollution (7 day discovery/ 30 day

reporting)


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Insurance Contractors Pollution Liability

Coverage on a Gradual Basis

Claims-Made or Occurrence

Third Party BI/PD and Cleanup Costs


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Insurance Professional Liability

Covers economic damages resulting from errors or omissions

Contingent bodily injury/property damage coverage


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RememberSuccess = Master Services Agreement +

Insurance Requirements

Darrell Heiden

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