AADE Your Key to a Better Drilling Program Operator Forum A Huge Success

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1 February 2010 APPALACHIAN DRILLER AADE Your Key to a Better Drilling Program We evaluate our drilling programs on the basis of economics, money spent versus production results. The fewer mistakes made results in minimizing the total time to complete a project. The total time to complete a project is directly proportional to the lowest number of problems encountered or self inflicted. AADE was founded on the premise that the sharing of drilling practices and techniques between operators and service companies would minimize or eliminate the repeating errors and problem issues in any given area. In short, there is no need to repeat drilling mistakes in the same operational area. The Marcellus is a new and challenging opportunity. Lessons learned in the Barnett and Haynesville will be extremely valuable to the success here, but like those areas, each has unique problem characteristics that will need to be resolved with new techniques and technology. AADE has been the platform for sharing these solutions in other areas of the country since the 1970 s. Operators and service providers of all sizes have provided countless case histories that have improved drilling performance by sharing solutions to problems without disclosing proprietary information or extensive commerciality. Appalachian operators are now invited to do the same. Jim Teague, Program Director will be happy to work with you. Inside this issue: Operator Forum A Huge Success Operator Forum continued AADE Appalachia Board of Directors AADE Appalachia Committee Members AADE National President s Message Next Meeting Cementing 101 AADE Gives Back Membership Application The 2010 Operator Forum on January 14 was exceptionally well attended by over 200 industry personnel. Presentations were made by managers and superintendents and each remained afterwards to visit individually with those that had specific questions. The 2010 outlook was cautiously optimistic with the focus being on personnel and equipment to satisfy the demand. The Marcellus has taken advantage of a slowdown in operations in the Haynesville and Barnett regions allowing companies to reallocate personnel east. Those areas have begun to return to a more active status putting a strain on the service company assets. Who will stay and who will go will have a significant impact on the number of wells drilled. (continued on page 2)

2 Operator Forum 2010 (continued from page 1) Additional discussion was made on the impact on the local economy by the industry, not to mention the diverse cultural exposure being brought to the area from Louisiana, Arkansas, Oklahoma, Texas, Colorado, etc. While some areas have benefitted greatly, direct employment for field operations is slow to follow. The pool of local experienced personnel is very small and most have opted to shuffle their field staff on a rotational basis. The Marcellus is a new oilfield for the Appalachian residents. Education and training is going to be critical if field staffing needs are going to be adequately met. Operator Forum Speakers (Left to right) Steve Woelfel, Anadarko; Randy Weeks, St. Mary Land & Exploration; John Applegath, Range Resources; Jim Tilley, EOG Resources; Tom Laylock, Marathon; Tommy Thompson, Atlas Energy Resources; Jeff Cutler, EXCO Resources PA; John Sinesi, CNX Gas; Kevin Ashley, Chesapeake; Bart Walker, Burnett Oil & Gas. Appalachian Chapter Officers President, John Applegath, VP Drilling Appalachia Shale, Range Resources 1st VP, Tommy Thompson, VP Horizontal Drilling, Atlas Energy Resources 2nd VP, Dan Steffy, Business Development Manager, New Prospect Company Secretary, Judd McBride, General Manager Appalachia, Stallion Oilfield Services Treasurer, Colby Fuser, NE Business Development Sr. Account Leader, Halliburton Chapter Representative to National Board, Zach Bray, Corporate Sales, Multi-Shot Directional Services Appalachian Chapter Committees Steering Committee Chairman, Mike Hallford, Appalachia Operations Manager, Chief Oil & Gas Program & Membership: Jim Teague, Business Unit Manager, New Tech Engineering Arrangements: Scott Frank, Account Manager Drilling & Evaluation Systems, Baker Inteq Membership: Bob Garland, Northeast Regional Sales Manager, Superior Well Services Elections: Rocky Ray, Regional Sales Manager, Express Energy Services Steering Committee: Tom Laylock, Northeast Drilling & Completion Superintendent, Marathon Oil Publicity: Jay LaComb, Account Representative, Ulterra Bits Newsletter: Ron Coulter, Global Marketing Manager, Sun Drilling Products, Corp. Page 2

3 The President Speaks Jeff Hughes, National AADE President First let me say that it is an honor and a privilege to serve as your AADE National President for the 2009/2010 term and that I will do everything in my power to continue the work of those individuals that served before me to make the American Association of Drilling Engineers a truly great organization. A lot of exciting things have taken place this year already and will continue to do so as the year winds down. The 2009 National Tech Conference and Exhibition that was held in New Orleans earlier this year was a huge success and plans are already in the works for the 2011 NTCE to be held in Houston. We are also pleased to announce the addition of a new Appalachian Chapter that just started up in Canonsburg, Pennsylvania, a new Student Section at Marietta College in Marietta, Ohio, and another potential Student Section this fall at New Mexico Tech in Socorro, New Mexico. As far as the business side of things, I don t have to tell any of you that 2009 has not been a stellar year for the oil and gas industry. A rig count that reached a peak of 2,031 in mid-september 2008 has now fallen to a low of 876 on June 12, 2009 but most recently has climbed back to 999. Oil prices that soared to $147 per barrel in 2008 are now hovering in the low $70 s per barrel. Worst of all for those of us that depend on natural gas to make a living, the price of natural gas has fallen from a high of $13/MMBtu last summer to just over $3/MMBtu today. For those of us that lived through the boom and bust period of the late 70 s and early 80 s, it seems like déjà vu all over again. Just to remind everyone of what it was like back then, the rig count hit an all time high of 4,530 in 1981 but then spiraled down to just 663 by During that time, oil prices went from $5 per barrel to just over $30 per barrel before leveling off at around $11 per barrel. Looking back on it now, the current price of crude doesn t seem all that bad does it. The moral of this story is that we will survive. That is what we do in the oil and gas industry and we do it day in and day out without the Federal government s help. I am writing this letter mostly to the new, young AADE members that have joined our great organization in the past few years. I want to tell them not to give up and to keep working hard even though they might feel as if their world has been turned upside down. As those of us with grey hair know, every seemingly endless bust is almost certainly followed by an even bigger and better boom so just hang in there, better times are coming. Upcoming AADE Events February 11th Luncheon Meeting, Crowne Plaza, Registration 11:00 a.m. March 12th Pistol Tournament (No Luncheon Meeting in March) April 8th Luncheon Meeting May 14th AADE Sporting Clays (No Luncheon Meeting in May) Reprinted from AADE National September issue. Items to be considered for inclusion in the Appalachian Driller should be submitted via to Ron Coulter, Sun Drilling Products, via - ronc@sundrilling.com Page 3

4 Cementing 101, what you need to know! February 11th The February luncheon meeting for the chapter is scheduled for Thursday, February 11th, at the Crowne Plaza, in Moon Township. The topic is Introduction to Cement: Manufacture, Chemistry & Classes. Cement plays an integral role in our industry, but just how much do we know about cement manufacture, how it is made, the intermediate components and the final product? Bill Carruthers, Manager of Quality Control and Oil Field Product Services of LAFARGE, in Montgomery, Texas, will take the process from quarry, through burning (making clinker) and finally making cement. Carruthers will address some of the characteristics of the classes of API cement and provide the reasoning behind why API cements should be preferred over construction cements for well applications. The comparison between construction cements (ASTM) and API cements will be discussed as well. Reservations are preferred: Contact Zach Bray, MS Energy Services, Reservations? Absolutely Necessary! Were you a WALK IN at the January meeting? If you were then you probably will make your reservation early for February. For those of you who did Thanks! Reservations are simply good business. The Program and Arrangement Committees are responsible for providing a pleasant and adequate venue for the luncheon presentations. In order to accomplish this, they must insure that there is ample seating and food for those attending. In order to do so AADE must guarantee a specific number to the venue catering staff. Should that number of attendees not show up, AADE is responsible for the no-shows, that is why you are charged when you don t show up. On the other side of the coin are those who choose to not make reservations and simply show up. Remember, the facility where the event is being held is set up based on the anticipated attendance and simply cannot enlarge the room, set additional tables, or prepare more meals on a moments notice. So don t risk being turned away, make your reservations early. The schedule and topics for the AADE luncheons are set and posted well in advance. Our goal is for you set your calendar for the second Thursday of the month. Bring your client, bring his staff the food will be excellent and you just might learn something that will save a little time on this or the next well. Make Reservations by contacting Zach Bray, MS Energy Services Phone: zbray@msenergyservices.com Reservations MUST be received by close of business Monday prior to the next meeting.

5 AADE Gives Back to the Community with $8,000 Donation In its first year, the Appalachian Chapter of AADE made a significant contribution to the Children s Hospital of Pittsburgh in the amount of $8,000. Tommy Thompson, Chapter Vice President, said that he was extremely pleased that the membership had supported the organization in such a way that funds were available for a donation. AADE chapters throughout the country have a long history of giving back to their local community through college scholarships, high school education programs, medical support organizations, etc. The check was presented to Ms. Denise Esposto of the Child Life Department by (L to R) Colby Fuser, Zach Bray, Tommy Thompson and Judd McBride on December 21st at the UPMC. Page 5

6 Membership Application Form Print, Complete & Mail! AMERICAN ASSOCIATION OF DRILLING ENGINEERS MEMBERSHIP APPLICATION DATE: Chapter Affiliation (please check one of the following) Appalachian Dallas/ Mid New Permian West Alaska Basin Fort Worth Denver Houston Lafayette Continent Orleans Basin Coast $20.00 $25.00 $20.00 $25.00 $20.00 $25.00 $25.00 $15.00 $15.00 $15.00 Last Name First Name MI Company Title Business Phone Address Fax City St. Zip Code Address Business Type: (Please circle one) (10) Oil and Gas Producer (20) Engineering/Operations Consulting (30) Environmental (40) Equipment/Service Supply Company (50) Consumable Product/Service Supply Company (60) Drilling Contractor (70) Governmental or Regulatory Agency (80) Other Job Function: (Please circle one) (A) Management (B) Engineering (C) Operations (D) Technical Support/Service (E) Research and Development (F) Field Service/Technician (G) Training (H) Purchasing (I) Marketing/Sales (J) Other AADE FORM No. 020(8/94) Rev. 04/09 Mail Form and Payment direct to appropriate Chapter ALASKA PO Box Anchorage AK APPLACHIAN BASIN Attn: Colby Fuser c/o Halliburton 400 South Pointe Blvd, Suite 410 Canonsburg, PA DALLAS/FT. WORTH PO Box Dallas TX DENVER Attn: Pat Lawson c/o MI Swaco th St. #1000 Denver CO HOUSTON PO Box Houston TX LAFAYETTE PO Box Lafayette LA MID-CONTINENT PO Box Oklahoma City OK NEW ORLEANS PO Box New Orleans LA PERMIAN BASIN PO Box Midland TX WEST COAST PO Box 9953 Bakersfield CA Page 6