Baker & O Brien consultants offer a variety of experience in oil and gas production facilities. Production facility experience includes gathering lines, compression, gas-oil separation, water treatment and injection, pigging, flaring, and storage. From single well heater-treaters to whole-field three-stage electrostatic desalters to cryogenic NGL recovery and fractionation, as well as natural gas, crude oil, and y-grade pipelines, our consultants have experience from the well site through to the marketplace. We have opined on the market value of crude oil and natural gas, regulations of pipelines tariffs, and testified in a number of accident investigations and contract disputes, including international arbitrations of upstream facilities. Much of our work includes the evaluation of contracts and agreements for oil and gas production, and the pertaining facilities and infrastructure. PRIMARY CONTACTS RELATED SERVICES Accident/Incident Investigation Asset Valuations Due Diligence and Advisor to Lenders and Investors Engineering, Procurement, and Construction (EPC) Markets and Strategy Merger and Acquisition Support Property Damage and Business Interruption Insurance Claims Technology Assessment Kevin H. Bunten Consultant London E. Shawn McDonald Consultant Houston 1 of 8
Homero Russares Consultant Houston RELATED EXPERIENCE Acquisition of Crude Oil Gathering System Conducted technical and economic due diligence on behalf of commercial bank in conjunction with the financed acquisition of a crude oil gathering system from a major oil company. Construction Dispute - Gas Plant Provided expert reports and testimony regarding project management issues, alleged defects, and liquidated damages for international arbitration between owner and contractor. The project involved an offshore platform, an undersea pipeline, an onshore pipeline, an onshore cryogenic gas processing plant, and a sales gas pipeline. Construction Dispute Litigation - Gas Plant Assisted in a litigated dispute between Owner-Operator and Engineering & Construction Contractor over whether a cryogenic gas plant, as engineered, procured, and constructed, met the stipulated contractual performance guarantees; prepared expert witness rebuttal report with respect to relevant issues. Crude Oil Marketing Strategy Prepared a marketing strategy for new production in Russia's Sakhalin Island region. The study analyzed potential markets for new production of crude oil, transportation options and costs, and contracting strategies. Crude Oil Metering Dispute Investigated alleged tampering with crude oil Automatic Custody Transfer volume and quality measuring devices. Reviewed common carrier pipeline tariffs, inspected site, and analyzed measurement data. Crude Oil Royalty Litigation Assisted in a lawsuit between an oil company and a royalty owner of oil company's crude oil production for alleged underpayment. Work included identification of the various markets for this crude oil to established whether its value in these markets was consistent with the price received. Crude Oil Utilization Study Assisted an Australian crude oil producer in preparing and submitting a "brief" to the Australian Government regarding the impact of large new volumes of Australian crude oil on the domestic refining industry. Analyzed the crude oil supplies available to each refinery and estimated the new investment that might be needed to process crude oils containing increased volumes of light ends. Assisted in making recommendations to the Government on the framing of new regulations to lessen the impact on both the industry and the consumer. Due Diligence of Gas Gathering and Processing Assets Conducted due diligence on gas gathering and processing assets within the Permian Basin in Southeast New Mexico and West Texas on behalf of lending group and prospective purchaser. Conducted physical inspection of the facilities, reviewed operation and maintenance records, assessed gas supply and competitive position, and reviewed financial assumptions and projections to 2 of 8
and maintenance records, assessed gas supply and competitive position, and reviewed financial assumptions and projections to ensure consistency with current gas supply contracts and asset performance. Evaluation of New Crude Production Evaluated a new crude oil stream produced by the client from offshore platforms in the West African country of Equatorial New Guinea. Evaluation included identification of potential markets and the values of this crude oil into these markets. Fertilizer Project Due Diligence Assessment In conjunction with a leading upstream consulting firm, conducted a due diligence assessment of gas resources for the purpose of developing a fertilizer complex associated with onshore and offshore gas production under development. The assignment entailed delineating the quantity and quality of gas resources available to support the prospective fertilizer project and estimating costs to deliver natural gas suitable for producing nitrogen fertilizers to the project. Gas Measurement Dispute Performed a preliminary audit of natural gas measurement discrepancies between an unregulated gathering system and an interstate pipeline. Identified periods that meters were out of service and utilized system balance to estimate deliveries. Gas to Liquids Evaluation On behalf of a major oil and gas producer, prepared a conceptual design for a Fischer-Tropsch based gas-to-liquids unit using low value associated gas to produce LPG, gasoline, and zero sulfur diesel. Developed estimates of charge and yield, capital and operating costs, and project development and capital spending schedules. Gas Well Incident Prepared expert report on behalf of client versus OSHA. Matter involved failure of a pipe carrying natural gas that injured one contractor. OSHA cited client for failure to provided a safe means of pressure relief for vessel (in-line heater) and piping. Gas Well Production Dispute Reviewed gas well production (meter readings) and pipeline pressure history to determine if gas was delivered into gathering system when the system was not being monitored and the local injection compressor was not operating. Gas Wellhead Equipment Failure Performed root cause analysis of a gas well casing hanger which led to a well blow out. Market Analysis and Term Supply Contracting - Synthetic Crude Oil Assisted a Venezuelan joint venture company in developing a marketing strategy for a new synthetic crude oil. The assignment included an evaluation of the potential market for the new production, modeling of refinery values for the new production, detailed assessments of potential supply agreements, and assistance in term contract negotiations. Market Value of Natural Gas Determined the reasonableness of royalty payments for natural gas by comparing available arm's-length contracts, pricing, and actual costs of gathering, compressing, and processing the gas. Marketing Effort for Ecuadorian Crude On behalf of a major international oil trading company, developed ongoing valuations for Ecuadorian Oriente crude oil in the US West Coast and Gulf Coast markets. Client used the results to achieve maximum values for the Oriente crude that it marketed under a long-term contract. Midstream Acquisition Due Diligence Assisted energy distribution company with due diligence for potential transaction involving gas gathering and processing assets located in the Permian Basin. Assets evaluated included over 4,000 miles of gas and liquid pipelines, four gas processing plants, and multiple gas treating plants. Participated in data room reviews and management presentations with a focus on commercial, 3 of 8
operational, and technical evaluations of midstream systems. Developed comprehensive economic model of the integrated gathering and processing assets that was used to determine valuations and evaluate key sensitivities. Natural Gas Asset Strategic Initiative Prepared job descriptions and qualifications as part of a new organizational strategy of a fully integrated natural gas division. Natural Gas Royalty Dispute On behalf of several producing companies, demonstrated the reasonableness of royalty payments for natural gas by comparing available arm's-length contracts, pricing, and actual costs of gathering, compressing, and processing the gas. Natural Gas Royalty Litigation Evaluated the design and historical capital costs of a natural gas pipeline system in western Oklahoma. Reviewed system material balances and operator's natural gas measurement practices. Natural Gas Tax Dispute Following the imposition of a new oil and gas taxation regime, a dispute arose regarding the contractual right of local natural gas producers to "pass through" incremental taxes to their customers. Served as expert witness. Key work involved the development of a fair mechanism to allocate recovery and distribution costs between "jointly" produced hydrocarbons, including oil, condensate, natural gas, and natural gas liquids. Prepared and defended specific proposal in the arbitration proceedings. Offshore Pipeline Failure Following a business interruption claim concerning number of failures on a large subsea crude oil pipeline, examined original construction specifications, maintenance, inspection, and operation records of the pipeline. Also reviewed the repair plans and repair execution of the failed components and made recommendations to include: a) comprehensive metallurgical analyses; b) preparation of an efficient repair and execution schedule; and c) complete subsea modeling of the pipeline for the purpose of failure mode and time to failure predictions. Offshore Pipeline Project Served as Independent Engineer on behalf of a major financial institution for a $200 million project to build a deepwater gas and oil-gathering system. Prepared a valuation of offshore pipelines and an onshore gas processing plant for gathering and processing of deepwater Gulf of Mexico oil and gas production in support of structured finance. Certified completion of the project for financial purposes. Offshore Platform Design Assessed design of elevated platform and ladders on a jack-up oil derrick which was under construction. Compared design to industry standards. Oil and Gas Royalty Valuation In support of a potential public offering, calculated the net present value of a defined royalty interest payable on all proceeds from the sale of crude oil, condensate, natural gas, and natural gas liquids produced from the Gippsland Basin in the Bass Strait off the coast of Australia. Worked in conjunction with an oil reservoir firm that prepared field production estimates over the next 20 years. Report became part of the offering memorandum submitted in compliance with local Public Securities Commission regulations. Oil Company Privatization Performed due diligence for the purchase of an integrated oil company on behalf of an investor. Inspected company assets, assessed technology, analyzed feedstock and product markets, evaluated a capital investment program, and analyzed manufacturing economics. Valuation of Pipelines and Gas Plant Served as independent engineer on behalf of a major bank to value and certify completion of a project to build offshore pipelines 4 of 8
and an onshore gas processing plant for gathering and processing of deepwater Gulf of Mexico oil and gas production. The valuation was prepared for the lender in support of $200 million of structured finance. Salt Water Disposal Tank Explosion Investigated the cause and origin of a storage tank explosion at an oil and gas salt water disposal facility in Colorado. Conducted site investigation and facility/equipment inspections, evaluated system design and operation, and conducted witness interviews. Determined cause of explosion and worked with company management to evaluate existing policies and procedures for potential areas of improvement. Review of Facilities Safety Issues Assisted in technical review of safety related issues at crude oil production and gathering facilities. Reciprocating Compressor Accident Reviewed details of non-fatal accident involving a restart of skid-mounted gas compression machinery at a producing well. Upon investigation of the facts, prepared report detailing the proximate cause of the incident. Replacement Cost Determination Provided a comprehensive estimate of replacement costs for oil and gas producing facilities, offshore production and drilling platforms, gathering systems, storage facilities, and processing plants. These costs were used as a basis for establishing appropriate levels of insurance coverage for a major petroleum corporation. Petroleum Supply Planning Assisted a major Canadian oil company in identifying improvements to its supply-chain planning process. The assignment focused on improvements that could be realized by an integrated oil company that produces, markets, and refines synthetic crude produced from oil-sands. Crude Oil Valuation and Marketing Plan Identified target markets, coordinated the assay evaluation, assessed market values, and developed a marketing plan and marketing brochure for a new crude oil to be produced in offshore West Africa. The initial crude oil sales price was estimated, based on quality and location, and was presented in terms of global crude price benchmark grades. Project Cost Overrun Dispute For a large sour condensate stripper facility, evaluated a significant project cost increase over the original estimate, taking into account work scope changes, market escalation, the accuracy of the original estimate, and the impact of project delays. An assessment was made of the reasonableness in each category and the likelihood of success with respect to cost recovery via litigation proceedings from a technical standpoint. The project was designed and constructed during a period of rapidly escalating labor and material costs. Gas Processing Metallurgy Replacement Evaluated the reasonableness of a large project s cost to replace the piping with a different metallurgy for a high-pressure, high-temperature sour gas reinjection facility in Central Asia. Also opined on the industry knowledge of the proper metallurgy at the time of construction of the original facility. Review Project Development Costs Evaluated multi-million dollar cost overruns of yearly operating budgets of a Central Asian consortium involved with the oil and gas development and production. Costs reviewed included Engineering Support, Operating Costs, Drilling Costs, and Capital Expenditures. Feasibility Assessment Developed a feasibility study for a large, potentially stranded, natural gas discovery. Constructed an economic model to evaluate 5 of 8
potential options for gas monetization, including pipeline natural gas sales, gas-to-liquids (GTL), and liquefaction (LNG). Performed market assessments for the LNG and GTL products. Oil Field Pipe Dispute-Insurance Claim Reviewed a claim involving an insurance dispute relating to proper preservation of drilling pipe in a storage yard following a hurricane. Pipeline Pigging Accident Reviewed injury accident that occurred while pigging a gathering pipeline to remove formation water produced with natural gas. Provided an expert report regarding applicable industry standards regarding operation of vacuum truck for disposal of formation, as well as observations regarding the contractual responsibilities of the tank truck operator and the production operator. Crude Quality Analysis Assisted with crude oil quality analysis from new production field in order to establish initial valuation estimates. Wellhead Value - Natural Gas Provided opinion with respect to effect of capital recovery of production facility costs on wellhead value of natural gas. Offshore Oil Lease Development Dispute Provided an assessment and expert report that determined estimates of the economic value for an undeveloped oil block in offshore Sierra Leone. The analysis synthesized an FPSO development approach and various scenarios of reserve volumes, development timelines, and oil prices to arrive at an indicative value for lease development. Review Project Development Costs Evaluated multi-million dollar cost overruns of yearly operating budgets of a Central Asian consortium involved with the oil and gas development and production. Costs reviewed included Engineering Support, Operating Costs, Drilling Costs, and Capital Expenditures. Production Sharing Dispute Reviewed amended field development plan with respect to a PSA dispute between government and operator consortium over a proposed multi-billion dollar increase in projected final costs. Prepared expert report, reply report, and provided oral testimony. Natural Gas Gathering Fee Dispute Reviewed natural gas contracts to opine on whether addition of a gas gathering fee was consistent with typical commercial experience on intrastate pipelines. Project Management Executed several mid-to-large pipeline and facility projects in multiple international locations, overcoming challenging cultural and language differences. Performed feasibility studies, detailed design, procurement, construction, inspection, hydrotesting, risk assessments, and pipeline integrity. Upstream Process Equipment: Intellectual Property Infringement In support of a dispute between a technology owner and a manufacturer, provided an opinion on the likelihood or not of another firm s ability to produce the same equipment with comparable features as the original product without utilizing trade secrets learned from the intellectual property owner. MidWest U.S. Crude Oil Study Identified the factors that likely contributed to a significant widening of the price differential between Light Louisiana Sweet Crude oil (LLS) at St. James, LA and WTI crude oil in Cushing, OK. Developed a three-year outlook for U.S. PADD 2 crude oil supply and disposition, and the expected price differential between LLS and WTI crude oil. Petroleum Revenue Override Dispute 6 of 8
Reviewed contract, evaluated contract terms and key definitions and analyzed royalties related to a large West African oil, gas, LNG and petrochemical complex. Shale Oil Market Study Developed target markets, estimated values for upgraded shale oil in various U.S. refineries, and expected price netbacks to the project site. Developed crude oil supply and demand balances to determine which crude oils would be displaced and the expected pricing impacts. Hydrogen Sulfide Incident Investigation Following a fatality caused by exposure to hydrogen sulfide at a crude oil storage tank with a known sour gas atmosphere, investigated the causes for the incident and the operating and maintenance practices (standard of care) with respect to: supervision, training, and use of personal protective equipment. Piping Purchase Dispute Reviewed purchase order documentation for piping material and provided opinion on whether the material met the engineering specification and requirements. Shale Oil Prefeasibility Study Assisted client with determining the economic optimum product quality for Synthetic Crude Oil (SCO) to be produced from retorted shale oil. Determined the potential impact of various SCO qualities on refining customer process units and estimated the potential revenue changes that would result from adjustment of these qualities. Oil Sands Technology Review Examined a new oil sands technology for bitumen extraction to identify potential flaws and areas of risk prior to commercialization. Observed performance of and assessed sufficiency of development unit to demonstrate viability and reliability of commercial operations. Drilling Incident Investigation Following an incident on an oil drilling platform, assisted with the investigation to discern whether relevant practices, e.g., API and others, were followed. Water Treatment/Injection Contract Dispute Engaged to provide expert witness assistance with technical issues regarding water treatment facilities. Reviewed project, maintenance and operational costs and schedules, in addition to the performance of the facilities. Testified in an ICC arbitration hearing in New York conducted in Spanish/English. Pipeline Quality Bank Dispute Reviewed claims by a crude oil refiner to adjust the valuation of the residuum cut in the TAPS Quality Bank. Reviewed the residual fuel markets and the delayed coking capacities and operations for several West Coast refiners. Provided written and oral testimony before a FERC Administrative Law Judge. Crude Oil Marketing Study Evaluated options for marketing light tight crude oil (LTO) including calculating the breakeven refining value in specific refineries and its value as diluent in a diluent-bitumen blend. Condensate/Diluent Analysis Developed a diluent supply and demand balance to determine if U.S. lease condensate is being blended into Canadian bitumen for import into the U.S. Evaluated multiple approaches to identify any potential U.S. lease condensate being blended into Canadian bitumen. Oil Disposition Study 7 of 8
Developed economics of crude disposition alternatives for producer's growing production of light tight oil. Alternatives included local and distant refining values with appropriate logistics costs. Crude Marketing Study Prepared a crude marketing study for a Utah black wax crude oil producer. Evaluated refineries outside of Utah which could receive crude oil via railcars and the expected netback price to the crude oil producer. Identified and ranked the refineries which would yield the highest netback value to the producer. Provided contact information and initiated meetings with the crude oil producer and potential refinery candidates for processing the Utah black wax crude oil. Production Facility EPC Dispute Reviewed and opined on different aspects of a dispute between the developer of an oil production facilities project and the EPC contractor. Assessed variation/change orders for entitlement and reviewed claims of preferential engineering (versus functional design). Fracking Equipment Fire Assisted with the Cause and Origin investigation of a fire on a blender used in a fracking operation. Natural Gas Measurement Dispute Assisted client with a "Discovery Request" regarding measurement of shale-play natural gas from a field meter. Reviewed accounting records, photos, and meter specifications to determine if consistent with industry standards for measuring natural gas. Oil Company Due Diligence Retained to visit data room and prepare due diligence report summarizing facilities and environmental information for multiple oil fields and an oil processing and export terminal. St James Louisiana Crude Supply Study Analyzed crude supply sources and pipeline flows for the Southern Louisiana refining market in conjunction with a potential pipeline acquisition. Forecasted crude supply availability by grade in the St. James trading hub and analyzed impact of new crude oil pipelines in the market. Permian Basin Crude Oil Supply and Logistics Provided supporting material related to Permian Basin crude oil production growth and logistic infrastructure for a pipeline owner's annual investor presentation. 8 of 8