American Oil and Gas Reporter - April 2018 - 63

EMPOWERING THE FUTURE
constraints. We also are seeing a number of oil pipeline projects
being announced that will help further take-away and differentials
from the basin.

Understanding that Samson's focus is exQ: clusively
on the Green River and Powder
River basins, given your personal experience and
Samson's history in conventional oil and gas plays
over the years, how do you evaluate the overall
prospects for conventional onshore fields over the
next few years? Are there opportunities to apply
the technologies and operational strategies honed
in unconventional resource plays to improve the
economics of conventional reservoirs?
MILLS: Conventional fields are far from dead. I think there
will be a number of good opportunities to see conventional
fields make money utilizing the new technologies of horizontal
drilling, multistage fracturing, pad drilling, improved water
management, robotics and big data analytics. We are seeing an
emergence of the conventional reservoirs in the Powder River
and Green River basins utilizing these new technologies and
larger frac designs. The old adage "the best place to find oil and
gas is where oil and gas are currently producing" has never
been more accurate. Conventional fields have, in general, only
produced a fraction of the total resource in place, so there
remains a lot of oil and gas yet to be recovered.
The application of horizontal drilling to traditional conventional
reservoirs has started already, but the application of larger and
larger completion designs is only beginning to be applied where
it makes sense. We believe this will reopen traditional conventional
fields that have not seen appropriate spacing patterns. It will be
new technologies and smart employees that will help us unlock
the potential of the larger conventional fields. But instead of
shutting down old fields, we are seeing some operators look to
automation, remote operations and improved water management
techniques to help reduce operational costs, increase safety and
prolong field life.
Part of the challenge for older fields is older facilities; with
age comes obsolescence and equipment that needs regular
attention. Maintenance costs are expensive and regulatory
requirements historically have required us to send personnel to
review these sites for any spills and check for leaks. Drones can
be a more efficient and economical way of checking field
operations without having to send personnel to remote locations.
We have seen pipeline companies utilizing drones on a more
regular basis to check pipeline rights of way.
The other exciting development is the utilization of artificial
intelligence and big data. Historically, these kinds of technologies
have been available only to the majors and large "super independents," given the cost of managing the data and information
technology horsepower. We are seeing this change and become
more accessible to the smaller independents, and I think AI and
big data can be the next game changers as we utilize machine
learning at smaller and more discernible areas to improve the
drilling, fracturing and recovery of hydrocarbons.

U.S. independents pioneered the lower-48
Q: shale
gas and tight oil plays that are changing
the game in global energy supply. How are the
high activity levels in shale plays and the entry of
large companies changing the overall competitive
landscape in the U.S. onshore for small and midsized independents? What are the biggest opportunity sets for these companies? What are the main
challenges they face, and what skill sets are most
important for their success?
MILLS: Times are interesting in the resource plays these
days. Areas like the Permian and SCOOP/STACK are getting
very expensive as the barriers to entry are high with high
leasehold costs. Many of these areas are becoming the domain
of the larger public companies, which have a much lower costof-capital structure compared with the smaller independents.
This is driving more independents, and I might add private
equity players, to less-expensive basins in search of better
returns and cheaper entry points. We are seeing this play out in
the Denver-Julesburg, Green River and Powder River basins of
the Rockies. We will see smaller, more nimble operators move
to areas that have not seen the application of new drilling and
completion technologies and look to unlock the potential of
these new areas.
The biggest impediment to this expansion will be service
costs and service companies' ability to provide competitive
services in these areas outside of the Permian and SCOOP/
STACK. We have seen so much capital and activity devoted to
these two premier areas that all the big service providers are focused on maximizing their utilization rates in these two areas.
This includes drilling, completion and frac sand services. We
will see new, smaller service companies fill this void in the expansion areas, but this always takes time, which will be an impediment for quick growth.
We are truly blessed to have such a large resource base of oil
and gas in our country, and I see no reason for smaller
independents to go overseas to explore for oil and gas and take
on additional political risk. Being the lowest-cost producer is
not just a saying; it is the only way for us to remain competitive
in this marketplace. The ability to export our products-whether
crude oil, natural gas or NGLs-truly has opened the U.S. energy
market to the world consumer.
However, one of the biggest challenges our industry will
face in the near term is the ability to find the technical personnel
to help power us to the future. Ours is a very technical, complex
business that requires technical and savvy employees to identify
new technologies and methods to extract hydrocarbons. We are
staring at a large group of our senior personnel retiring in the
next 10 years and we need young new talent to fill the void.
The downturn of the 1980s hurt us and the most recent downturn
is doing the same thing, as young college graduates look at
other industries to start their careers. We will not see the full
effect of this downturn until 2020, as we see more retirements
and the need for young technical personnel becomes evermore challenging.
r
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American Oil and Gas Reporter - April 2018

Table of Contents for the Digital Edition of American Oil and Gas Reporter - April 2018

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