Tom Bartos Rings Bell at NYSE

Tom Bartos, CFO of ABARTA Energy, has been serving on the Independent Petroleum Association of America (IPAA) Board of Governors for seven years and as a member was invited to ring the opening bell at the New York Stock Exchange (NYSE) as a kick off at their Oil & Gas Investments Symposium (OGIS) Monday, April 7th in New York.  This is not the first time Tom has been given this honor, but it was every bit as thrilling the second time around.

The IPAA is the leading, national upstream trade association representing oil and natural gas producers that drill 95% of the nation's oil and natural gas wells.  These companies account for 54% of America's oil production and 85% of its natural gas production.  The IPAA OGIS New York is the premier outlet for publicly traded independent exploration and production and service and supply companies to present their company profiles to the investment community.

Local Marcellus Drilling Relies on Regional Manufacturing for Steel Pipe

Written by Vince Delbrugge, Manager, Unconventional Drilling Operations

On April 8^th, I was one of five ABARTA Energy employees to tour three local factories owned by TMK IPSCO that make the steel tubular products that we use to drill and complete our wells. Manufacturing processes used to make the pipe include those that are icons for Pittsburgh and the Ohio Valley: melting, casting, forming and cutting of steel. Dan Allen and Doug Dye, representing Miller Supply, and Tony Cargo, representing TMK IPSCO, hosted the tour. After meeting in Robinson Township for breakfast, we drove to the three different facilities in Ambridge and Koppel, Pennsylvania and Brookfield, Ohio (see map below highlighting locations) to watch production and learn how their operation influences ours. I describe some of the interesting processes in this article.

(1) Plant Tour Locations

(2) ABARTA ENERGY (AE) tours pipe manufacturing facilities owned by TMK IPSCO. 

L to R:  Doug Dye, Miller Supply; Shane Huffman, AE Geologist; Cliff Simmons, AE Director of Operations; Dan Allen, Miller Supply; John Emmerling, AE VP/COO; Jim Watson, AE Director of Unconventional Operations; and author Vince Delbrugge, AE Manager, 
Unconventional Drilling Operations.

The Koppel facility is modified to melt and cast the types of steel used for our applications. Electric arc furnaces use huge amounts of electricity to melt steel scrap which is the first operation of manufacturing tubing and pipe. Melting in an arc furnace is a spectacular event. Like lightning in a big bucket, thousands of Amperes of electric current spark between graphite electrodes and the steel. Both electric current and radiating light easily add enough heat to reach the steel melting temperature of nearly 3,000˚F. Sophisticated technology is used to measure and modify the amount of elements in the molten steel before they are cast into the solid, cylinder-shaped, billets. Small, precise amounts of carbon, manganese, chrome, molybdenum and other elements are specified and controlled in the molten metal that is about 97% iron.  Scrap metal for melting is limited to certain steels, because some elements cannot be removed or reduced once they are melted.

(3) Electrodes melting steel in the arc furnace.

(4) Continuous casting the round billets at the Koppel facility.

Billets cool and solidify in the Koppel factory with the shape, properties and element composition that all influence quality of the finished pipe. After cooling to room temperature, the billets are transported by truck to the factory in Ambridge where we watched them form the solid billets into the sizes and shapes for our oil and gas applications. The metal is stretched, bent, twisted and squeezed using a variety of traditional cold and hot processes that are performed at different temperatures ranging up to 2,300˚F. The first forming process at Ambridge is rotary piercing which creates the hole in the pipe that is called the inner diameter. This interesting process is illustrated below in details (a) through (d). Details (e) and (f) are sections of billets that were photographed after interrupting the rotary piercing process and cutting the billets that show the growth of the inner diameter. Subsequent forming processes at Ambridge refine the diameters, roundness and straightness of the tubular material that we need for our oil and gas operations. Heating and cooling processes called quench and temper change the atomic structure of the steel to increase its strength. 

(5, 6 & 7)

Size and shape of the pipe and tubing is complete when it leaves Ambridge, but it cannot be used yet for oil and gas operations. Almost all of our tubular products are connected together with screw threads, which are cut into the ends of the products at the Brookfield, Ohio facility (see below). We had the opportunity to watch an Okuma lathe cut threads into the outer diameter of pipe used for our production casing, which is the pipe that extends from the surface to the bottom of the well. Okuma lathes and many other machine tools can maintain tolerances of 1/10,000ths of an inch, which is more precise than is required for successful pipe connections. Roundness, straightness and other shape tolerances of pipe products and other structural materials created during forming are the most important factors that determine our pipe connection quality, and we saw the extensive inspection operations at Brookfield diligently monitoring those properties both before and after cutting the threads. Some of the pipe from Ambridge must be rejected at Brookfield because the threads cannot be successfully cut due to the shape distortion.

(8) Pipe threads cut on a lathe at the Brookfield, Ohio facility.

 (9) Coolant is used while the tungsten-carbide tool moves along the billet to remove metal and cut the thread geometry.

Working with suppliers gives us knowledge about their capabilities that will help our planning for our wells. Visiting the different facilities gave us the chance to observe processes that are critical in the path of manufacturing our casing, tubing and drill pipe, and we know how to evaluate the important characteristics and improve the quality of our wells. We are grateful to TMK IPSCO for the opportunity to tour their facilities and purchase material for our wells that is made here in our region.

Image References.

[1] Image from Google Earth.

[2] Image by Anthony Cargo.

[3] Mr. Blaaaaah. An Electric Arc Furnace’s Three Graphite Electrodes. Web. http://www.reddit.com/domain/siemens.com/.

[4] Web. http:/www.alibaba.com/product-detail/TIEQI-High-Performance-flexible-dummy-bar_56…

[5] Schematic of the rotary piercing operation. Web. http://en.wikipedia.org/wiki/File:Schraegwalzen.png. Modified by Vince Delbrugge.

[6] E. Ceretti, E.; Giardini, C.;  Attanasio, A.; Brisotto, F.; and Capoferri, G. Figure 6. Longitudinal section of the rod, start and development of the hole, in FEM Analysis of Rotary Tube Piercing Process. Web. http://www.tubenet.org.uk/technical/piercing.html. Modified by Vince Delbrugge.

[7] E. Ceretti, E.; Giardini, C.;  Attanasio, A.; Brisotto, F.; and Capoferri, G. Figure 7. Α 3˚, Formation of the internal hole in the rolling direction: =Comparison between simulation and experiment, in FEM Analysis of Rotary Tube Piercing Process. Web. http://www.tubenet.org.uk/technical/piercing.html. Modified by Vince Delbrugge.

[8] Industrial Piping Specialists, Incorporated. Web. http://www.ipipes.com/?page_id=144.

[9] Okuma. Web. http://www.okuma.com/loc-series-oil-country-lathe.

ABARTA Energy Well Represented at NAPE East

Written by Tom Bartos, CFO

ABARTA Energy rolled out its new identity at NAPE East in April at the David L. Lawrence Convention Center in Pittsburgh.  In addition to being represented by staff on the exhibit floor, I was one of four speakers on an open panel discussion with other industry leaders  from MarkWest, Talisman Energy and CONSOL Energy.  A brief overview of our company follows.

ABARTA Energy, also known as ABARTA Oil & Gas Co, was founded in 1979 as a way to further diversify Taylor and Bitzer family interests, which at the time consisted of newspapers and Coca-Cola bottling plants.  The company began by making relatively small energy investments each year with different oil and gas developers and remained a passive financial partner through the late 1980s.

In 1995, Jim Taylor, a third generation family shareholder, realizing the opportunity to increase shareholder value in the energy business, joined ABARTA Energy and assembled a management team to move the company to the next level.  ABARTA Energy then became a more active partner with energy companies who shared its vision for growth.  We developed in-house expertise in geology, engineering and operations so we could pursue a balance between continued growth through the drill bit and acquisitions.  In 1997, ABARTA Energy completed its transition to an operating company by acquiring the joint venture assets from Meridian Exploration and by 2007, owned and operated over 1,000 wells in West Virginia, Kentucky, Pennsylvania, Ohio and Texas.

Today we own an interest in over 2,100 oil and natural gas wells in eight states with over 50% of our revenues derived from participating in horizontal shale joint ventures in Bradford and Tioga Counties, Pennsylvania, and a Utica shale joint venture with Rex Energy in Ohio.

Headquartered in Pittsburgh, we have field offices in Pennsylvania, West Virginia and Kentucky where we operate over 750 conventional wells, 260 miles of pipelines along with multiple compression stations and sizeable sour gas and cryogenic plants. 

ABARTA Energy strategically decided not to be a first mover in the Marcellus and subsequently participated in the play once it became derisked by other companies.  In 2010, ABARTA Energy joint ventured with two established public companies on our acreage in Bradford and Tioga counties to develop the Marcellus.  To date, ABARTA Energy has participated in over 115 horizontal shale wells in Pennsylvania and Ohio with our joint venture partners.

The company currently owns approximately 130,000 acres of oil and gas leases for unconventional development in the Marcellus, Utica, Burket and Rogersville shales.  All the operated acreage in Pennsylvania is strategically positioned in a proven, stacked shale area with plans to continue developing our shale assets in the coming years.

Additionally, ABARTA Energy owns over 70,000 mostly contiguous and HBP (held by production) acreage in Kentucky containing highly prospective Rogersville shale development opportunities.  The Rogersville shale is a liquids-rich resource play in the Cambrian section of the Rome Trough, at depths of 10-12,000 ft.

The Utica Shale….Warrior South

Written by Shane Huffman, Geologist    

     In this modern period of unconventional shale plays, the industry again has shifted its attention to the Appalachian Basin, this time to explore the Utica Shale.  During the last three years, operators have applied their exploration efforts to the more oil-prone and liquids-rich shale plays.  Much like the Eagle Ford Shale in southern Texas, the Utica has three distinctive windows for exploration: a dry gas window, a liquids-rich gas window, and an oil window, making the shale an economically attractive target for the industry (See Figure).

   

           












The recent focus of exploration activity for the Utica Shale has been primarily in eastern Ohio and western Pennsylvania where the formation reaches depths of 3,500 feet along the western margin and deepens eastward to 10,000 feet.  

     The Utica Shale is an organic, carbonate rich black shale deposited in warm oceans that extended from Quebec to Tennessee during the Late Ordovician period (443 – 490 million years ago).  The formation lies between 2,000 and 4,000 feet below the Marcellus Shale and has been a major source rock for oil and gas in the deep reservoirs in the Appalachian Basin.  The thickness of the Utica varies from less than 100 feet to more than 500 feet.  The primary pay target is the lowermost 120 to 140 feet of the formation known as the Point Pleasant.

     The Ohio Department of Natural Resources estimates potential recoverable reserves from the Utica Shale to be between 1.5 and 5.5 billion barrels of oil and between 3.8 and 15.7 trillion cubic feet of natural gas.  The vast reserves of oil and natural gas estimated by the industry and state geologists have been called a “game-changer” for American energy independence and could even surpass the energy potential in the Marcellus Shale.

     In the wake of the evolving play, ABARTA Oil & Gas has positioned itself to benefit from the development of this natural gas resource.  In the spring of 2012, ABARTA Oil & Gas entered into a partnership with Medina Fuel Company and Rex Energy to jointly explore and develop approximately 6,400 acres in Guernsey, Noble, and Belmont counties, Ohio, known as our Warrior South Project.  Warrior South falls in what has been deemed the “sweet spot” of the Point Pleasant as it lies in the liquids-rich gas window. 

     Rex Energy serves as the project operator and to date has drilled a total of 8 wells, all of which are currently producing.  The project has added significant volumes to our reserves and is proving to be a successful venture with an additional 6 wells planned for 2014.

                

                                                                     

Good Governance Makes Good Sense: Laying a Strong Foundation for the Future

L to R:  Jim Taylor, Lynn Clarke, Rob McIlroy

Jim Taylor, ABARTA Board Chair and Oil & Gas President and CEO, participated in a panel with two other board members from privately-held companies to address a group of approximately 100 family business owners in Pittsburgh on Wednesday, November 6^th.  This was one of nine educational seminars hosted annually by the Institute for Entrepreneurial Excellence at the University of Pittsburgh Joseph M. Katz Graduate School of Business (http://entrepreneur.pitt.edu).

Because Jim knows first-hand the value of ABARTA’s Board of Directors, he was able to speak from experience about what he perceives is one of our greatest resources.  ABARTA Board Member Lynn Clarke, who is CEO of MetroKitchen.com (http://www.metrokitchen.com), and Rob McIlroy, Board Secretary and Vice President of Robroy Industries, also joined Jim on this panel. 

The role and importance of a board – including why and how to establish one – were among the topics discussed.  Panelists enumerated reasons to have a Board, explained the four types of Boards, detailed what makes an effective Board, and gave the Top 10 Benefits of having a Board.  Jim says that he was about 35 years old when ABARTA was transitioning from the 2^nd to the 3^rd generation of owners, and that is when they adopted an independent Board of Directors.  Statistics say that only about 12% of 3^rd generation family businesses survive, and fewer than that grow and thrive.  ABARTA’s leadership wanted to ensure the company’s success and survival. 

Our independent board, made up of members who have specific industry and functional expertise, provides essential support, encouragement, guidance and helps to make ABARTA a better company.  They ask tough questions and are not afraid to ask about touchy subjects.  They anticipate issues, guide key management, set goals and enforce follow through, act as a sounding board and bring outside perspectives to the table.  This provides for more creative thinking and decision making and ultimately will help our family business leadership achieve its vision.

The ultimate goal is not only survival but success, and ABARTA appreciates the role our independent board plays in that success.

Katie Hanlon Turns Talent into Gift

West Virginia Administrative Assistant Katie Hanlon has many passions and past times, one of which is photography.  She is well known in the Bridgeport area for her talent as a photographer and is often asked to snap just a few pictures of friends’ children for their Christmas card.  For the second year, Katie turned her talent into a gift for a family in need.

Katie’s cousin Tori, who is just a few weeks older than Katie’s daughter Charlie, was born with biliary atresia.  Biliary atresia is a life-threatening condition that affects only 1 in 18,000 infants in which the bile ducts inside or outside the liver do not have normal openings.  This summer Tori had to undergo not one but TWO liver transplants!  Her mother had to quit her job to care for Tori, and Katie says the family has “basically been living in Cincinnati Children’s Hospital for months.”

Hitting so close to home, Katie imagined what the mounting bills must be like for Tori’s family and decided to do something about it by collecting donations at her annual photo shoot.  Katie set aside time on Saturday, October 26^th to photograph friends and  collected $1,810 for her cousin.  She also had an assistant shooting video and sent the video to Tori as an early Christmas present.  What a wonderful use of your talent, Katie!

Tori lives with her parents Andrea and Bill King and older sister Ella in Charleston, WV.  If you would like to read about Tori, follow this Facebook link or copy and paste to your browser:  https://www.facebook.com/torisliver.  Contact Katie Hanlon at khanlon@abartaenergy.com if you would like to contribute to the Tori King Transplant Fund.

Mother/Daughter Share Passion for Rowing

Lynn Biery, Pittsburgh Land Supervisor, and daughter, Elyn, share a passion for rowing.  For the past three years, Lynn has been that “rowing (soccer) mom” helping her daughter, Elyn, rise to Coxswain for her Steel City Rowing team.  (In most boats, the Cox sits facing the rowers in the stern so she/he can steer the boat and coordinate the power and rhythm of the rowers.) Lynn’s passion developed quite by accident but was spawned by early ABARTA health initiatives.  As part of Lynn’s exercise routine, she tried an IndoRowing machine at a local gym and liked it so much that she decided to become a certified instructor.  She quickly fell in love with the motion that eventually developed her power and strength and took her to the water in March 2013.   

Lynn Biery is the 2nd rower from the top, daughter Elyn is at the bottom in purple.

Lynn spends approximately four hours each week rowing, both indoor and out.  After training for only six months, she had the confidence to compete for the first time in the Head of the Ohio in Pittsburgh on the Allegheny River.  One of the largest one-day events in the country, this event attracts competitors of all skill levels.  Lynn’s team placed third, and she received a bronze medal for her efforts in a Masters Mixed 8+ race on Saturday, October 5^th.  She worked with seven other rowers in a sweep boat pulling only one oar (see photo), while her daughter, Elyn, sat in front commanding the team to victory.  What surprised Lynn about this victory is that the team had only practiced twice together in the sweep boat.  Typically the rowers practiced in a sculling boat where each rower pulls two oars instead of one.  This team of 4 women and 4 men of varying ages and skill finished the 2.6 mile course in 18:13 and crossed the finish ahead of 5 other boats.  It is never too late to try something new, and we applaud you.

You are never too old to set another goal or to dream a new dream.                                                                 C.S. Lewis