the permian basin magazine

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Novbr 200

P e r m i a n B a s i n P e t r o l e u m A s s o c i a t i o n w w w . p b p a . i n f o 4 3 2 - 6 8 4 - 6 3 4

The Permian Basin Petrolem Association Magaine

PRSRT STD

U.S. Postage

PAIDPermit No. 1467Fort Worth, TX

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Oilfeld Equipment& Supplies

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PBOil&GasMagazine

D E P A R T M E N T S4 From the President6 From the

Executive Vice President8 From the General Counsel

10 Member News14, 20 Industry Reports

27 News Reviews29 Education & Training

Calendar31 PBPA Calendar of Events

12 September Lncheon Highlights RandyFoutchofLaredoPetroleumtoutedtheuseofprivateequity,amethodologyheusedtobuildfoursuccessfuloil

companiesintheMid-ContinentandPermianBasin,andgave

hisperspectiveontheglobaloilandgasconditionatthePBPA

Septemberluncheon.

16 Top Hand Recipients GlennPattersonandCloyceTalbotthavebeennamedco-recipientsofthePermianBasinPetroleumAssociationsTopHandAward.ThepairwillbehonoredattheTopHandBanquet

Jan.24,2008,atthePetroleumClubinMidland.

22 Oil & Gas Sotware PermianBasinOil&GasMagazineaskedseveralexpertsin the eld of oil and gas data to give their advice in picking

therightsoftwaretomeetvariedneeds.Accordingtothese

professionals,integrationofdifferentsoftwareisthekey.

28 Nrtring Domestic Prodction Americasundevelopedoilandgasresourcesshouldbeconsideredourgenerationsvictorygardeninthefaceoftodaysstruggletomaintainenergysecurity.Innovativetechnology

isbringingonlineoilandgasproductionfromheretofore

noncommercialandunconventionalgeologicalreservoirs.

Permian Basin Oil & Gas

eDITORIALJulie Anderson

432-367-1564 Fax [email protected]

ADveRTIsIng sALesAmy Brittain

325-673-4822 (ext.121) Fax [email protected]

h.C. Zacry Publisher

Bcky Frot Business Manager

Jli Adro Editor

Amy Brittai Sales Manager

Kati Kafma Art Director

The Permian Basin Petroleum Association is a non-proft organizationor the promotion o business efciency and the betterment o PermianBasin oil businesses through cooperative eorts and the exchange oideas. Published on the 5th o each month. Opinions expressed in thismagazine are those o the writers and do not necessarily represent theviews o the magazine or the Association.

PB Oil & Gas is published monthly by Zachry Associates, Inc. All materialscopyright 2007 by Zachry Associates. Reproduction o contents in wholeor part without expressed written consent o publisher is prohibited.All rights reserved. Monthly PB Oil & GasMagazine single copy priceis $2. Subscription rate is $22 per year. Address all purchase requests,subscriptions, news items and inquiries to:PB Oil & Gas, 500 Chestnut St.Ste. 2000, Abilene, TX 79602, 325-673-4822, FAX 325-677-2631.

PB OIL & GAS IS The OFFICIAL PUBLICATION OFThe PeRmIAN BASIN PeTROLeUm ASSOCIATION

www.pbpa.ino 432-684-6345 [email protected]

ContentsNovember 2007

On the Cover:ector Coty

Poto by Day Flaaa

B spprdPBPA Executive

Vice [email protected]

Allio WbbPBPA Ofce

[email protected]

Becky FrostPBOG

Business Manager

Julie AndersonPBOG Editor

Amy BrittainPBOG

Advertising Director

PERMiAN BASiN PETRolEuM ASSociATioN STAff

PERMiAN BASiN oil & GAS MAGAziNE STAff

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Well,anotherannualmeetinghascomeandgone,andas

beforewehadagreatturnoutforouricebreakerreceptionand

thefollowingdayatourbreakfastandluncheonmeetings.ItwasaperfectopportunityforourbusyPBPAmemberstonetwork

witholdfriendsandmeetnewones.Anaddedpluswashearing

KenHershofNaturalGasPartnersattheluncheon.Hisexpertise

andvisionforourenergyindustryreallymakeusallfeelgood

aboutwherewehavebeenandwhereweareheading.

The nally-waking-up award goes this month to Congress

asthestallingethanolindustrywantsthemtomandategreater

useofthebiofuel.Butmanyoftheindustrysformerfriendshave

turnedagainstitamidsoaringpricesforcornandothergrains.

Congress gave a big boost to ethanol in 2005, when it mandated that oil reners blend 7.5 billion

gallonsofrenewablefuelssuchasethanolintothenationsgasolinesupplyby2012.Thefarmlobbywas

unitedbehindethanolasawaytostrengthenruraleconomies.Environmentalgroupsbackeditasaway

to ght global warming and lessen the nations dependence on foreign oil. Since then, dozens of ethanol

plantshavesproutedaroundthecountry,turningcornintofuel.Theriseoftheindustryhashelpedtoboost

grainpricesandcreatejobsinfarmstates.

But ethanol production today is close to reaching the 7.5-billion-gallon level in the 2005 law. Over-

supplyhasforceddownpricesanddrivensomeethanolproducersintotrouble.Producersandcornfarm-

ersarelobbyinghardforCongresstoboosttherequirementanewtoensurethatdemandcansoakupthe

risingproduction.

Opposition to the ethanol industrys goals has grown signicantly stiffer. The so-called barnyard

lobbyrepresentingthemeat,livestockandpoultryindustriessaidhighcornpricesarehurtingitsprof-

its.Thepriceofcorn-basedanimalfeedhasincreasedabout60percentsince2005,accordingtotheU.S.

DepartmentofAgriculture.

Our single biggest priority is for Congress to reject a new renewable-fuels mandate, said Jesse

Sevcik,vicepresidentoflegislativeaffairsattheAmericanMeatInstitute,ameatandpoultrytradeas-sociation.

Other groups that were originally sympathetic to ethanol are drifting away. They fear that the fuels

advantagesareoutweighedbytheriseincornprices,whichtheysayincreasesthecostoffoodsranging

fromsteaktocereal.

Many policy-makers were seduced by ethanol, said Cal Dooley, president of the Grocery Manu-

facturersAssociation.TheAgricultureDepartmenthassaidconsumerscanexpecttopayasmuchas4.5

percentmoreforgroceriesandrestaurantmealsthisyearoverlast,upfroma2.4percentrisetheyear

before.

ThespreadingcoalitionagainstnewethanolmandatesincludestheAmericanPetroleumInstitute,

whichsupportsethanolbutprefersamarket-drivenapproach,ratherthanonedrivenbythegovernment

with its subsidies. Some petroleum reners say ethanol prices are low enough now that they would con-

siderbuyingthefuelontheirown,withoutmandates.

Charles Stenholm, a former Democratic congressman from Texas who was inuential in agriculturepolicy,isnowalobbyistinWashington.Hisclientsincludepork,dairyandoilinterests,accordingto

lobbyingrecords.AccordingtoStenholm,theyallagreethatyouneedtoletthemarketbethebiggest

determinant for ethanol.

WeatPBPAcouldnotagreemoreandhavebeensayingthatforacoupleofyearsnow.Firstand

foremost,peopleneedtounderstandfromanenergystandpointthatethanoltakesjustasmuchenergyto

makeasitgivesup;somesayittakesmoreenergythanwhatitgivesup.Sometimestheselobbyistsget

what they deserve when pushing an idea that just doesnt makes sense. Maybe Congress will nally be

comingaround.

Again,thankstoallofyouPBPAmemberswhohelpedsponsorourannualmeetingthisyear.As

always,weatPBPAareveryappreciativeofallyoudoforthePermianBasinandournation.Keepupthe

greatwork!

FromthePresident

President

Kirk edwardsMacLondonRoyalty Company

ExectiveVice PresidentBn SpprdPermian BasinPetroleum Associatio

ImmediatePast PresidentBruc BradyGreat Western

Drilling Company

President-ElectTaylor maynMayne & Mertz

Vice Presidentat LargeDoug RobisonExL Petroleum, LP

HonorarVice President

harry SpannausDiscovry Oprating

Area Vice Presidmik RobinsonRobinson Drillingo Txas

Area Vice Presidmark mrrittFaskn Oil &Ranc, Ltd.

Area Vice PresidKlly maclaskymaclasky OilfldSrvics, Inc.

Secretar/TreasKn DanJonson, millr &Copany

General ConselBrad millrKrr, Ward, mcLaug& millr, L.L.P.

ExecutiveCommittee

Kirk Edwards, PBPA President

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FromtheExecutiveVicePresident

Ben ShepperdPBPA Executive Vice President

Itwasgreattosee