Learning to Roughneck – March 15, 2015

Today we discuss five things that happened the week of March 9, 2015:

  1. Senate GOP Uses States Against EPA
  2. Gov. Wolf Working on Pipelines While Under Fire for Taxes
  3. AGA Not Into New Furnace Rules
  4. Texas Legislator Pushing More Natural Gas Trucks
  5. Natural Gas Fuel Cells In Vehicles

Our interview is with Christian Wallace, a contributor at Texas Monthly who recently wrote a great piece called “Learning to Roughneck.”

Click below to listen or find us on iTunes or Stitcher.

1.  Senate GOP Uses States Against EPA

On Wednesday, March 11, the Senate Environment and Public Works Committee held a hearing entitled “Examining State Perspectives of the EPA’s proposed carbon dioxide emissions rule for existing power Plants.”  Republicans brought in representatives from Indiana, Wyoming, and Wisconsin to criticize the Environmental Protection Agency’s Clean Power Plan.  Democrats countered with representatives from New York and California, both states that say they are reducing carbon dioxide emissions without hurting their economies.

The conversation was primarily a clash over differing views of the costs and benefits of the proposed regulation.  Republicans argue the costs of the new rules are draconian, and but Democrats say the costs are justified by the potential damage from climate change.

The hearing lasted just short of two hours, but here is a five-minute summary:

2.  Gov. Wolf Working on Pipelines While Under Fire for Taxes

Pennsylvania’s new Democratic Governor, Tom Wolf, is wading into pipeline siting issues.  John Quigley, Gov. Wolf’s Acting Secretary for the Department of Environmental Protection, told StateImpact last week that the state wants to add some voluntary planning to the “maddening and chaotic” rush to build pipelines:

“We’re not contemplating any additional regulatory action or regulatory grab,” said Quigley. “This is about having a conversation to see if we can facilitate this whole development process in a way that makes sense for everybody.”

At the same time, the Associated Press reported that the Governor is readying more stringent environmental regulations for the industry:

A forthcoming proposal to toughen regulations for the Marcellus Shale natural gas drilling industry will target how it stores waste, dampens noise and affects public water resources, schools and playgrounds, state environmental regulators said Monday.

The proposal is “balanced, incremental and appropriate,” John Quigley, Wolf’s nominee to head the department, said in a conference call briefing on the forthcoming draft.

As the Governor looks to take these additional steps, he continues to take heat for his plan to raise natural gas taxes.  Philly.com reported on a long-standing complaint of Gov. Wolf’s plan, that his new tax will likely not raise as much as he predicts:

Gov. Wolf has proposed a severance tax on natural-gas production that he says would generate $1 billion for education programs.

But the proposed tax is based on the price of gas. And as long as gas is cheap, it will be hard to hit the revenue target.

The Pittsburg Business Times reported the tax would cap funds that are currently going to local governments.  And the American Petroleum Institute’s (API’s) Energy Tomorrow blog warned the tax hike risks killing the goose that laid the golden egg.

3.  AGA Not Into New Furnace Rules

On Thursday, the Department of Energy (DOE) published a notice of proposed rulemaking entitled “Energy Conservation Program for Consumer Products: Energy Conservation Standards for Residential Furnaces.”  The DOE has long-standing authority to regulate the efficiency of various household appliances.  It has tried for some time to raise the “fuel utilization efficiency rate” for home furnaces, meaning the percentage of the natural gas that is actually burned.

The American Gas Association does not like it.  They say, this rule likely eliminates non-condensing furnaces from the market.  Those furnaces have one exhaust, and it goes out the ceiling.  The non-condensing units would be taken off the market and the only replacements available will be condensing furnaces, which need to vent out the side of the house and have a water drain inside.  Adding new vents and drainage are costly, and the AGA argues “this would force many customers to move away from natural gas selecting a less efficient heating system.”  AGA put together this handy infographic:

AGA Furnace Infographic

Folks at the National Comfort Institute, a group that serves heating and air conditioning contractors, had a similar take.

Please tell us, DOE: what is the justification for this seemingly arbitrary change? Do you realize that if this becomes the rule, it in effect eliminates non-condensing furnaces from the world? Had you thought about or consulted with anyone with regard to stranded water heater exhaust in chimneys that can create serious and costly condensation issues? What about the need to exhaust these 92% furnaces through the wall and the potential for long flue pipe runs?

The proposal will be available for public comment until June 10, 2015.

4.  Texas Legislator Pushing More Natural Gas Trucks

Texas State Senator Carlos Uresti (D-San Antonio) is pushing a new bill to expand natural gas usage, according News Radio 1200 WOAI reports:

Uresti has introduced a bill that would mandate all 27,000 vehicles operated by the State of Texas, from prison vans used to transport inmates to the limousine Gov. Abbott is driven in, to convert to natural gas.

Uresti says the money to pay for this would come from the Texas Emissions Reduction program.  The TERP program was created in 2001 and is funded from a variety of sources, mainly from a $225 title fee for out of state vehicles being registered in Texas.

5.  Natural Gas Fuel Cells In Vehicles

On Tuesday, the Sandia National Lab released a report entitled, “Transitioning the Transportation Sector: Exploring the Intersection of Hydrogen Fuel Cell and Natural Gas Vehicles.”  The report was a summation of work done last year examining common opportunities and challenges in expanding the use of hydrogen and natural gas as transportation fuels.  According to a press release, the report finds:

  • Fuel station operators could cater to both natural gas and hydrogen users, as they are targeting different customers (natural gas for fleets and hydrogen for consumers).
  • Companies should work towards common equipment, pressures, and manufacturing process to create economics of scale for storage and handling.
  • The market for both fuels is expanding.
  • Multiple generations of vehicle and fueling infrastructure will coexist and are likely to suit different niches.
  • While the growth of alternative fuels will be unpredictable, early station development can provide valuable lessons for long-term expansion.
  • Thorough system requirements and cost assessments are needed to quantify the benefits of co-developing natural gas and hydrogen.
  • Different policies may be more effective for different fuels.

Interview with Christian Wallace, Contributor to Texas Monthly (Starts at 23:32)

Christian grew up in Andrews, Texas, right on top of the Permian Basin.  The oil field seems to be at the heart of the town’s identity.  Christian did not grow up in the business, but he spent some time on a workover rig after college and documented his experience in a recent Texas Monthly piece entitled “Learning to Roughneck.”

Christian got his job with an email to a childhood friend, and started work back in the boom days of 2013.   At the time, jobs were plentiful.  He frequently saw folks hired on the spot at local gas stations.  People came in from all over the country looking for work.  Christian said it was quite a thing to behold.  For many, drilling for oil is the family business.  Christian found that jobs on the rig come with a level of respect in the community.

A workover rig’s main job is pulling up pipe from an existing well that is having some kind of problem.  The rig is mobile and Christian’s had a four man crew doing three different jobs:

  • Floorhand (Two per rig) – Responsible for working the tongs, which is more or less a jumbo, hydraulic-powered wrench used to break connections on the rods and tubing.
  • Derrickman – Stationed high above the ground on a “tubing board” to unclamp the rods and tubing so the blocks can travel down for another haul.
  • Operator – The captain of the ship, who is running the engine and the brakes.

New guys on the crew are called “worms,” and have to wear green hats for their first few months on the job.  They start out on the floor and generally move up to the other positions based on experience and on the job training.

In many cases, the workover rig is owned and operated by a company that is contracted out to a producer that needs a well serviced.  So in Christian’s case, he answered directly to his rig operator, but on a job the rig operator answered to the “company man” who was in charge of the well.  Some jobs are quick, but most seem to last a few days or less.  Sometimes a rig will have downtime between jobs, or the well operator may have caused some kind of delay and the rig will be paid just to stand by.

The job of a roughneck remains a physical and dirty job.  Each segment of pipe comes up full of decades-old drilling mud and dumps it on the floor hands.  That mess will freeze on a cold day, and metals can be dangerously hot in the summer.

Safety is always a concern, and Christian had one scary experience.  His crew was swabbing a well, which basically means pulling rubber cups on a wire through the pipe in order to clean up any junk in the well.  Christian did not actually have a role in the process, but he was on the rig floor to deliver a message to the operator.  The “sand line,” which is the wire pulling up the rubber cups, snapped and hit both the operator and the other floor hand.  Christian managed to jump out of the way and ran about 40 yards away from the rig, but the floor hand needed a trip to the hospital.  The injuries were not serious, but apparently that type of accident is often fatal.

Christian said he feels like accidents are fairly rare, but they do happen.  Missing fingertips are not unusual, and just last week several people from his town were killed in a work over rig explosion.  At the same time, others can go their entire career without a mishap.  When something does go wrong, fingers get pointed and people can get fired.

The oil field seems to draw a range of personalities, but Christian seemed to find career changers were not particularly common.  He met some preachers, a teacher, and a lawyer.  But, more commonly, the workers had been in the field since leaving high school.  Many had spent time in prison.  And the ex-lawyer Christian knew wound up being injured and leaving the field on bad terms.

Christian’s story seems to have a happy ending, though.  He found that most his coworkers felt a strong sense of pride about their jobs.  The work is tough, but is a somewhat-rare opportunity to make a comfortable living doing blue-collar work.  Many folks proudly wear the label “oil field trash.”  The work gave Christian an opportunity to pay down some debt, work near his family, and better understand the place he grew up.

You can see Christian’s work at: www.texasmonthly.com/contributor/christian-wallace and www.christianhwallace.com.