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 The headlines surrounding the rescission of the redundant methane rules for oil and gas companies can be misleading. VOC emissions from Oil and Gas Production operations are still regulated under New Source Performance Standard OOOO and OOOOa if the site underwent a well completion operation following hydraulic fracturing or refracturing after the effective dates of 8/23/11 and 9/18/15 respectively. The VOC emission reduction requirements which include but are not limited to leak detection and repair programs, emission controls on affected storage tanks, and annual compliance reporting are still in place. Click here for excerpts from the final rule. The rule is currently pending publication in the federal register. The entire final rule can be found here.
The New York Times |
Forbes
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| LET US HELP YOU WITH YOUR TROUBLESOME OIL & GAS ASSETS |
2020 has been one crazy year. Commodity prices down and Covid 19 up makes for a toxic combination. Many oil & gas assets have found themselves in dire straights financially, operationally or both. Brammer Engineering can be a long- or short-term safe harbor for many of these assets. The following narratives illustrate how our team can take struggling assets and stabilize them and in many cases improve their overall performance in a relatively short period of time making them ready for sale, transfer to other strategic partners or left in our care for long term management and exploitation.
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| A BRAMMER CASE STUDY: RESTORATION & OPTIMIZATION OF DISTRESSED WEST TEXAS ASSETS |
In early 2016, Brammer Engineering was approached by a client to act as the contract operator for their West Texas assets. Our client, a non-operating financial entity, had taken control of these distressed assets and needed help in the management and operation of these properties. Brammer agreed to assist our client in restoring and optimizing their assets and assumed the responsibility of 195 oil, gas, injection, and saltwater disposal wells located throughout West Texas in the third quarter of 2016.
The Challenge and Brammer's Approach:
Prior to assuming responsibility of these assets, Brammer assembled a team to begin working through a "transition" period during which we gathered as much data as possible about the assets. During this time, every sector of our team identified many challenges that we had to overcome to best serve the interest of our client.
Click here to read more details on the challenges identified by HSE, Accounting, Land/Legal, Production/Regulatory Reporting, and Engineering/Operations, as well as the result of Brammer's involvement in the project.
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| | ONBOARDING DISTRESSED OIL AND GAS ASSETS |
In the past several years, capital providers have contracted with Brammer Engineering, Inc. to provide financial property management solutions for producing oil and gas assets pending alternative long-term arrangements. Oftentimes capital providers take control of financially distressed assets by removing management teams, and if appropriate, foreclosing under state law and through bankruptcy under Federal law. In these situations, the existing knowledge base for the asset can become disengaged. As a result, Brammer is tasked with recovering and uploading land, well and accounting records on an expedited basis through any means available.
The expedited basis has involved immediate takeover of field operations, and a process for building land and accounting files. Brammer has managed this process for its capital provider clients through a transition process of any records available. For land records, this has involved contacting prior operators/service providers and updating those records. It has also involved recovering and inventorying hard files for relevant information. Brammer notifies the royalty and non-operating working interest owners and keeps them advised pending reconstruction and vetting of the divisions of interest, outstanding accounts receivable, and suspense matters. Brammer's accounting team uses these records provided to setup the asset in our oil & gas software. This includes setting up the wells, properties, and allocations; setting up business associates including working interest owners, royalty owners, and overrides as well as vendors used in the operations of the wells; importing the JIB and Revenue divisions of interest; and configuring reporting requirements for state production, severance tax, and financial reporting. Brammer also confirms that the appropriate insurance coverage is in place or secures that coverage to protect the assets and the joint interest owners. All vendors are vetted and MSAs are executed with them if they are not already Brammer approved vendors. This expedited process allows for Brammer to transition the management of the oil and gas assets in a seamless and timely manner. The ultimate goal is to provide the capital provider with a commercially sound asset record system for later disposition of the asset. Brammer seeks to keep all interest owners educated on the process of truing up their joint interest billing and/or revenue accounts. Lastly, Brammer provides these services on a lower cost basis compared with the historic operating cost of the asset.
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| | HOW INFORMATION TECHNOLOGY SERVICES IMPACT DISTRESSED ASSETS |
 In addition to operational and back office solutions for distressed properties, the expertise of Brammer's Information Technology group can bring positive impact and value to these properties as well.
First of all, the team will assess the current costs and expenditures related to IT: networks, systems, hardware and security. The ongoing costs, age, functionality and viability are all critical to understand. It is often found that decisions have been made by the previous operator to eliminate costs on crucial IT systems.
The IT team works closely with the Operations Engineers to determine what systems and data flows are currently in place or must be put into place to efficiently and safely operate a specific property and associated assets. A commonality with distressed properties is that something as critical as a SCADA system for monitoring plant operations, pipelines, and wells has been neglected. Hardware may be outdated and can put operations at risk with a potential failure. Maintenance on the software may not have been performed and security exposure then becomes a major concern. Additionally, the data network servicing the SCADA application is usually the same one that has been in place for many years.
Brammer has often found that utilizing existing infrastructure, upgrading to a "hosted" SCADA system, and optimizing network infrastructure can provide significant savings to the client. Our team has experience successfully implementing a range of "hosted" SCADA systems that upgrade functionality and ensure viability. With a somewhat low monthly cost, rather than a long-term capital investment on hardware, software and professional services, these hosted solutions bring immediate operational and economic value. Recently, Brammer saved a client over $5,000 per month on network expenses, which includes the monthly costs of upgrading to the "hosted" SCADA application, through this optimization process
There are a variety of additional savings that the IT team has consistently found through analysis, such as identifying remote properties with hardware infrastructures of virtual hosted servers, storage arrays and associated software. Some of these systems have not had support or maintenance for many years. We often replace and upgrade these systems, where needed, with cloud hosted services. A lower monthly cost along with viability, increased functionality, and security are the typical benefits.
Brammer Engineering's IT services are just of piece of the full line of oil and gas services offered. Whether it is a specific service, a combination of services that you may need or the complete contract operating package, contact Phillip Templeton, IT Director, if we can be of assistance with your IT needs. We will be glad to discuss the value and quality that we can bring to fulfill your needs.
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DUE DILIGENCE
The oil and gas industry is characterized by large investments that expose owners and operators to substantial financial, operational, environmental and safety risks. Due diligence is essential when investing in or acquiring properties. The acquirer needs to know exactly what is being sold, its condition, and the financial, environmental, safety and technical risks involved. The Brammer team provides professional due diligence services for clients who are evaluating a potential oil and gas investment. Our analysis can help you better understand your risks so that you can make investment decisions with confidence.
Our due diligence services typically include all or any combination of the following:
- Land - thorough verification of land and leasehold records, as well as net revenue interests, check for liens/encumbrances, confirm obligation calendar, review existing payout statements, joint operating and other participation agreements.
- Health, Safety & Environment - perform Phase 1 environmental site assessments, review regulatory records and permits, perform site assessments to evaluate environmental condition and safety standards.
- Accounting - review all accounting processes and severance tax filings, review and manage pre-effective and post-effective transactions, verify working and revenue interests in accounting decks, review and confirm suspense funds.
- Operations - overall review of operating procedures and historical lease operating statements, perform site audits and assessments, verify current production rates, inventory all equipment and stock on hand and review ad valorem tax filings.
- Regulatory - research state regulatory agencies to determine well status, reported production, fees and fines. Review previous operator's state reporting. Prepare all forms and filings for new operator setup.
- Energy Marketing - review current purchaser contracts and related agreements, as well as purchaser revenue check details. Confirm any gas imbalances with owners and/or pipelines.
- Human Resources - identify key seller employees and independent contractors. Interview and assess potential employee hires associated with the acquisition.
Brammer has a comprehensive model to assist our clients in transitioning their new properties from acquisition to operations as smoothly as possible.
Please contact Pat Brown, VP of Operations, to further discuss our Acquisition to Operating services.
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What is your position at Brammer?
Sr Revenue Analyst/Special Projects
What responsibilities does that include?
Revenue accounting, banking, sales/use taxes, audits, insurance and any special projects needed.
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How many years have you been at Brammer?
How many years in the energy industry?
30 years.
What do you enjoy most about working at Brammer?
I enjoy working at Brammer because people care about each other as a person. Everyone has the same vision and is dedicated to helping each other personally and professionally.
What do you think sets Brammer apart?
I think Brammer is set apart by the principles the company was founded on of serving our clients, and how the management and employees strive keep these principles alive.
What is the most important thing you have learned since starting at Brammer?
The importance of teamwork.
Click here to read the full interview with Sherry.
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Vestiges of the Past
Angel Fire, New Mexico
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"Talent sets the floor, character sets the ceiling."
Head Coach
New England Patriots
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Ever wonder how the U.S. got the nickname Uncle Sam?
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