Chesapeake Energy Besieged with Lease Compliance Issues

Oil and gas companies often struggle with the vast amounts of information inherent in day to day business. We took notice last week of an article in The Examiner reporting that in Pennsylvania, Chesapeake Energy is losing “its hold as the market leader within the state,” as it reduces drilling by more than half this year. The company has of late been selling off shale gas assets to meet debt obligations, and they say drilling reductions are due to low prices for natural gas. Meanwhile, the company is facing “allegations of price fixing in Michigan while increasingly besieged with landowner lawsuit claims of underpayment of gas royalties and related leasehold disputes,” and these data issues more than likely are contributing factors to their declining market position.

Unclear data and reporting has popped up more recently in Pennsylvania for Chesapeake Energy, The Examiner reports.  According to state officials, Chesapeake submitted a production report to the Pennsylvania Department of Environmental Protection that was filled with errors. “This caused great confusion within the state regarding actual production and has called into question oversights as to how accurate such production data might be.”

The article also related Chesapeake’s recent statement to Pennsylvania lease holders that they have the “right to deduct certain post production costs from a landowner’s royalty check payments if it can show such costs “enhance” the value of the shale gas.” The issue remains a bit murky, as land owners insist their royalty payments were meant to be based solely on the volume of gas produced at the well head. Legal action will probably be required to sort the issue out.

Is the company’s new policy in compliance with the leases of the land owners? Without good information, this may be hard to tell. Chesapeake is not alone in their struggle to maintain accurate data. How long would it take your company to unravel either of these issues?

Get started now with our Lease Compliance White Paper, and find out how you can get ahead of the curve!

Neil Duffin says Regulatory Compliance “More Important than Ever”

ExxonMobil Development Company President Neil Duffin spoke at the Rice E&C forum this evening in Houston, Texas, focusing on managing today’s changing regulatory environment and choosing oilfield service companies who share Exxon’s commitment to regulatory compliance.

Duffin noted that while the number of incidents of non-compliance have decreased, the number of high-consequence incidents were alarmingly high and “eye-opening” for his executive team. Because there is a huge gap between the field and the corner office, the executives were shocked when they took a look into the quantitative information around these risk scenarios. He believes that if the energy industry really examines the small number of truly high-consequence activities, and mitigates the risk of such consequences, Oil and Gas can elevate itself as an industry.

The increase in regulatory demands from governments reflects changing societal expectations, in his view, and needs to be a high priority, because a single non-compliance issue can negatively impact the entire industry, even if general trends say that the situation is improving. Duffin emphasized that Exxon is dedicated to making it a daily business priority to prevent regulatory issues from arising.

Mr. Duffin is on-point with his analysis, and we believe it’s because he had ready access to accurate information from the field. Would you like to have data from across your organization at hand? Here at Entrance, we know that mitigating compliance issues has a lot to do with gathering the right information and presenting it compellingly. We strongly believe that if organizations better exploit their information assets, they will be able to produce quantifiable decreases in regulatory compliance risks.

For information about dashboards and portals that enable intelligent decision making to prevent non-compliance from occurring, check out our latest whitepaper.

Risk Mitigation Through Technology

Risks are a part of daily life in the oil and gas industry. And because they are many, varied and unpredictable, software product companies cannot keep up with industry needs. We specialize in creating custom business solutions that respond to changes impacting the Oil and Gas industry long before anyone else comes to the table. We like to think that preparation, visibility, and communication are vital to mitigating risk – and are all aspects that can be improved with good data.

Are you prepared?  Our client is!

Early warning through Notifications

When faced with regulatory changes and a rise in the consequences of being out of compliance, our client chose to create a system that could track operational aspects and warn stake holders in advance of non-compliance. Entrance plotted out the data points needed to determine compliance with various types of provisions, and connected data from many different departments and databases to track well status.  We then created automated notifications for when action needs to be taken – sent in time for it to actually happen.

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Do you have the visibility?  TG Mercer does!

Effect Mitigation through Tracking

Information can be the key to mitigating the consequences of unplanned events. For instance, if a joint of pipe has a problem, it could take a huge financial and monetary investment to manually track down the paperwork to determine its history. With automated tracking of pipe location and status into a set of databases, not only does it become easy to find its history, in case of emergency, you can also track down pipes with the same background and prevent a future occurrence.

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Have you communicated?   StatOil did – even in a merger!

Buy-in of tactics through Data-based Strategy

E&P firms take significant risks in deciding which assets to drill, and each firm has a set of strengths that can help determine what their best plays are. In order to avoid costly misdirection of resources, StatOil had Entrance put together a look-back of p-10, p-50 and p-90 data in combination with actual production and accounting numbers to create an understanding of the commonalities of their most profitable wells. Being able to articulate a risk portfolio based on real numbers will not only keep investors happy, but will guide your firm to better decisions.

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How do we effectively manage data during mergers and acquisitions?

When I received a notification that Robbins & Myers and National Oilwell Varco had announced a merger, it seemed like perfect timing to talk a bit about Mergers and Acquisitions from a data management perspective. “Mergers and Acquisitions are the lifeblood of growth” (Mike Gorsage for INC. Tech) but “companies that approach such an [IT] integration hastily are often unpleasantly surprised by the complexity..or the cost it will add to the transaction.”

Think about how complicated your company’s data systems already are, and then imagine adding another organization’s functionality that’s equally complex. Especially in Oil and Gas, everyone has invested in different platforms, software, hardware and data models, and those systems are integrated specifically to meet the needs of the company they are supporting. So adding all of those connections together can result in a tangle of connections that just creates a huge mess to clean up.  At Entrance, we’re able to turn that headache into a seamless transition. We work to understand and document the processes represented by those digital assets, and then consolidate the intricacies of two companies worth of information into a system of systems that makes sense.

Due diligence regarding digital assets really is the best recommendation we can make regarding Merger and Acquisition planning. Creating an overall IT portfolio requires a lot of inputs. Everything from a complete inventory to a plan for system compatibility needs to be scrutinized. In many cases redundancies can be identified, so that where there are currently two systems there could just be one in the future. In other cases one company simply has a better set of technology platforms than the other. In order to accomodate for all of the potential scenarios, it’s important to work with a partner who is experienced with the types of options that arise in an M&A process, and even more important, someone who understands how data is organized in relation to the value it provides to the business.

In many scenarios, a data management plan created around a merger & acquisiton scenario can drive significant accessibility and decision-making enhancements. By analyzing the purpose and related location of data, what master data should exist and what the system of record should be, the system that comes out of a well-planned m&a scenario is many times far more efficient than the two systems were going in. Surfacing high-quality information at the right time for the right people can be the end result of what starts as a simple assessment.


TG Mercer and Entrance – Engineering Intelligence for Midstream Energy

Our partnership will push the entire midstream forward in efficiency and safety compliance with strategic software.

TG Mercer and Entrance have partnered to create SpreadBoss, a logistics support tool that allows thousands of joints of pipe to be tracked, providing customized inventory reports and creating a pipeline status history database. Not only does the software reduce time and effort spent on tracking pipe, it also provides accurate and timely data capture, as well as consistent documentation. The software solution has become a differentiator for TG Mercer, because it makes them the best in the industry for providing fast and accurate field data for corner office decisions, while reducing the labor cost of that information and making it easily available for regulatory and safety purposes. The project was recently covered in Pipeline and Gas Journal!

The big idea

Every industry-changing technology starts as an idea, and according to Charlie Hankins from TG Mercer, the idea for SpreadBoss grew organically. TG Mercer is very logistically oriented, and most of their projects center around active pipeline construction. They’d get calls asking how much pipe a particular yard has at any given time and would then proceed to compile the information to respond to the customer request. Because of the effort needed to gather joint counts manually, by the time the information reached the people who needed it, it was out of date. Additionally the manual process of calling, faxing and typing in spreadsheets of information was both time consuming and wasteful. With almost no computerization, it also created a huge paper trail that had to be followed by compliance and safety specialists to get the information they needed.

The impact

What started as an idea to improve efficiency grew over the life of the project to become a tactic for differentiation. “We were originally looking for a way to get information that was going on in the field to our headquarters more quickly.” notes Charlie Hankins, Executive Vice President of TG Mercer, “But as we looked into what was possible with technology, we saw that there was a huge market gap we could fill, where we could bring untapped value to many constituents within the midstream sector.” There are huge implications for the industry with this application. Pipeline projects are huge, with lots of people involved, and status tracking is of interest to people in roles all across a midstream organization. Given the level of importance associated with the product and the complicated specifications for paperwork, the lack of sophistication in the industry’s standards for pipe tracking was extremely surprising.  You can imagine that knowing the status of orders, segments and joints of pipe is useful for:

  • Procurement
  • Project management
  • Inventory maintenance
  • Financial systems
  • Regulatory compliance
  • And more

TG Mercer’s team didn’t stop at imagining those implications; they brought their idea to friends in the industry in order to customize the solution to match the needs of various stakeholders. They looked to transform their idea into industry-wide improvements with custom software.

The partnership

As SpreadBoss grew from an idea to a reality, the team at TG Mercer was looking at a quickly growing project scope with many industry problems to solve. They needed a partner in place to quarterback software design and development, because that’s not what they want or need to specialize in. This partner would provide them with a software strategy road map and someone with experience to make sure that milestones were in place to get to completion. Entrance brought software project management to the table, with the industry perspective needed to determine what the resource and time implications were for adding new functionality. Entrance focused on enabling intelligent business decisions, and offered TG Mercer help quantifying what they needed to achieve the business goals at hand with a custom software solution. “Entrance really thrives in an environment where complicated industry problems need to be fixed in line with business needs,” states Nate Richards, President of Entrance “We love bridging that gap between what technology looks like in industry today and what solutions match business drivers.” And the great thing is that everyone wins with such a great partnership in place – the midstream industry gets new value, TG Mercer brings something exciting and special to the table, and Entrance gets to be in the ideal role of value generation with custom software.

The results

There are huge implications for the industry with this application. It’s an entirely new product that was created with industry members involved. With a positive impact both on process automation and pipe history documentation, this solution is going to become the standard for logistics in the midstream arena. SpreadBoss was built based on real industry insights and many of the exciting features of the tool were created to match specific needs expressed by real potential users. The first implementation of the software system is currently underway. It’s a 900 mile project, and SpreadBoss is already proving its value. One field employee noted, “This software is easy to use. And I can now check in 15 joints of pipe in the time it would take me to fill in just one before!”

Find out more about inventory management for oil and gas services in our case study!

GPS Equipment Tracking for Oil and Gas Services

Entrance just launched a custom software solution that integrates GPS tracking with the information systems our client already has in place in order to improve equipment-use efficiency!

Our client wanted to make sure their equipment is being efficiently utilized. In oil and gas services, where equipment is a huge investment and asset, making sure that run times validate expenditures is extremely important. Entrance has created a software integration and custom reporting solution that ensures our client won’t end up buying extra equipment if similar items are underutilized in another location, or runtime can be better optimized somewhere, freeing machines they already have.

How the custom software works:

Entrance’s solution begins with collecting the hundreds of thousands of records generated by our client’s GPS solution. The records are then cross-referenced with a database of equipment identifiers, connecting each piece of equipment with information about run time per unit, per day. Records include everything from a device turning on and off, to its location and travelling speed, to a simple daily ping confirming that it is in the appropriate warehouse storage location. We then bring all of this great information in contact with other important informations systems to create custom reports.

The benefit of custom reporting:

The real excitement begins, however, when all of that information is pushed to other systems, like field ticket management, and accounting. By layering information about run time over billing information, for instance, for instance, our client knows whether they are under or over billing their equipment based on actual time logs. When comparing time logged in the field, run time and location can help verify time logged in other systems.

As you can imagine, bringing all of that great information together would be extremely difficult if you were simply inundated with the hundreds of thousands of tiny records created on a monthly basis. Instead, we sat down with decision makers and determined what it was they really need to know as well as when and how they wanted to receive that information.  Then we created custom reports matching their requests, as well as building in preparation for the types of information they are likely to request of the system. And with some cool tricks, we ended up pulling on-demand reporting time down from an average of 10 hours to just minutes!

Getting the best information possible:

One secondary perk of automatically and continuously cross-referencing equipment information is that there’s a built-in data quality check. If a piece of hardware was incorrectly added to the system, we now see that error and can report on it. With millions of records, the devil really is in the detail, and our client can rest assured that the information we’re providing is both accurate and up to date.

Engineering Intelligence for Pipeline Safety

At a recent industry breakfast, a panel of speakers from Embridge, TerraFina, Plains All American, and the Bauer College of Business discussed their perspectives on both the boom and the coming challenges for the midstream sector. With the introduction of fracking and horizontal drilling, production has increased beyond the transportation infrastructure’s ability to move those hydrocarbons to factories and the market. And with the market flooded with natural gas, both Plains All American and Terrafina are pushing to export. All of this remains good news for the Midstream, because even the best condensates aren’t worth anything if you can’t get them to market.

As noted by Enbridge’s President ‘safety and integrity are critical driving factors’ –  for a multitude of reasons. In fact, the Dean of the Bauer School of Business stated that 34 million man hours per year are being spent in the Midstream sector, just on maintaining regulatory compliance in a world of ever-changing standards. And risk management is not driven only by human safety implications, a ruptured joint of pipe also slows time to market and gouges revenue.

At Entrance, we are well positioned to provide intelligence and visibility that will make compliance headaches and safety worries far more manageable. Based on our experience, most of the 34 million hours spent on compliance are probably spent tracking down information rather than making key decisions and taking preventative action. Tracking joints of pipe from the mill to the ground and creating a history of each joint’s various statuses can mean many an hour of work saved when a pipeline’s status needs to be reported on. In fact, SpreadBoss, our ongoing project with TG Mercer, is solving just that problem (and a few others to boot!). Check out the article about our application in the May 2012 issue of Pipeline and Gas Journal!

Oil and Gas Spotlight – Geology and Geophysics (G&G) Software

Custom Software and SharePoint Consulting for Oil and Gas

Software is an unsung hero when it comes to the Energy Market and the Oil and Gas Industry. Custom software plays a key role at crucial moments throughout industry decision making. Here at Entrance, industry insight drives the custom solutions we develop. We have over a decade of experience tailoring our software to solve complex problems, whether they are broad in scope like helping smooth out large mergers or deep in detail like processing sensor data.  We have industry experience from upstream geology and geophysics all the way to downstream chemical plant processes.

Geology and Geophysics (G&G) Software Solutions

We have done software consulting supporting every department in the E&P structure, and have also customized SharePoint to enable interdepartmental data synchronization, collaboration and decision making. To get started we’ll zoom in on Geology and Geophysics. Positioned at the very start of decision making, these specialists process and make decisions based on tons of real-time data. Our custom software provides data processing, visualization and simulation that are core to informed decision making. For example, we’ve created a custom solution for Spinnaker that helps them balance their prospect portfolio choices.

Risk Management Software

The oil industry began as a field of risk takers, and while that spirit of adventure and opportunity is alive and well, risk management has become a well-defined and careful art. Companies need to take chances on long shots in order to strike game-changing wins, but drilling is costly, so it’s not a decision that is taken lightly.  Entrance created custom software for risk analysis that integrates the best data available with metrics to evaluate possible, probable and proven figures on a prospect basis, map out successes from a historical perspective, and split evaluation inputs to reflect risk differences in shelf and deep water prospects.


Those who use P90, P50 and P10 know that the implications of reserve figures vary strongly based on where, along the spectrum of how sure geologists are of the reserves in a particular field, reporting is done and decisions are made. Our software provides a central place for team collaboration and peer review, and offers both look back and at a glance risk analysis. With our software, teams can determine whether their past advice and actions were too optimistic or too conservative, and can directly apply that insight to current decisions. Our metrics apply to both current and former prospects and range in nature from date of discovery to location, lease information and more. We also offer analysis split by shelf or deep water locations because not only are the teams associated with each type of prospect completely different, the risk calculations vary greatly. When looking into drilling on the shelf, the process is cheaper, likelihood of success is higher, but the quantity of raw hydrocarbon is usually low. When deciding whether to drill under deep water, the investment is much greater, and the chance of finding something much smaller, but if that reservoir is found, it is usually huge.  Our metrics are customized to reflect this difference appropriately. As you can see our software has become an essential part of portfolio management when looking into drilling prospects.


Where Oil and Gas Expertise Meets True Software Consulting

We attended TIPRO this past week, and the discussions here have confirmed a lot of what we are hearing from our clients. In the video below, Entrance Software’s president, Nate Richards, shares a few thoughts on one particular issue, getting the right talent to develop oil and gas software. Click the image below for the full video or read an excerpt here:

Play“We’re at TIPRO today, the 56th annual conference in Dallas. And a comment made by several of the speakers is the challenge with hiring experienced personnel across their organizations. Something that we see a lot is that it’s a challenge hiring software engineers, project managers, systems engineers that understand oil and gas. This is a big problem in the IT space, which is one of the key departments serving a modern oil and gas company – bringing that information to the right decision makers. Our teams of experienced software engineers understand what a well is. They understand an asset lifecycle in a modern E&P firm. And they understand what is important with respect to Data Management and Process and People.”

Read more about the HR gap between the booming energy industry and good IT talent


Shale Royalty Compliance

Brad Harris, Senior Manager – Oil and Gas.

Get a warning before you’re ever out of compliance.

With the advent of fracking and horizontal drilling, onshore lease contracts are getting more and more complicated. Lease provisions are getting more granular, time-sensitive and more punitive – and all in the land owner’s favor. Lawyers who used to chase ambulances are now looking at those contracts for their next big paycheck. Are you compliant with every provision? Hundreds of millions are at stake, and our custom oil and gas software will keep scavenging lawyers away. We will warn you before you’re non-compliant and take the risk out of these complex new contracts.

Avoid Litigation with our automated compliance tracking and notification system

Lease Provision Tracking System

With the rise of continuous drilling, minimum production, royalty escalation and other provisions that need to constantly be monitored in order to remain compliant, old ways of tracking leases in jeopardy are no longer enough to keep up. And while lawyers comb your fine print, we’ve created a way to make sure they’ll never trap you. We built an integrated lease provision tracking solution that moved a client from managing long and detailed leases manually via a disconnected spreadsheet to an integrated system with real, current information on the well in consideration’s compliance status. On top of that, we created a notification engine to inform subscribers of well status changes that affect leases before they ever come into jeopardy.

Push for Data Standardization

As a separate initiative in the royalty compliance project, Entrance software helped standardize a process to ensure well data consistency across multiple systems.  Wells, and their related data, are tracked in a variety of software applications for differing purposes depending on the department and system.  Land, production, operations, drilling and reservoir all use these systems for their internal purposes, but much of the same pieces of well data are used throughout.  To provide a consistent well view across departments, Entrance worked with key stakeholders to identify data points that are shared and which system should serve as the “system of record” for that data point.  We then wrote an automated process to keep the well data synchronized across systems, as well as warn users of any potential issues with the synchronization process on a nightly basis.  The notification sign-up user interface is surfaced through a standard SharePoint portal and allows users to determine which pieces of data they want to be notified about.  In addition to sharing pieces of data about wells among these various systems, Entrance also identified a well’s standard “lifecycle”, meaning the various phases a well will transition to throughout its life.  These would typically span: to be drilled, drilling, awaiting completion, producing / shut-in, plugged & abandoned (with some others).  Rather than rely on a user to manually transition a well through these statuses during its lifecycle, we identified triggers that will automatically move a well’s status – for example, setting a spud date would transition a well to “drilling”, while setting a sold date would transition a well to “sold”.

The Benefit of Metadata

We connected systems from all of the different departments and determined what bits of data were important to communicating well-status. Important well data now sources, pushes and pulls through our centralized database. Our client now has a consistent company-wide system of systems that keeps information on each well’s status up to date – its SPUD date, rig release date, production information, etc. With good information, not only are users in every department now up to date and on the same page, users in the corner office have a much more accurate picture of what’s going on accross departments.