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INTERVIEW

New type of storage for well-site chemicals


prevents spills
Seth Martin, President/CEO, Appalachian
Drilling Services
In the second of our weekly interview features we are talking to
Seth Martin, President and CEO of Appalachian Drilling Services.
One of the winners of the Ben Franklin Shale Innovation Awards
for their innovative spill-proof containment solutions, Appalachian
Drilling Services is a pure play oil and gas services company
supplying chemicals and lubricants to the oil and gas industry.
Monica Thomas (Shale Gas International): We know from the contest that you provide rig
friendly waste storage units specifically built to mitigate the chances of any type of spill,
but can you tell us a bit more about yourselves?
Seth Martin (President/CEO, Appalachian Drilling Services): Well, Appalachian Drilling Services
is a pure play oil and gas services company. Our breadth of services - we service currently Ohio,
West Virginia, Pennsylvania, Kentucky, with obviously an appetite for expansion. But we are first and
foremost an environmental company, we take environmental storage very seriously, thats why we
offer some of our patent-pending equipment. Thats all about mitigating opportunities for spills, and
any type of reportable incidents with the DEP, but as far as our services go, were really a chemicals
and lubricants supplier, we sell drilling chemicals, soap defoamer, inhibitors, lubricants, that type of
stuff, and we also have a full breadth of lubricants as well; motor oils, hydraulic oils, and that type of
thing.
MT: When it comes to the shale innovation contest, you were particularly recognised for the
containment solutions, if I understand correctly?
SM: Thats correct. So we threw our hat in the ring this year for the event and particularly we were
focused on our patent-pending spill-proof containment which is for chemicals, lubricants and waste
storage and management.
MT: Okay. So can I just maybe ask you a bit more about those containment solutions?

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According to your website you provide separate solutions for storing drilling chemicals and
drilling lubricants and waste storage. Can you maybe tell us a little bit more are these all
different solutions for different substances?
SM: Sure. The chemicals and lubricants containers are essentially the same units they come
in different configurations depending on the need of the customer; theres 4-compartment,
2-compartment, single-compartment; fluids and / or lubricant containment, and those are all heavygage steel, double-walled, spill-proof, epoxy-lined, and theyre built specifically for the purpose of
being on active drilling rigs or frack-sites.
Theyre very durable and heavy-grade, and 100%
spill-proof and puncture-proof.
As it relates to our services, we typically
provide those pieces of equipment at no charge
with the commitment from the customer to
purchase the chemicals or lubricants from us.
MT: So you basically provide the chemicals
and the lubricants and then the containers
are added as a part of the service.
SM: Correct. We provide our equipment at no cost. The only cost incurred by the customers is the
purchase of the chemicals, housed in our containment. Does that make sense?
MT: So, when it comes to storage, do you also provide storage for water for hydraulic
fracturing operations or for flowback and produced water, or is it just for the chemicals
that are used in the process?
SM: Just for the chemicals and the lubricants used in the drilling and / or fracturing process. We do
have manufacturing facilities so we customise containers specifically for customers that are a little
out of the norm when it comes to the scope of our services but we dont really build anything on that
scale not that we wouldnt we just havent seen any demand for some of that stuff yet.
MT: The containment solutions are obviously an innovative product. Could you tell me a
little bit more about what would be the outdated solutions that your companys products
replace?
SM: The standard mode of transporting and delivering chemicals and lubricants to drilling-related
facilities whether its and active drilling rig, frack-site or a pipeline company are 275 gallon IBC
totes; plastic wrapped in metal, and 55 gallon steel drums.
We werent always in the containment business, we were in the chemicals and lubricants business,

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but we figured there had to be a better mouse-trap and some of the stuff that we got into was at
the behest of our customers. Plastic totes get punctured and spill, or the tops go missing, they fill
with rain water contaminating the contents and theyre repurposed on the rig-site very frequently;
they cut the tops off and reuse them for solid waste.
Same thing with the 55-gallon drums. They call them Envirodrums and theyre using them for waste.
Theres really nothing enviro about them; theyre just steel drums and the same scenario repeats
itself with those they tip over, the tops go missing, theyre not spill-proof, and the operator or the
driller has to dispose of those at the end of the day when theyre empty, so we skirt the whole IBC
tote and drum issue with our service.

MT: So after the operation is complete, you just take the containers back?
SM: Yes, so typically, we service our containment on the rig-site and our services are built around
our containment so we fill up our containment, whether its chemicals or lubricants, with custombuilt trailers that have air-compressors and retractable hose-reels. Its important for us when we are
servicing our equipment that we are not interrupting the rig-operations to borrow any equipment or
man-power; so were self-sufficient on the rig-site and we also pick up our equipment when theyre
moving typically what happens is
that theyll drill a hole or two or six
on a pad well pick our equipment
Were the only company in the
up and bring it back to our facility;
Appalachian region that is permitted
inspect it, top it off and clean it and
by the DEP as a residual waste oil
re-deliver to their new pad once they
treatment transfer facility.
set the rig down at a new location.

MT: I understand that there seems to be a transition towards higher standards when
it comes to environmental safety during drilling operations. In your presentation you
mentioned the requirement of Chapter 78 of the Pennsylvania Code can you, maybe, tell
us a bit more about that? How does that change the containment solutions within the
industry?
SM: Sure. Waste is a hot-button-issue with the DEP and the citizens of the counties that have
active drilling rigs its always been a hot-button-issue. Regulatory change is not something that is
particularly news-worthy in and of itself because regulatory change is always coming in the drilling
industry. Its note-worthy where we operate because theyre paying specific attention to how waste
is transported and stored and what people are doing with their waste once it leaves the rig-site.
Our equipment, our way-side solutions, speak directly to those issues. We are the only oil and gas
company in the entire Appalachian region that is permitted by the DEP to transport stuff off rigs,
what is called a transport permit we bring our containment back to our facility and we recycle all

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the recyclables typically spent filters, waste oil the non-recyclables which are just what they call
oily rags and diapers are squeezed for oil and go to a licenced landfill.
And its the same with the waste oil were the only company in the Appalachian region that is
permitted by the DEP as a residual waste oil treatment transfer facility. So we use it for beneficial
re-use.
MT: But that would not include things like flowback water or produced water or NORM?
SM: Correct. Were looking at that actively because thats a big issue safe and legal disposal of the
incredible amount of flowback water and drill-cuttings that are produced, and thats something that
is in our hopper, but today were pretty laser-focused on our solid waste and waste oil containment
units and the services associated with that.
MT: Obviously winning the Ben Franklin Shale Innovation Contest must have boosted your
companys profile, so I would like to know where you see your company going from now
on. Where do you see your company going in, say, 3 to 5 years? What is the next frontier?
SM: Well were still in start-up mode and were a relatively small, independently-owned company.
Weve been in business since 2011 so were somewhat new at this but were adamant that our
services really do resonate with our customers and are meaningful.
The reason that I got involved in the Shale Gas Innovation Contest, was because of who was
sponsoring it; Shell, Chevron, XTO which is a division of ExxonMobile and some local companies
like Consol Energy, EQT, Williams (Partners), Range Resources some of whom wed worked with,
some we hadnt, and it was important for me to be able to tell our story to a captive audience. So,
moving forward, I expect well start engaging some of those bigger E&P companies and as I stated
we are all living in the same downturn currently but our business is growing, mostly because our
containment really does provide operational efficiency, some cost-saving benefits, and we do provide
meaningful services.
But I see us expanding west. Typically oil and gas services companies are based out west and they
are moving east, as business dictates, were kind of flipping that script a little bit. We started on the
east coast in the Appalachian region and we are going to gradually chip away out west. Its easier
when youre being invited by the customers youre working with, that respond to your services, than
just go out and start making cold sales calls.

MT: Do you think that tightening of the environmental rules will boost your company, since
you offer solutions that are more environmentally safe than current solutions widelyadopted by the industry?

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SM: Its a very difficult business to crack; its very competitive and the difference-maker for us has
been our containment. Chemicals and lubricants is a very competitive business and theres a million
people that sell chemicals and/or lubricants so its tough to stand there with a straight face and tell
a potential customer that we have the best chemicals theyre ever going to try, when in all likelihood
some of our competitors are getting their chemicals from the same place we are. But we can sit
there with a straight face and say that
we do have patent-pending spill-proof
containment that we provide free-ofcharge, that is very meaningful at the
rig-level. And thats been able to kick
some doors open for us.
As regulations continue to tighten,
and there will be a day when IBC totes
arent permitted on drilling rigs; I think
some companies are starting to look
at that now, although its not mandated. Best practices are best practices, whether they are forced
on you by the DEP or state or federal agencies, its never a bad time to initiate best practices and we
certainly believe weve got some services that fall into that category.
MT: You mentioned that you are currently concentrating on the domestic market in terms
of expansion and that your solutions are patent-pending, would that be only in the U.S. or
worldwide?
SM: Correct, theyre provisional patents and the whole patent process is laborious, capital-intensive,
and its very time-consuming working with the Federal Government on that stuff. But really, it doesnt
prevent someone from making something very similar to what weve got, just maybe tweak it a
little bit. So its not a really defensible position, but theres something to be said for being the first,
and we do have a provisional patent. For people who get into the business, they have to wrap their
whole service around servicing those units which we have, and that in itself is a capital-intensive
proposition, you have to be built for it.
As far as international expansion, clearly we have an appetite for that, its just a matter of aligning
ourselves with the right customers. In all likelihood the customers were working with now, who see
the value and want to carry those services outside of the region were in.
MT: So in terms of international expansion, is there a particular area that you are interested
in? Theres been a little activity in Poland, in the UK not much has happened, but there is
hope that in the next 3 to 5 years some exploration will take place.
If you were to make an assessment in terms of where, you think, shale is going to take
centre stage apart from the U.S. what would be your guess?

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SM: Again, to your point exactly, people know that the gas is there and fracturing can release it, its
just a matter of getting the infrastructure in place and starting to do so. But, you know, Australia, you
mentioned Poland, Argentina, the UK it depends on these big E&P companies; the Chevrons of the
world, or some of the international companies Statoil, Shell that have an appetite and it depends
on where they decide to start exploring.
I cannot give you an exact location but I can tell you we have an appetite to partake in it and I think
our services are not constrained by the Continental United States and they make sense whenever
people are actively drilling.

MT: So you think that it is the majors that will take the lead and be the driving force behind
shale development?
SM: They have to. They have the resources to do it, and a lot of these small independents dont have
the resources or the Capex to start venturing into those kind of unknown regions, but the Chevrons
and the Exxons and the BPs of the world certainly do, and they bake that into their Capex every year.
MT: Yes, thats going to be interesting to see, how that develops. Obviously, they have
been playing it quite safe in pulling out of places such as Ukraine or Poland, and there is
probably going to be some work done by the independents, so I guess it remains to be
seen.
SM: Im an interested observer and I think the future for natural gas is bright; its about building the
infrastructure to get the gas to the high-density regions at least in this country. Pipelines need
to be built to carry that resource to the New York cities of the world and the high-density eastern
seaboard and elsewhere, but thats happening as we speak and in my estimation natural gas is going
to grow exponentially, as infrastructure gets built.
MT: Do you think that the LNG exports are going to make a big difference?
SM: And I think that at some point the 1970 oil embargo in the United States will get lifted and that
will open up a lot of doors and oil exports will certainly offset the cost of the lower oil price. The
energy industry is nothing if not volatile but its dynamic and its a fascinating industry and we love
being a part of it. It ebbs and flows a bit but you have to be built to withstand these ebbs and flows.

Published: 8th June, 2015

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