Q&A: Addressing Permian Basin need for infrastructure investment

By Luke Geiver | October 01, 2018

As the pipeline bottleneck continues in the Permian, the infrastructure situation in West Texas is rapidly becoming a global economic concern.

In addition to the increase in equipment and supplies moving in and out of the region via flatbed trucks, numerous tank trailers are being added to the mix to make up for the deficit due to limited pipeline capacity. According to the energy research firm Wood Mackenzie the Permian produces an estimated 3.6 million barrels a day, while the pipeline out of the region only carries 3.5 million barrels. This is resulting in a rapid deterioration of an already dangerous stretch of highway.

Of course, there are numerous reasons for some of the driving hazards in the area, but the worst of it stems from the roads not being designed for the current loads traversing the route every day.

We spoke with Ronnie Witherspoon of Aveda Transportation, a Daeske company, about the road conditions in the Permian. 

To start can you describe the road conditions in the Permian?

Certain segments of the road need to be rehabilitated or completely rebuilt. It is necessary for certain segments of the route between Pecos and Carlsbad to be expanded to a four-lane highway, and alternate passing lanes are needed to reduce the long delays and congestion.

There is an 11-foot-wide restriction on the road which forces our business plan to change as we move oversized loads daily.  We are forced to find alternate routes, whether on dirt roads and/or county roads, to get to our destinations.  These alternate routes increase the time and distance to move a rig, so what started out as a short routine move could easily creep into a long-distance rig move, having substantial impact on the cost associated with the rig move. 

The Texas Department of Transportation has committed to making many enhancements and construction is underway. However, most of the construction is not scheduled to end until sometime in 2019, which places further challenges on the entire logistical picture in the Permian. 

What is the impact of the current conditions to the region’s economic development opportunities, to the operators or to logistics teams working there? 

Operators are pressure testing any and all viable options to keep the crude moving. Because the Permian has low lifting costs, it remains economically viable to use unconventional means to move incremental barrels out of the basin even with the additional cost or rise in the takeaway differential. As the need for oilfield services has increased so has the intense congestion which unfortunately has led to an increase in incidents.   

How is Aveda overcoming the current challenges of the region?

The current infrastructure in Midland is not conducive to support the recent surge in the region. This surge has created a tremendous amount of congestion on the roads, increasing the risk associated with the logistical challenges that the industry is facing. 

To combat these risks Aveda has invested in additional crew vans to bus employees to and from the location, reducing the number of trucks that are on the road. We have centralized our employees and house them in man camps, with one in Midland, Texas and an additional camp in Pecos, Texas. An aggressive push has been put in place to increase the number of owner operators to decrease our dependence on third party providers and to better ensure that we can uphold homogeneous standards throughout the company.  A “train the trainer” program has recently been started by joining forces with a credible driving training institution, all drivers are expected to attend such training.  Aveda has recently been afforded, through acquisition of Daseke, the opportunity to increase our employee benefits, which in turn has had a positive impact with respect to our ability to attract and/or retain our employees.  

Our Midland team is actively engaged in meetings and forums surrounding highway construction and constantly communicating/messaging our drivers to ensure they are fully appraised on recent developments.  We constantly perform route surveys prior to all rig moves to ensure we are taking the safest and most efficient route while moving.  Mandatory pre-job planning is established to ensure proper staging of trucks in order to reduce/avoid congestion

The issues in the Permian help highlight a larger need for greater infrastructure investment. What do people need to know about infrastructure in the Permian (or elsewhere) and why investment is greatly needed?

To be frank, the trucking industry has grown tired of watching our roads and bridges deteriorate. According to the American Trucking Associations, the trucking industry loses $50 billion a year just sitting in traffic.

There was a lot of talk about road infrastructure on a national level at the beginning of 2018 with the Trump Administration unveiling its $1.5 trillion, 10-year infrastructure plan. We think it is time to show some forward movement on these infrastructure improvements to not only improve safety but strengthen our economy.