The Power of Place

For these companies, operating from within the Bakken has been an economic boon.
By Luke Geiver | October 04, 2013

Andy Smith will always have a space in his heart for a 1998 Mercury Topaz. During his first visit to Williston, N.D., Smith was standing in the Williston Airport at the Avis Rental Car desk at 10:30 p.m. after a shaky flight from Wichita, Kansas. When he learned there were no cars for rent, and there hadn’t been for six months, he started calling around, he says. Smith, president of Alltite Inc., a tooling and tool service provider based in Wichita, was in Williston to learn about the Bakken and talk with current and potential clients about the merits of an innovative torque wrench and hydraulic tooling system offered by Alltite that could be used on well heads and natural gas infrastructure. He started making calls to every car dealership in the area. By 11:30 p.m, he found himself buying that Topaz with 200,000 miles on it from the only car dealer in the area that had picked up the phone. That night, after driving several miles away from the city, he stayed in an elderly woman’s trailer house with a group of pipeline workers because it was the only place he could find.

That was 2011. Today, Smith and his team are operating a thriving Williston Alltite branch that features trucks and vans specialized for the region. The Topaz is gone, thanks to an encounter with an unfortunate deer, but the lesson of Smith's first night and first few months after that night is not. “In one day of driving around, I had about four people tell me they would give me 100 percent of their business related to bolting equipment if I would only have something local,” he says. Later that day, he called to tell his team about his trip. “I said we are getting in on the action, that there was no way we weren’t moving there.”

Anne Smith, company communications director (and Andy’s sister-in-law), credits much of Alltite’s success to the decision to start a branch in Williston instead of traveling back and forth to the region to perform service and sell tools. “Williston was really our first store that was geographically out of the realm of where we wanted to be. We found that it was important to be there, to make a sacrifice to move there,” she says.

It wasn’t easy establishing a location, however. Smith rented an executive apartment for $1,200 per month and first attempted to sell and service tools out of a two-wheel drive van. In one winter Williston day, he says, he got stuck in the parking lot three times. But, he quickly realized that in addition to a four-wheel drive vehicle, working in the region could be successful. “I thought I would have to do all the repairs in the van,” he says, “but people were so nice. They would let me in their shops to fix their tools. It is a different mentality of people in the Bakken area, they are looking out for each other.”

His tools are a major reason why many were so happy to work with him from the start. As Anne explains, Alltite has formed a service based on safety. The service includes tool training and safety protocols that help reduce worksite accidents. “It is really important to us to not only provide the most exceptional tools,” she says, “but to also educate users on how to use them right.”

And, the torque wrenches used to fasten together well heads or tighten high-pressure flanges are faster, lighter and thinner than any others on the market. The tools feature a hydraulically powered head that can be fitted with several different sizes, shapes and styles of wrench. The company has introduced the X-driver series of wrenches to the Bakken that for Smith, a self-proclaimed tool and wrench enthusiast, is the best the Bakken has. The system allows a user to use one powerhead for several different tooling applications. In some cases, the wrenches can help a well head installer avoid striking a 16-pound sledgehammer against a 12-point socket, a tooling process used when a wrench's threads aren’t small enough to fit around one bolt without touching the adjacent bolts.

Clients in the Bakken range from Weatherford to Oneok Energy Partners LP. All of them have the entire Smith family happy with their move to the Bakken. Tom Smith, (Anne’s husband, Andy’s brother) is the CEO of the company. Andy’s father, a once-retired tooling expert brought out of retirement to act as the manager for Alltite’s home base in Wichita, is also on the team that started out of Andy’s backyard.

“We are expanding and its great,” Smith says. “And a lot of it has to do with oil. We are going full steam at the oil business.” Those efforts have spawned other tooling service businesses for the company, and with the successful launch of the X-driver, the team is looking to other shale plays. Much of the growth, both Andy and Anne say, can be attributed to their decision to be in the Bakken.

Becoming Mr. Go-To
If Smith’s story hints at the importance of place to the success of some companies operating in the Bakken oil and gas play, then Darick Franzen’s story screams it. Before taking near full-time residence in Watford City, Franzen was in the Illinois construction business. When the construction business there went sour, Franzen was sent to North Dakota to verify and find new business. After helping to establish some construction projects for his Illinois company, Franzen found his new team, a group of timber-owning, roof-tiling entrerprenuers from Oregon. He is now the Regional Manager for Spring Capital Group.

Franzen is tasked with assessing business opportunities and then, after getting the monetary go-ahead from his Spring Capital Group team, executing the launch and growth of a startup. To date, Franzen has helped launch several real estate deals, an asphalt company, a gravel pit operation and recently a water flowback operation. “I think the reason I have been successful,” he says, “is that like most successful groups, I’ve been there and lived there. Some groups try and go in for two days and then come back in three weeks,” he adds, but in most cases, that doesn’t work. “To be successful anywhere in the Bakken, you have to have boots on the ground.”

According to Franzen, his team was successful because many of them have spent significant time in the area and spoken with local officials who expressed a desire to work with people actually living in  the region. Franzen has a house in Watford City, N.D., that he lives in when he’s not in Illinois with his wife. “One of the real challenges of starting and operating a business is that everything moves and changes so fast,” he explains. Because Franzen, who is now the Watford City Chamber of Commerce president, has immersed himself in the region, he is able to adapt to the fast change. He’s been able to leverage the power of being in the Bakken to help him find contractors, access capital, or speak with oil company executives faster than others, he says. “My role is to figure out who you call. My job is to know who do you go to to make things happen,” he says. And it, the flowback business formed by a young group of oil executive endorsed men from Canada, the real estate developments and the asphalt business, has all happened because as Franzen says, “I’m there.”

~~~~~~~~~ SIDE BAR ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

A Product Supplier That Has To Be More
To deploy its food-grade cleaner in the Williston Basin, E&B Green Solutions had to become a service provider, not a product supplier.

When potential clients call E&B Green Solutions to sample a cleaning product used for degreasing workover rigs, frack water tanks or a myriad of other oilfield-related equipment pieces, they will be told no. For any client, however, Ted Cordova and Pat Plugge, the team responsible for spearheading the company’s product growth in Lousiana, Kansas and North Dakota, say that initial no is a good thing. According to Cordova, marketing director for the company, as a chemical supplier, it takes more to succeed in the oil and gas industry than just providing a commodity.

“We are certainly a startup organization with a new idea, a new product line and a new way of doing things in the oil and gas market,” Plugge, general manager, says. The new product is a food-based cleaning product that can be used to remove oil and other unwanted chemicals from a wide range of surfaces including concrete or steel. The product comes in highly concentrated dosages. For the 250 gallons needed to clean an average storage tank, only 1 gallon of E&B product is needed. And with the product, the E&B team provides a suite of services not typically associated with a cleaning product supplier.

First, the team will schedule an onsite visit to assess the equipment in need of cleaning. Second, the team will analyze the tools used to clean the products, such as the power washer or other equipment. Third, a safety assessment and cost comparison will be given in order to give the potential client a clear picture of all the potential benefits provided by the cleaning product.

Part of the reason for the intense early client effort is related to the nature of the industry, Plugge says. “The oil and gas industry has been doing things a particular way for 100 years. When you come in with something totally new, overcoming that initial skepticism is a challenge,” he says. “We are disciplined in telling people, we are not just going to send them a sample.”

What the clients do get is the result of colloidal chemistry and a mixture of food-grade oils that when activated with water are able to penetrate the hydrocarbon molecule and usher that molecule away through force (pressure washer). The company has used the product on over 280 well sites in California and currently has product in the Williston Basin. Part of its successful entrance to the Williston Basin is its ties to California. E&B Natural Solutions, based in Bakersfield, Calif., is an oil and gas producer with over 8,000 barrels of oil per day production in several mature fields located across the U.S. The production business is also a sister company to the Green Solutions arm.

“Because we are a producer, we probably have one of the biggest applied laboratory testing abilities to test our products and prove the efficacy of those products,” Plugge says. In the Williston Basin, clients have gravitated toward the environmentally friendly rig and equipment cleaners. In the future, Plugge believes others will apply the company’s frack water tank cleaning products. All of the products eliminate the presence of a film after washing, reducing the likelihood of future dust and grime build up on recently cleaned equipment. “We want to try and do one of two things: increase client revenue (by providing cost savings through its initial client efforts), or decrease their total cost of ownership (by maintaining the equipment used at the well site or storage facility for a longer period of time),” Plugge says.

The company has already performed several case studies from various oil and gas plays that show the ability of the product to match the claims of the company. Armed with its educational approach to product deployment and a willingness to make the trip from Bakersfield to the North Dakota communities of Minot, Williston or other oilfiled staples any time a potential client has time for a product demo, Cordova and Plugge believe they are on the right path to growing their green cleaning service in the Bakken. “We want to get folks to successfully apply these products,” Plugge says, “and employ this new technology.”

~~~~~~~~~ END OF SIDE BAR ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

----------

Author: Luke Geiver
Managing Editor, The Bakken magazine
lgeiver@bbiinternational.com
701-738-4944