3 Men And A Crane

The economic opportunities linked to the Bakken require service providers to cater to the oil and gas industry's every move. Some companies, like Rossco Crane, are finding ways to service the oil industry while expanding into new segments.
By The Bakken magazine staff | May 15, 2014

The Bakken has been an economic juggernaut for several years. Today, it remains strong, but is different. Some elements responsible for creating the positive economic environment have remained and others have not. The boom of the Bakken is still impossible to ignore, and, if anything, is getting louder, but to stay competitive or to enter the market, all entities need to understand how the play is
evolving.

Ross Kovach and father Jere, founders of a crane and trucking company operating out of Minot, N.D., with roots in the Pinedale, Wyo.-gas play of the early 2000s, have grown their business from fewer than five employees to more than 60, at a time when the company heavily-linked to drilling rig moves has witnessed the industry transition to multi-well pad drilling and a decrease in the number of operating rigs present in the Williston Basin. The rig count today hovers around 188, down from the all-time high of 218 in late-May 2012. Walking rigs used on multi-well pads can stay on a well pad for a month or a year in today’s Bakken of multi-well pad development. When Kovach started offering drilling rig moving services, his team was moving a rig every 20 to 25 days as operators were drilling one hole per well. Although the time each drilling rig spends on a wellsite has increased, Kovach hasn't let the change impact his business. As Kovach would tell you, he’s been proactive and it has paid off. To understand how pursuing a forward-looking business model in a bullish market or diversifying when a firm is too busy to keep up with work orders and branching out seems impossible is worth the effort, starts with understanding the story Rick Long, general manager of Rossco Crane, likes to tell about three men and a crane.

Entering The Market
Within days of arriving in North Dakota four years ago, Kovach knew the Bakken was advantageous to his future in the crane business. Kovach grew up watching his father operate cranes and work in the business. He's even gone through the process of acquiring and selling a crane company with two other partners before selling his interest. Kovach visited North Dakota to gain a sense of a possible opportunity after taking a break from the business to spend time with his father. “We’d never had a vacation our whole lives,” he says. “We were always working.”

Previous work in Wyoming had helped him establish a relationship with Halliburton, and a cousin offered him a place to stay while he was away from his home in Wyoming. “Halliburton wanted me to get back in the crane business and come to North Dakota,” he says. During a visit to Stanley, N.D., he learned why. “Every place I stopped said that if I had a crane and could use it that they could put me to work the same day I got it there.”

The incredible need for crane services inspired Kovach to move to North Dakota with his father Jere and his brother Karl Porter, the current crane superintendent for Rossco. Without the participation of Karl, Kovach says, the Rossco dream would have never been realized. Porter has earned the respect of his crew and they look up to him, Kovach says, in more ways than one. Porter stands over 6 feet 4 inches tall. He has also acquired a valuable knowledge base of downhole operations, something the Rossco team has been able to utilize in it's own planning. The team has also benefited from Rusty Mixen, trucking manager, who has been with the company a year. Mixen has brought a high-level knowledge of the trucking industry from his previous role with a different trucking firm. With Mixen's guidance Kovach was able to successfully acquire and impliment a trucking division into Rossco's main suite of crane operations. They started working with a single crane and a semi to move the needed parts used in crane operations. Initially, the three man crew focused on moving drilling rigs. Kovach remembers a stretch when he spent nearly a year working on the same road, moving drilling rigs for EOG Resources and Whiting Petroleum. “I just started handing out cards. I started calling people,” he said.

Although Kovach and his father had always shied away from the trucking industry, the two knew that renting, and waiting on truck services required to perform crane operations was putting the small team at a disadvantage. After finding the capital to acquire a struggling trucking company’s assets, the Rossco team changed from a small-time operation to a multicrane, multi-truck company overnight. “It just got to the point that we were so dependent on everyone else. It made sense to move that service in house,” Kovach says. “We took a big leap.”

That leap was the basis for what Rossco is today, an 60-person-plus operation with General Manager Rick Long helping to guide the business. The rise of the crane company may seem to trivial so many other stories in the Bakken, but the Kovach’s and Long have shown that growth doesn’t have to come through attrition, it can come from a constant eye on the future of the oil patch and the ancillary economic stimulus created from it.

Rising Up
Drilling Rig moves were once the main revenue stream for the Rossco team. Today, Long and Kovach have expanded the team’s capabilities to include moving yellow iron, equipment or anything else requiring a crane or heavy haul trailer in nearly every stage of a well site’s existence. The team can work on drilling rig moves, help with coiled tubing operations and install tanks or pump jacks. The Minot water tower was installed by the team, and work at the Minot Air Force base was completed by Rossco Cranes.

“The business culture has changed,” says Long. “You have to have your internal employees rise up to new challenges in order to succeed.” Change does not scare Long. “The oil is what brought us here, but there are still all of these other opportunities. For any company that is in the Bakken, they have to look for ways to diversify as it changes.”

Long takes several trips each year to Denver and other oil hubs to stay current on oil production trends. At times, he will be sitting next to career petroleum engineers and at others, he’ll be talking with CEOs. “It is part of the added expense to keep up with what is going on,” he says.

His research efforts have helped Rossco stay relevant with several operators. Since Rossco’s story changed from three men and a crane, the company has had to alter its protocols and reinvest in its own operations.

“Over the last four years, companies have shown up from all over the country. As the big players grow their vendor list, they have to start weeding some of them out,” Kovach says. That process happens through pricing, scheduling and safety.

The Falsity of Price
When Kovach acquired trucking assets from a struggling firm, the team soon learned that the price of the purchase was actually higher than the dollar amount it had paid. The equipment, according to Kovach, had not been kept in a regular maintenance schedule and some of the equipment did not perform to the level that the Rossco team had planned.

In addition to performing unplanned maintenance on the trucks, Rossco has had to invest in new cranes as previously suitable cranes have become undersized. When Kovach first started working with coiled tubing in Wyoming and then later in North Dakota, the spools would weigh 50,000 to 60,000 pounds. Now, he says, they are up to 128,000 pounds. “We are getting rid of our smaller-sized cranes because they just don’t cut it anymore. We need 140 ton machines or larger."  
 
It’s not just the companies using larger coiled tubing spools. Many of the newer drilling rigs in the Bakken are drilling deeper, and to do that, they are built bigger and heavier. “We are going bigger because everything is getting bigger,” he says. It’s not just cranes. The team has gotten bigger trucks with more axles to meet the ever-present thaw laws in the spring. Adding the trucks designed to work during the spring has allowed the company to provide service when, and where, others are not able.

Insurance rates and coverage amounts for service providers are also going up as the push for safety in the Bakken continues. “The amount of coverage required is pretty staggering now,” Long says. “But it is non-negotiable.”

Because safety is now receiving such high priority, Rossco also has to constantly maintain a clean safety record through ISNetworld, an online database that tracks the safety records of companies so that others can verify that vendors are accurate in their reporting. “Our safety record is awesome. We have been here four years, no incidents, no accidents, no lost time,” Long says. “We are a small company, so if something does happen we are done, it will take our safety record down to nothing.” Maintaining that database requires constant monitoring from a dedicated employee.

ISN collects self-reported information for contractors in a centralized database. Information includes: management systems used; written health and safety programs; incident and accident records; audit results; insurance certificates; workers compensation and emergency letters.

Some firms, like Continental Resources, he points out, are so committed to safety that a service provider cannot have a bad safety record, and often a contractor must pass a safety class or process with the actual entity it is working for before performing any work.

In addition to the costs associated with new equipment and insurance coverage, Long says the team will always be in a battle with other similar companies over price of service. Because Kovach is committed to a maintenance plan and utilizing the best possible equipment the company can afford, he knows what the overhead costs are for all services. When others quote a job for lower than Rossco, he knows that a lower price means something is being sacrificed, from equipment maintenance to equipment performance. “There is nobody that moves a rig—I don’t care who it is—more efficiently than us. But, it costs more,” Kovach says of the importance of having the right set-up and maintained equipment.

Kovach doesn’t let lower-price offerings from competitors sway his vision for the company, however, and it is one of the main reasons Long joined the team and others have made a career under the Rossco name.

“I run my business with one mindset,” he says. That mindset starts with people. Kovach doesn’t look for new hires who have worked at several locations because he believes that there is a reason they weren’t retained—a reason that isn’t good.  His motto with employees is to pay them well and give them the best equipment possible. “They will not only take care of your equipment, they will take care of you and your customer's bottom line,” he says. “When your customer is happy, you are happy. And, when you are happy, your employees are happy,” he says. “There has been a huge change in workforce across the entire Bakken. Employers, including us, are doing what they can to retain the talented workforce.”

The logistics of the Bakken have also forced Rossco to rethink how it operates. At one point, the team was working strictly out of Minot. But, as the Bakken has moved and developed, the workers were having to drive further and further from Minot. A Watford City, N.D., housing facility owned by Rossco now allows the company to serve clients from two different hubs. 

“As the Bakken changes, it changes us. We are okay with that. To grow our brand of service, we have to stay on the leading curve of where this is going,” Long says. The change is worth it, he adds. “For us to get 2 more percent of what we are chasing is a whole new challenge, but a huge opportunity.”

To meet that challenge, the Rossco team participates in industry events that might not appear to be related to the crane business. “We try to follow what everyone is doing and what they are planning,” Long says, “because it is all related.”