Oil Tank Trailblazers

By Luke Geiver | March 28, 2013

A 400-barrel steel oil storage tank is simple in design, singular in purpose and exemplary of the innovation and execution it takes for a company to succeed in the Bakken. Diverse Energy Systems has it all, the tanks, the trailblazing attitude that turned a zero-profit company into a $20 million company in one year, and the streamlined manufacturing model that is changing the way producers think about equipment.

To find its niche in the Bakken, Texas-based DES analyzed production numbers. When the company first started supplying its main product, oil storage tanks, daily oil production was near 625,000 barrels per day, but takeaway was only 285,000 barrels per day. “You don’t have to be a math wizard to figure out there was a need for oil storage,” says Scott Muster, spokesman for DES. But to make it in the play, the company didn’t focus its efforts solely on storage tanks. “The model was to actually treat the oil patch, infrastructure and equipment needs like one business,” Muster says. Tracing the steps used to do that, and execute on that model proves why DES has succeeded.

First, DES invested in a town that could provide a talented workforce and a place for workers to live. In Grafton, N.D., DES found both and proceeded to purchase and renovate an entire city block of houses. The company then customized a product line that transformed it into a big-box supplier of well pad production essentials. The line includes 400- to 1,000-barrel tanks, a crude-oil measurement system called a lease automatic custody transfer (LACT) unit, heater treaters, generators and more. Muster was tasked with not only staffing the workforce, but also creating a training structure that would allow new and existing workers to improve their skills and increase their pay. “We wanted to provide a means to the welder so he could work for us for quite a few years and get better at his craft and be paid accordingly,” Muster says.

For staffing, he formed relationships with training schools in Minnesota and North Dakota and even allocated space for training rooms and instructors to teach at the location in Grafton. And most recently, to stay ahead of the competition for oil and gas equipment supply, the DES team has upgraded its manufacturing process for the tanks to include an automated system. “The welding of tanks is hard,” Muster says. “The side welds on the tanks themselves can be done easier in an automated process.”

And, even with the crude takeaway numbers rising, Muster and his team aren’t concerned. “Just a couple of years ago, we were looking at charts that showed oil was going to run out by 2057, now we don’t have any idea when that will be. Who is to say where this will end up going?” he says. One thing he does know, however, is that once an oil well starts producing, there is no slowing down. DES has something for the continued need for products. Products like 1,000-barrel steel storage tanks for oil and water that are already made and waiting for transport, LACT units designed for individual wells that can measure the amount of oil that is going into the tanks, all of which the company makes at its state-of-the-art manufacturing facility in Grafton.