Reserve mode: Local oilfield service providers hope to maintain business while looking for an oil comeback
As the oil economy stagnates due to low commodity prices, the different businesses that support the industry have felt the stall in varying degrees. These days, many parking lots outside of oilfield service workshops around Dickinson sit empty, o...
As the oil economy stagnates due to low commodity prices, the different businesses that support the industry have felt the stall in varying degrees.
These days, many parking lots outside of oilfield service workshops around Dickinson sit empty, or are populated by a vehicle or two. Not long ago, they were full of pickup trucks.
Phone lines that previously connected to offices staffed with workers servicing the Bakken Oil Patch are now dead and disconnected, with no forwarding information of any kind.
Still, for other local service providers, life goes on.
The businesses that continue in their work often do so through some combination of efficiency-increasing adaptations and advantages gained through larger corporate structures and deeper wells of cash than enjoyed by the competition.
Elite Power, a locally owned field generator, transformer and light tower provider based in Dickinson, is focusing on the efficiency side of the equation.
David Mendez, assistant manager of Elite Power, said he’s “definitely proud” of the company’s staying power in the context of the oilfield slump.
With a slower business, Mendez said Elite Power is dedicated to controlling quality on the jobs it has while maintaining its labor costs. At the same time, he said its rates have fallen with the rest of the industry, which poses a challenge for service provision.
Mendez said the price cuts help keep the business competitive, but increase the pressure on staff to maximize their work potential through heightened consideration of organizational and communication measures.
“It’s really hammering down and double-checking your truck before you head out of the shop, so you’re not running around,” he said. “I think the biggest thing is … it’s really important to communicate with the operators and game plan your days and weeks, whereas before you just ran out to the field and said, ‘Hey, here’s the job.’ If you get there and say,
‘We can’t do that,’ you burn a day.”
Despite the chill of the outside market, Mendez said Elite Power still grew over last year by hiring on six more staff members, more than doubling its previous crew of five and adding on 20 pieces of equipment for new locations coming online.
So far, Elite Power has not had to lay off any of its employees or cut wages, Mendez said. But, like many oil-related companies, it has tightened its belt by cutting back the workable hours it offers.
Mendez said he hopes the company can maintain its position as the year continues while establishing best practice procedures to ready itself for an oil comeback.
Though he said Elite Power has enough business for now to carry it through “reserve mode,” Mendez believes this year is going to be a trial for many Oil Patch providers.
“I think 2016 is going to be the judgment day, so to speak, for lots of companies in the Bakken,” he said. “Right now there are several of us vendors doing the rate cuts. But how long can a company operate under that?”
Expansion in the bust
Other service providers that have been judged favorably so far have followed a similar track through the bust.
ENTREC Corp. branch manager Jesse Taylor said the crane operator and transportation company’s rates and hours have also declined.
“We’ve been beat down on price,” Taylor said.
That fall has encouraged ENTREC to pursue greater efficiencies to be able to get by with what it receives. In the midst of that, Taylor said the company still has enough to keep its staff “well fed.”
ENTREC’s position has been assisted by a workflow that pulls from sectors other than oil, he said, including infrastructure and other construction work.
The slow pace of the oilfield and the remaining presence of “lots of competition” have led ENTREC to carve its niche where it can make it.
“We do as much as we can,” Taylor said about finding work in the oilfield, “but we look elsewhere for work too. Not all of our eggs are in one basket.”
He estimated the oilfield used to contribute about 80 to 90 percent of the company’s workload during the oil boom. Now, it makes up about 40 percent.
With that, staffing has fallen by about 10 employees and now sits at around 50. Taylor said the personnel losses were mostly crew members who came from outside of Dickinson or
North Dakota. That overlaps with “the guys who were wanting 100-some hours a week” and left on their own accord when the work decreased.
Beyond ENTREC’s efforts to expand its market and increase personnel efficiencies, it’s one of the local service providers with the benefit of a wider corporate network.
The branch is one of two U.S. operating locations, with the other in Watford City.
Most of ENTREC’s holdings are in Canada, as is its corporate headquarters.
Even in the face of the oil slowdown, Taylor said the company is currently in the midst of expanding to open a new branch in Midland, Texas - the epicenter of the Permian Basin oilfield - which he will also manage. Staffing in Dickinson should not be affected by the addition of the Texas location, he added.
‘It’s tough on everybody’
Steier Oil Field Service is another Dickinson company that balances local adjustments with corporate support while riding out the trough of the oil economy.
Dave Attleson, Steier Oil Field’s general manager, said the once-family owned business was incorporated in 2012 as a company within Broadspectrum, a multinational firm based in North Sydney, Australia, with domestic headquarters in Houston.
Attleson said Steier still maintains some of the ethos of a family business while adding on a “global perspective” that “lightens the load” of the operations in Dickinson.
“We get a lot of support from (Broadspectrum) and that helps us sustain ourselves through tough times like this,” he said. “In times past, this would have put the onus on local ownership to bear the brunt of this entire downcycle.”
Attleson said Steier is trying to control costs locally by increasing its safety measures on site to reduce lost-time injuries and by increasing efficiencies in the field.
On the personnel end, a combination of staff layoffs and a natural attrition following reductions in workable hours have also factored into the company’s adaptation to the oil comedown.
Attleson said Steier had 160 employees about a year ago and is now sitting at about half that, following what he described as a “sharp decline in a short period of time.”
As the year progresses, Attleson said the service provider is focused on sustaining and positioning itself for the future, in which he is “full of optimism” that the price will come back up.
For now, he said Steier is “holding its own as well as anybody” in a hard time for the industry.
“We know for a fact that there are companies that are less fortunate than we are, so we’re thankful for the opportunities we get and the work we do get,” he said. “But there’s no denying it’s tough on everybody.”