Fuel Marketer News Magazine Summer 2016

Summer Issue 2016

Your Source for News and Information

DEF PRODUCT

ROUNDUP EPA Releases RFS Volume Obligations

Diesel Fuel’s Quality Problem Commercial CNG

in Today’s Marketplace

SUPPLY, MARKETING, DISTRIBUTION, TRANSPORTATION & LOGISTICS

PUBLISHER’S NOTE

Your Source for News and Information

EDITORIAL STAFF Publisher Gary Bevers gbevers@fmnweb.com Editorial Director Keith Reid kreid@fmnweb.com Managing Editor Kathy Bevers kbevers@fmnweb.com Columnists and Contributors Greg Cushard Vladimir Collak Shane Dyer John Eichberger Doug Haugh Corey Henriksen Frank Hunter Maura Keller Alan H. Levine Joseph H. Petrowski Fred M. Whitaker Nancy Yamaguchi, Ph.D. Editorial Board Ed Burke Lisa Calhoun George A. Overstreet, Jr. Joseph H. Petrowski Paul Reuter Art Director Jeff Beene jbeene@fmnweb.com Advertising Sales Greg Mosho 732.610.5735 gmosho@fmnweb.com Mailing Address 15201 Mason Road Suite 1000-288 Cypress, TX 77433

www.FuelMarketerNews.com

© Copyright 2016, Fuel Marketer News All rights reserved.

A note from

Gary Bevers, Group Publisher As the Summer comes to an end, we’ve seen

We will continue to serve the fuels

gas prices remain at historical lows through

marketplace through the provision of timely,

the vacation driving season. Certainly good

fuels-related industry news, in depth feature

for consumers and fuel retailers alike. Crude

articles, thought leader analysis and

prices remain at below market equilibrium for

educational events, but now, through our data

many oil producers, which continue to keep

and analytics division, we will be delivering

a lid on normally rising summer fuel prices.

daily fuels pricing for both retail and

But, as Dr. Yamaguchi’s article The Seven

wholesale rack indexes. At EPIC, our products

Shales illustrates, many U.S. oil companies

and services are engineered to provide the

are blessed with an abundance of shale oil

key industry, market, and price information

fields where low-cost recovery methods have

needed by fuel sellers and buyers to conduct

producers continuing to profitably add new

efficient transactions every day. Further, the

drilling and production rigs, pushing already

fuels information will be provided in formats

higher than normal inventories to near

specified by the end-user at a nominal

record high levels—again keeping crude

subscription price or, in many cases,

prices depressed. Joe Petrowski gives us his

free-of-charge. Thus, EPIC News + Data will

take with his Crude Oil’s “Fair” Price article,

provide enhanced and low-cost access to

including an explanation of the market

news and pricing data to all fuels marketplace

fundamentals that even a layman can

participants, including: wholesale marketers,

understand!

retailers, commercial and industrial end-users, traders and advisory services firms.

In this issue we also cover everything from Diesel Fuel’s Quality Problem to CNG in

Register for our weekly e-newsletter at

Today’s Marketplace to fuel delivery in your

www.FuelMarketerNews.com. Registration is

own driveway with Taking the Station to the

free, and the process is short and easy.

Customer and several articles on fuel truck

Coming soon, look for our price index daily

drivers and the growth of DEF in the market.

e-newsletter to receive free wholesale and retail pricing.

At Fuel Marketer News, we pride ourselves on having extensively covered all the news you

In 2016, we will continue to work hard to make

need to run your fuel operations and the

sure you have every reason to make us your

buying, selling and handling of all types of

go-to news and price index data site for

fuels. And, turning the corner to the “next”

motor fuels marketing, retailing and supply.

big thing—I am proud to announce that we have merged FMN Media into our new company—EPIC News + Data.

EPIC

NEWS+DATA A Publication of EPIC News + Data

TABLE OF CONTENTS

3

PUBLISHER’S NOTE

The Candidates

FUELS & SUPPLY

6

EPA Releases Proposed RFS Volume Obligations

by Keith Reid

10

The Candidates and Energy Policy

by Keith Reid

14

Crude Oil’s “Fair” Price

by Joe Petrowski

20

Diesel Fuel’s Quality Problem

by Doug Haugh

24

The Seven Shales, Part 1

by Dr. Nancy Yamaguchi

36

DEF Demand Continues to Grow

by Adam Panayi

and Energy Policy

10

Crude Oil’s

“Fair” Price

by Joe Petrowski

14

RETAIL OPERATIONS

42

Taking the Station to the Customer

by Maura Keller

48

Grow with the Flow—Retail Fuel Looks to be on the Rebound

by Joe O’Brien

WHOLESALE & FLEET OPERATIONS

53

Can Fleet Drivers Drive Fuel Savings?

by Vlad Collak

56

Five Years Seems Like Ages Ago

by Rick Long

62

Commercial CNG in Today’s Marketplace

by Keith Reid

BAKKEN

The

Seven Shales

NIOBRARA PERMIAN

HAYNESVILLE EAGLE FORD UTICA

MARCELLUS

Part 1

24

BUSINESS OPERATIONS

72

Reducing Distracted Driving

by Virginia Pajarito

76

Five Things that Wreck Your Customer Service

by Ann Pitts

78

Routing the Driver Shortage

by Maura Keller

53

by Dr. Nancy Yamaguchi

Can Fleet Drivers Drive Fuel Savings?

by Vlad Collak

Routing the

85 PRODUCT ROUNDUP:

DEF Solution Providers

91 INDUSTRY NEWS 98 ADVERTISER’S INDEX

by Keith Reid

78

Driver Shortage

by Maura Keller

FUELS & SUPPLY POLICY BRIEF

by Keith Reid

EPA Releases Proposed RFS Volume Obligations In an unusually timely manner, compared to recent history, EPA has released its Renewable Fuels Standard (RFS) proposed annual percentage volumes for cellulosic biofuel, biomassbased diesel, advanced biofuel and total renewable fuel for 2017. In addition it released its proposed applicable volume of biomass-based diesel for 2018.

In general, the proposals bump up the volumes compared to 2016, but do not require the much higher volumes that would have been in place under the initial mandate assumptions. As the proposal summary notes:

In this action, we are proposing standards that are designed to achieve the Congressional intent of increasing renewable fuel use over time in order to reduce life cycle GHG emissions of transportation fuels and increase energy security, while at the same time accounting for the real world challenges that have slowed progress toward such goals. Those challenges have made the volume targets established by Congress for 2017 beyond reach for all but the minimum 1.0 billion gallons for biomass-based diesel (BBD). We are proposing to use the waiver mechanisms provided by Congress to establish volume requirements that would be lower than the statutory targets for fuels other than biomass-based diesel, but set at a level that we believe would spur growth in renewable fuel use, consistent with Congressional intent.

Specific volumes recommended:

18.8 billion 4 billion

Total renewable fuel increases from 18.1 billion gallons to 18.8 billion gallons. The Clean Air Act had called for 24 billion gallons.

Advanced biofuel increases from 3.6 billion gallons to 4 billion gallons. The Clean Air Act had called for 9 billion gallons.

2 billion

Biomass-based diesel increased from 1.9 billion gallons to 2 billion gallons. A quantity greater than one billion gallons was specified under the Clean Air Act. This is the final standard, not proposed.

31 million

Cellulosic biofuel increased from 23 million gallons to 31 million gallons. The clean air act had been particularly ambitious anticipating 5.5 billion gallons.

While this represents a middle ground—not a significant retreat from the RFS or an aggressive move toward mandate requirements as would be expected—no one is particularly happy with the results. The levels push the blend wall concern, but are anticipated to be absorbed through increased demand due to lower fuel prices. Comments must be received on or before July 11, 2016. EPA will announce the public hearing date and location for this proposal in a supplemental Federal Register document.

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“ FUELS & SUPPLY POLICY BRIEF

EPA Releases Proposed RFS Volume Obligations

The following are official responses from a range of organizations as posted on our website:

API on RFS Volumes: EPA Must Do More to Protect Consumers

“Consumers’ interest should come ahead of ethanol interests,” said Macchiarola. “EPA is pushing consumers to use high ethanol blends they don’t want and that are not compatible with most cars on the road today. The administration is potentially putting the safety of American consumers, their vehicles and our economy at risk.”

API Downstream Group Director Frank Macchiarola

RFA: EPA’s Draft 2017 RFS Rule Relies on Illegal Interpretation of Waiver Authority

“For months, EPA has been saying it plans to put the program ‘back on track.’ Today’s proposal fails to do that. The agency continues to cater to the oil industry by relying upon an illegal interpretation of its waiver authority and concern over a blend wall that the oil industry itself is creating. As a consequence, consumers are being denied higher octane, lower cost renewable fuels.

Investments in new technology and advanced biofuels will continue to languish and greenhouse gas emissions from automobiles will be unnecessarily higher.”

RFA President and CEO Bob Dinneen

NBB: EPA Proposes Modest Biodiesel Growth under Renewable Fuel Standard

“We appreciate the EPA’s timeliness in releasing these volumes and its support for growing biodiesel use under the RFS, but this proposal significantly understates the amount of biodiesel this industry can sustainably deliver to the market. We have plenty of feedstock and production capacity to exceed 2.5 billion gallons today, and can certainly do so in 2018.”

National Biodiesel Board Vice President of Federal Affairs Anne Steckel

ACE: EPA Should Increase 2017 RFS Blending Levels as Gasoline Use Reaches Record Highs

“A top excuse EPA has used to rein-in the RFS is data from the U.S. Energy Information Administration (EIA) which indicate falling gasoline consumption. EPA has claimed they can’t require oil companies to add more ethanol to a shrinking gasoline pool because of the so-called E10 blend wall,” said Jennings. “Under that logic, EPA’s ethanol blending volumes for 2017 should increase to statutory levels because gasoline use is on a steady rise and will set a new record this year.”

Brian Jennings, Executive Vice President of the American Coalition for Ethanol

Growth Energy: EPA Proposal: Moves RFS Forward, Improvement Still Needed

“We are encouraged that the EPA proposal takes a step forward, signaling the critical importance of cleaner burning, less expensive biofuels, like ethanol. However it still falls short of the goals of the Renewable Fuel Standard. Ethanol producers, retailers and the current auto fleet are fully capable of providing consumers with a true choice at the pump.”

Emily Skor, CEO of Growth Energy n

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The Candidates and Energy Policy

by Keith Reid

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Climate Change

T

his presidential campaign season seems to have dragged on longer than a president actually spends in office. An exaggeration, of course, but even as we head into the political conventions in July, the players are not fully set on the Republican and Democratic sides. However, this represents a good time to take a look at the energy policy positions from these candidates that might impact motor fuels marketing and retailing.

We generally have to rely on public statements to get this perspective, and since many of these are campaignrelated, they should be considered with an honest degree of cynicism.

So, what follows are the public statements the current candidates have made relative to climate change policy, biofuels and hydraulic fracking for oil and natural gas.

This is currently limited to Donald Trump (likely Republican nominee) and Hillary Clinton (likely Democrat nominee). While Bernie Sanders remains in the race as this is being produced, his only real shot at being the nominee would involve Hillary Clinton being indicted for her current email problems. Even many Republicans who feel she is guilty and should be indicted are skeptical that such a thing would actually occur. In general though, for Sanders you can take Clinton’s views on an issue and move to the left. In an indictment scenario it’s also possible, though unlikely, that a Joe Biden or Elizabeth Warren might be pushed as a substitute nominee. However, the blowback from Sanders supporters would seem to make that a questionable political choice.

An economically aggressive, UN-focused climate change policy has been the cornerstone of the current administration. This approach fairly quickly becomes economically painful to Western nations if carried through, and for motor fuels relatively quickly evolves into a focus on zero-emission solutions such as electric or hydrogen (versus an “all of the above” energy policy).

Alternatives to this approach range from dismissing climate change as a notable threat to accepting climate change and human influence, but approaching the problem from less costly avenues.

Polling indicates that the further right a person is, the less inclined they are to see climate change as a significant threat, and certainly not one that requires any notable disruption of an economy, to the far left where only the aggressive eradication of fossil fuels is acceptable. On the special-interest front, significant money can be found to sway a candidate in either direction.

Donald Trump Donald Trump, Fox & Friends Interview, January 18, 2016: Well, I think the climate change is just a very, very expensive form of tax. A lot of people are making a lot of money. I know much about climate change. I’ve—received environmental awards. And I often joke that this is done for the benefit of China. Obviously, I joke. But this is done for the benefit of China, because China does not do anything to help climate change. They burn everything you could burn; they couldn’t care less. They have very—you know, their standards are nothing. But they—in the meantime, they can undercut us on price. So it’s very hard on our business.1

Hillary Clinton The following is an excerpt from the Clinton Campaign website, as of June 15: Hillary’s plan is designed to deliver on the pledge President Obama made at the Congress to pass new legislation. Her plan will reduce greenhouse gas emissions by up to 30 percent in 2025 relative to 2005 levels and put the country on a path to cut emissions more than 80 percent by 2050. Her approach will catalyze new investment and economic opportunity across the country, create hundreds of thousands of new jobs, reduce energy bills and save families money, make our country more secure, and protect our families and communities from pollution.2

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FUELS & SUPPLY POLICY BRIEF

The Candidates and Energy Policy

Hydraulic Fracking

Biofuels

Natural gas production using a hydraulic fracturing process is much more of a contentious issue on the Democrat side than the Republican side. Republicans generally support the energy and economic bonanza that comes from this technology, where Democrats tend to be split between seeing the natural gas production aspect as a bridge fuel on the more moderate side, to simply another evil fossil fuel on the more extreme side. Our cheap oil and natural gas from fracking result in less price volatility and lower process for the refined fuel products produced from that oil.

Since the primaries start with the Iowa caucuses, renewable biofuels fuels (most specifically ethanol) are a major, early campaign issue and one where support is seen as being advantageous. Interestingly, Ted Cruz won Iowa with a campaign that did not support government involvement with ethanol. Obviously, the Renewable Fuel Standard is a significant issue for the motor fuels industry.

Hillary Clinton Hillary Clinton, guest columnist, The Gazette (Iowa) May 28, 2015, wrote the following:

Donald Trump

I believe the United States can and must be the clean energy super power for the 21st century. China and other competitors are already racing ahead with big bets on renewables. Yet there are still some here in America— even candidates for President—who want to keep the deck stacked for the fuels of the past. They support wasteful subsidies for oil and gas, block investments in new clean technologies, and even deny the science of climate change.

But [Clinton and Sanders] want to absolutely knock out fracking. And you do that, you’re going to be back into the Middle East and we’re going to be begging for oil again. It’s not going to happen. Not with me.

We’re going to open it up. We’re going to be energy independent. We’re going to have all sorts of energy. We’re going to have everything you can think of, including solar.

The Renewable Fuel Standard can continue to be a powerful tool to spur the development of advanced biofuels and expand the overall contribution that renewable fuels make to our national fuel supply. But we also can’t ignore significant changes to the energy landscape since the RFS was expanded in 2007. We have to get the RFS back on track in a way that provides investors with the certainty they need, protects consumers, improves access to E15, E85, and biodiesel blends, and effectively drives the development of cellulosic and other advanced biofuels.3

And I know a lot about solar. The problem with solar: It’s very expensive. When you have a 30-year payback, that’s not exactly the greatest thing in the world. But I know a lot about solar. I have gone solar on occasion, but it a very, very expensive thing.

Wind is very expensive. I mean, wind, without subsidy, wind doesn’t work. You need massive subsidies for wind.5

Hillary Clinton At the Democratic Flint, Mich., debate on March 6, 2016: You know, I don’t support [fracking] when any locality or any state is against it, number one. I don’t support it when the release of methane or contamination of water is present. I don’t support it—number three—unless we can require that anybody who fracks has to tell us exactly what chemicals they are using.

Donald Trump Donald Trump as compiled by America's Renewable Future: Donald Trump spoke in favor of the Renewable Fuel Standard at the Iowa Faith and Freedom Coalition banquet in Des Moines (September 19, 2015):

So by the time we get through all of my conditions, I do not think there will be many places in America where fracking will continue to take place. And I think that’s the best approach, because right now, there places where fracking is going on that are not sufficiently regulated.

Question: The federal Renewable Fuel Standard displaces Middle East oil with homegrown, domestic fuels. As President, will you support our national security with the Renewable Fuel Standard?

So first, we’ve got to regulate everything that is currently underway, and we have to have a system in place that prevents further fracking unless conditions like the ones that I just mentioned are met.6 n

Mr. Trump: “Yes, and a very strong yes. There is no reason not to. We need it. We need every form we can get.

Ethanol is terrific, especially with the new process. And I am totally in favor of ethanol 100-percent and I will support it.”4

References: 1. http://www.donaldtrump2016online.com/2016/01/fox-friends-jan-18-2016.html (3 minute mark) 2. https://www.hillaryclinton.com/issues/climate/ 3. http://www.thegazette.com/subject/opinion/guest-columnists/clinton-invest-in-rural-clean-energy-20150528 4. http://americasrenewablefuture.com/rfs2016/ 5. http://www.c-span.org/video/?c4600942/trump 6. http://www.nytimes.com/2016/03/07/us/politics/transcript-democratic-presidential-debate.html?_r=0 FMNMagazine

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FUELS & SUPPLY

by Joe Petrowski

Crude Oil’s “Fair” Price

The question often comes up: What is a “fair” or equilibrium price for crude? Putting aside what a producer “needs” to either remain solvent, balance the current accounts or government budget, the best way to approach the question is to look at old-fashioned supply and demand on a global basis.

“

” FIRST

The United States remains well heated, cooled and illuminated and in love with private transport.

The rest of the world is playing catch-up.

—Crude Oil Demand:

• World GDP

$80 trillion

• Energy intensity at 17%

$14 trillion

• Petroleum intensity at 15%

$2.1 trillion

• Annual consumption of crude

35 billion barrels

• Crude price at equilibrium

$60/barrel

These numbers approach petroleum from the demand side and are a good gauge of sensitivity to the variables of petroleum demand:

1 World GDP—U.S., Asia and EEC, primarily 2 Energy Intensity—At 17%, world energy intensity is slightly less than the U.S. at 19% because of less energy-intensive manufacturing and less infrastructure (roads, power grids, computer networks, etc.).

3 Petroleum Intensity—This is driven by transport fuel in which the United

States is predominant, but China is now accelerating and the biggest vehicle market in the world. Also, other fuels like coal are still a big slice of world Btu demand, but this will change as other countries access markets for imported natural gas and liquids and switch to more environmentally accepted fuels.

4 Annual consumption of crude—This is currently 95 million barrels per day or about 35 billion barrels per year, so a $60 price per barrel neither stimulates increased demand nor rations it.

Long term the crude price is certainly impacted by GDP growth, energy intensity or efficiency and the utility and use of alternate energy including coal, natural gas, hydro, wind and biofuels. The United States remains well heated, cooled and illuminated and in love with private transport. The rest of the world is playing catch-up.

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FUELS FUELS&&SUPPLY SUPPLY

Crude Oil’s “Fair” Price

NOW—Crude Oil Supply The ability and willingness to produce is obviously different for each country depending upon:

• Type of formation (shale, deep water, existing versus new field etc.)

• Capital spending • Technology • Politics—including taxes, governance and contract norms A doubling of world GDP with 20% energy intensity and 20% petroleum intensity would bring world crude demand to only 150 million bbl/d or 54 billion barrels annually at $100/barrel, and we could easily satisfy that if necessary, as the following table illustrates:

“

The millions of barrels per day in crude production by country that can be expected to come online as the price of crude oil shifts

U.S.

$30

$40

$50

$60

$70

$80

$90

8

9

10

11

12

13

14

16

9

9

9

11

12

14

16

4

6

8

10

12

9

9

Saudi

10

12

Iran

6

7

Russia Canada Iraq

UAE

Kuwait

Mexico

Norway

Venezuela Nigeria Libya

Indonesia Brazil

China UK

Other Total

8 1 2 2 3 1 1 1 1 2 1 2 2 1 6

58

2 3 3 4 2 2 2 2 3 1 3 3 1 7

75

12 8 3 4 4 5 3 3 3 3 4 2 4 4 2 8

81

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13 9 5 5 5 4 4 3 3 4 3 5 5 3 9

104

16

15

11 7 8 8 6 5 5 5 6 5 8 6 5

12

141

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18

14 8

19

15

$100 20

17

8

10

9

10

10

7

9

8 6 6 7 7

10

9

10

7

8

7 8 8

10 7 8 9

9

10

12

6

7

8

8 14

169

”

So from both a supply and demand perspective, between $50 and $70 is a current great equilibrium price for a barrel of oil. Below $50 was never sustainable, nor was price in excess of $80.

10 16

190

11 18

212

FUELS FUELS&&SUPPLY SUPPLY

Crude Oil’s “Fair” Price

So from both a supply and demand perspective, between $50 and $70 is a current great equilibrium price for a barrel of oil. Below $50 was never sustainable, nor was price in excess of $80. If world GDP picks up, certainly price will strengthen, but there is significant elasticity in supply and this does not take into account changes in technology that make the finding and extraction of crude more efficient as well as the anticipated revolution in hydrogen, batteries and natural gas.

What are the policy implications of above?

Keep U.S. production strong (while Nigeria or Indonesia make headlines at times, it is still Saudi Arabia, Iran, Russia and North America that move the needle).

We need infrastructure in oil and natural gas to simply move from production to consumption. The more we the world environment and the more pressure on oil.

Power is the growth market in the United States and the world.

China will be the transport fuel center of the world surpassing the United States. (Will they have Drive-Ins, and songs about a GOTH?)

Markets work and prices are elastic in both directions. We are not now, nor ever will be, running out of oil. We have obviously run out of good candidates and leaders, but nobody laments the reaching of “peak intelligence.” We are in a transition where petroleum is taking less of a slice in world Btu consumption. n READ MORE at fuelmarketernews.com

Joe Petrowski

Joe has had a long career in international commodity trading, energy and retail management and public policy development. In 2005, he was named President and CEO of Gulf Oil LP and elected to the Gulf Oil LP Board of Directors. In October of 2008 he was named CEO of the now combined Gulf Oil and Cumberland Farms whose annual revenues exceed $11 billion and that now operates in 27 states. In September 2013, Petrowski stepped down as CEO of The Cumberland Gulf Group. He is now managing director of Mercantor Partners, a private equity firm investing in convenience and energy distribution.

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Diesel Fuel’s Quality Problem L

et us start with one simple fact: it is illegal to even sell gasoline without the minimum amount of detergent additives established by the EPA. Specifically citing the code 40 CFR 80.161—“Gasoline may not be sold or transferred to a party who sells or transfers gasoline to the ultimate consumer unless such gasoline contains detergent additives which have been certified according to the requirements of this section.” While this minimum requirement is a necessary starting point, most engine OEMs today recommend going far beyond the EPA minimum requirements by encouraging that Top Tier gasolines be used in their engines.

So one might wonder what would happen if you decided to run your car on raw gasoline and just ignored the detergent and performance requirements of modern engines? The results would not likely be good. Injectors would clog, emissions would increase and you just might find yourself stuck on the roadside. Despite that reality, diesel fuel users, both on the consumer side at home and in commercial fleets at work, are doing that very thing. They are dumping raw diesel fuel into a very advanced engine and many are learning the hard way that this may not be a great idea.

Diesel has never had the best image. From the black smoke bellowing out of that truck in front of you on your drive home to the scandalous Volkswagen emissions fraud case, diesel seems to work hard at looking bad. But the other side of the story is that diesel is a tenaciously competitive fuel. It provides relatively cheap and dense BTUs that are better at powering the engines that move heavy loads than anything else we’ve come up with.

Despite the many challenges diesel faces, engine manufacturers have recently made some amazing progress. With the implementation of EPA Tier 4 Final in 2015, diesel engines of all classes now have nearly eliminated their smoke, soot, NOX and SOX emissions. The chart produced by John Deere (below) shows just how dramatic the reductions in pollutants have been since 1996.

EPA and EU Nonroad Emissions Regulations B37-560 kW (50-750 hp)

NOx – Nitrogen oxides, which react in the atmosphere with hydrocarbons HC – Hydrocarbons, a by-product of combustion PM – Particulate matter, a non-gaseous product of combustion

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Source: John Deere

by Doug Haugh

“

”

Diesel has never had the best image.

From the black smoke bellowing out of that truck in front of you on your drive home to the scandalous Volkswagen emissions fraud case, diesel seems to work hard at looking bad. But the other side of the story is that diesel is a tenaciously competitive fuel.

So if this story is about diesel fuel quality, why are we talking about emissions? Well, the progress on emissions has resulted in engines that put tremendous new demands on the diesel fuel. The most obvious of these demands was the reduction of sulfur in 2006 for use in the 2007 model year engines.

What have been far less obvious are the unintended consequences of removing the sulfur from the fuel.

With sulfur removed, diesel fuel can hold far less water in solution. When that water drops out of solution in storage tanks, the bacteria and algae that feed on the hydrocarbons while living in the water start having quite a feast. In the process these organisms are creating a hideous mess inside diesel tanks of all shapes and sizes.

Emissions requirements have also resulted in engines with a daisy chain of emissions reduction equipment on the exhaust that includes a diesel particulate filter (DPF), a diesel oxidation catalyst (DOC) and a selective catalytic reduction (SCR) unit. Each of these components introduces new maintenance challenges and burdens on the engine and the fuel. If injectors clog with deposits from dirty fuel, dirty tanks or unstable biodiesel, the downstream impact on each emission control component can be severe.

So is this really a diesel quality problem or a diesel specification problem? The short answer is both. With sulfur out of the fuel, diesel tanks simply require a much more stringent maintenance and cleanliness regime than they have had in the past. Keep the water out and the bugs and algae won’t grow. It sounds simple, but that leads us back to the diesel specification itself—ASTM D-975 for diesel fuels in the U.S. More specifically, for the vast majority of fleets we are talking about “1.1.4 Grade No. 2-D S15— A general purpose, middle distillate fuel for use in diesel engine applications requiring a fuel with 15 ppm sulfur (maximum).”

To spare you reading the 27-page specification, let us summarize the primary areas contributing to our biggest quality concerns:

• Can contain up to 5% biodiesel and still be labeled ULSD #2 • Can contain up to 500 parts per million of water and sediment • No minimum requirement for detergent or dispersant Now there is nothing wrong with biodiesel of course, and most progressive fuel suppliers are integrating biodiesel into their diesel fuels—and in several states you simply do not have a choice. The challenge with using increasing amounts of biodiesel is that at the temperature and pressures of modern diesel engines, there are likely to be deposits formed in the engine if no additive chemistry is employed to provide detergency.

Ethanol by Unit Train to Debut in Little Rock—Genesee & Wyoming’s Arkansas Midland Railroad Company will offer the first ethanol unit train solution for the North Little Rock and surrounding gasoline-blending markets.

Delivering to the JP Energy terminal, the unit trains, which are able to handle up to 108 railcars, will be unloaded directly to JP Energy’s ethanol storage tanks on premises for onsite blending or direct outbound truck loading.

Prior to this, the local ethanol market was served only by truck deliveries and single-car rail shipments so savings are expected in the form of reduced laid-in freight costs, truck traffic and product transfers.

Bottom Line This is a trending indicator demonstrating the maturing of the ethanol distribution supply chain outside of the traditional Midwestern corn markets, resulting in cheaper gasoline pricing in the central Arkansas markets.

READ MORE

at fuelmarketernews.com

FUELS & SUPPLY

Diesel Fuel’s Quality Problem

Water in the fuel may sound like an obvious issue, but perhaps at just 500 ppm it is really not something to worry much about. Well, to illustrate just how much water that is, consider this: if each truck load of 7,000 gallons of diesel fuel came in just below the specification that would mean that there are 3.5 gallons of water in every truckload of fuel. You just thought the water cooler guy was the only one delivering water to your business; it seems he may have some competition.

So if you are dumping nearly a 5-gallon pail of water in your diesel tank every time you get a load of diesel and that low sulfur diesel no longer holds that water in suspension, let’s guess what we find in our tanks at the end of a year. I am not even going to talk about the sediment part of the specification—let’s just assume running dirt through an engine with 2 – 4 micro-clearances is on the face of it a really bad idea.

As a big fan of diesel in general I hope we can clean this up, but like any problem, getting to a solution starts with some recognition that the problem is real. On that note I am starting to see a few suppliers run at this problem instead of away from it. They are offering advanced additive treatment programs, tank cleaning and maintenance solutions, and first and foremost they talking with their customers openly about the challenges with diesel fuel quality. Those marketers and suppliers that get in front of this to protect their customers are going to take market share and win business. n

23

Doug is currently President of Mansfield, a $9-billion industry innovator recently ranked by Information Week as the No. 1 technology innovator in Energy & Utilities and the only nationwide provider of fuel supply, biofuels, propane and diesel exhaust fluid.

Haugh is a frequent speaker on energy, supply chain technology and entrepreneurship. He can often be found leading general sessions or seminars at many national conferences and conventions. He also blogs on energy issues at: http://thinkingonenergy.com.

The opinions expressed there (and here) are his, and not those of Mansfield.

READ MORE at fuelmarketernews.com

FMNMagazine

Douglas H. Haugh

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FUELS FUELS&&SUPPLY SUPPLY

BAKKEN NIOBRARA PERMIAN HAYNESVILLE EAGLE FORD UTICA MARCELLUS

The

Seven Shales

by Dr. Nancy Yamaguchi

I

n the 1950s, Italy’s Enrico Mattei was credited with coining the term “Sette Sorelle,” or “Seven Sisters” to refer to what he viewed as the incestuously close association between seven major international oil companies: Exxon (Jersey), Mobil (Socony-Vacuum), Chevron (Standard Oil of California), Texaco, British Petroleum, Royal Dutch Shell and Gulf. At the time, they controlled the majority of global oil reserves. As the decades marched on, a dizzying succession of breakups, mergers and acquisitions changed all of the Seven Sisters. New players have entered the market in waves, including independents and national oil companies.

The Shale Revolution in the United States caused a major shift in the global market. As an interesting parallel, there are seven major shale play areas in the U.S. The author coined the term “The Seven Shales” to express the importance of these areas. The rebound in U.S. production has catapulted it above all other producers, and the U.S. is now the largest producer in the world. The Seven Shales are responsible for essentially all of the new oil and gas production in the country. Far too often, however, shale formations and hydraulic fracking operations are lumped into one phenomenon, when instead they have had dramatically different impacts on their regional markets.

Figure 1 provides the U.S. Energy Information Administration’s (EIA) map showing seven main shale play areas: Bakken, Niobrara, Eagle Ford, Permian, Haynesville, Marcellus and Utica. The Utica deposits are located alongside and partly underlying the Marcellus formation, and although this makes the Utica appear small, it is actually much larger than the Marcellus. While all of the deposits produce both oil and natural gas, the Bakken, Eagle Ford, and Permian developments are more oilbased while the Marcellus, Utica and Haynesville deposits are more gas-prone, and the Niobrara is in between.

Figure 1: Key tight oil and shale gas regions BAKKEN

NIOBRARA UTICA MARCELLUS PERMIAN HAYNESVILLE EAGLE FORD Source: Energy Information Administration (EIA)

“” Far too often, shale formations and hydraulic fracking operations are lumped into one phenomenon, when instead they have had dramatically different impacts on their regional markets.

The Bakken formation is situated along the border of Montana and North Dakota, extending into Canada’s Saskatchewan Province. Canada also produces light tight oil (LTO) from this formation. The Niobrara region is mainly in Wyoming and Colorado, with extensions into Nebraska and Kansas. The Permian area covers a large swathe of West Texas plus the southeastern corner of New Mexico. The Eagle Ford region stretches south by southwest in the southern part of Texas, and the geologic structure extends into Mexico. To the northeast of Eagle Ford is the Haynesville area, which is located at the juncture of eastern Texas, northwestern Louisiana, and southwestern Arkansas. The Marcellus and Utica formations cover a large portion of Pennsylvania, New York, Ohio and West Virginia. Utica is a deeper formation, underlying much of Marcellus.

It is difficult to overstate the importance of The Seven Shales. According to the U.S. Energy Information Administration, these seven regions were responsible for 92% of domestic oil production growth and all domestic natural gas production growth during 2011 – 14. If we reflect back to the oil price spike in 2008 and the dire economic recession that followed, the high oil prices were a financial burden on the country, yet they also created a boom time for the domestic oil industry.

This helped ameliorate the recession by creating jobs and reducing dependence on oil imports. But the oil industry is famous for boom-bust cycles, and many of the new producing companies may become victims of BAKKEN their own success. There is little doubt that the spectacular rise in U.S. output was a prime force NIOBRARA behind the collapse in global prices, because other producers had lost so much market share that the only PERMIAN solution at hand seemed to be cutting prices. The HAYNESVILLE continued low prices are shutting in U.S. production.

The EIA prepares weekly production estimates, and EAGLE FORD these estimates indicate that crude production fell by approximately 503 thousand barrels per day (kbpd) during the first five and one halfUTICA months of 2016.

MARCELLUS

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The Seven Shales

The crude price rally does appear to be revitalizing interest in drilling. According to Baker Hughes, the number of active rigs in the U.S. has dropped precipitously, but as Figure 3 shows, the pace at which rigs were shut slowed in April and May. It is possible that the rig count bottomed out at 404 rigs in late May, since the number rebounded to 408 in the first week of June, 414 in the second week of June, and 424 in the third week of June.

The idea that our market is coming more into balance is supported by the growing importance of the active drilling rig count. Even one or two rigs going from active to inactive, or the reverse, can spark a market reaction. Why? Figure 4 sheds some light. In mid-June 2015, Baker Hughes reported that there were 859 active rigs in the United States. The EIA created a weighted average production-per-rig figure of 404 barrels per day.

In mid-June 2016, the active rig count was 414 rigs (up from 404 rigs in late May.) The average oil production per rig, however, increased to 575 barrels per day.

Clearly, the more efficient wells are the ones that remain in production. Just as clearly, having even one of them close makes a more significant dent in production. We will offer the 1980s overcapacity in U.S. refining as an analogy. In 1980, there were 319 refineries in the U.S., with an average size of 56.4 kbpd. The 1980s were a time of global refinery overcapacity, and refineries around the world were closed. In numerical terms, half of the refineries in the U.S. closed between 1980 and 2000. In 2000, there were 158 refineries remaining, but the average size had increased to 105.6 kbpd. The refining industry became stronger and more competitive, but the process was a painful one, as many people lost their livelihoods. Many U.S. producing companies are now fighting to remain standing in this type of a highly competitive environment.

Figure 2: WTI spot prices and U.S. crude production, two-week delay

kbpd

Dollars per Barrel

Now that prices have remained low for two years, many producers lack the cash to wait out the market—much less invest in any additional production. Figure 2 compares the trend in WTI crude spot prices, in $/barrel, with U.S. crude production, in thousand barrels per day (kbpd,) with a two-week lag. That is to say, the crude production trend is shifted over two weeks to allow a brief time for producers to respond.

The two trend lines have tracked one another. The drop in U.S. production during the current quarter has been considered a bullish factor for crude prices, which have rallied and hit the $50/barrel mark in June. Ramping up U.S. production is not instantaneous, but it would not be surprising to see U.S. output rally in response to the current price rally seen in the chart. And naturally, in the current situation of oversupply, this would end the price rally, and rigs will go inactive again. And so forth.

Source: Energy Information Administration (EIA)

Figure 3: Has the U.S. rig count hit bottom?

Rig Count

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Source: Baker Hughes

Figure 4: Active rig count has plummeted, but productivity has risen, June 2015 vs. June 2016

Source: Production per EIA, active rigs per Baker Hughes

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”

The Seven Shales

Although the Bakken made it into the popular press, the general public often does not realize that there are actually seven shale play areas, nor that the ones in Texas are actually more prolific than the Bakken.

Bakken

The famous Bakken name

When the terms shale oil, light tight oil, and hydrofracking are mentioned, the Bakken region often is the one that springs first to mind. Its development literally transformed communities in Montana and North Dakota into the modern-day equivalent of frontier towns. North Dakota was the site of what National Geographic called the “fracking frenzy,” in its March 2013 special feature, “America Strikes Oil: The Promise and Risk of Fracking.” Although the Bakken made it into the popular press, the general public often does not realize that there are actually seven shale play areas, nor that the ones in Texas are actually more prolific than the Bakken. But Texas was already the largest oil producing state in the country, while North Dakota (and Montana) had very little by way of an oil industry and an oil infrastructure, and oil production had been gently declining for years. As Figure 5 below illustrates, Montana’s crude production had been in the vicinity of 80 kbpd in the 1980s before falling to 42 kbpd in 2000. Production rose to nearly 100 kbpd in 2006 before declining again to 78 kbpd in 2015.

Crude Production (kbpd)

The next Figure 6 shows the number of drilling rigs at work in the Bakken area along with the average oil production per rig. The number of active rigs peaked at 205 in 2012. By the end of 2013, oil prices were starting to fall, and the number of active rigs fell with them. The active rig count fell to 182 in 2013 and 183 in 2014 before dropping precipitously to 84 in 2015 and just 36 in the first half of 2016—the smallest number since 2007. Production per rig, however, has soared. In 2007, average production per rig was 116 barrels per day. The rigs now remaining are producing 792 bpd each.

Figure 6: Bakken rigs and production per rig

Source: Production per EIA, active rigs per Baker Hughes

Fracking was far more prevalent in North Dakota. North Dakota’s crude production had reached approximately 140 kbpd in the mid-1980s before falling below 100 kbpd by the 1990s. The “fracking frenzy” caused production to skyrocket, surpassing the million-barrel-per-day mark by 2014. The shape of this production curve has been called a “hockey stick.” Despite low prices in 2014 and 2015, production continued to climb, reaching 1174 kbpd in 2015. But certainly the steepness of the upward trajectory leveled off in 2015.

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Rig Count

Figure 5: North Dakota and Montana crude production

Fracking was far more prevalent in North Dakota. North Dakota’s crude production had reached approximately 140 kbpd in the mid-1980s before falling below 100 kbpd by the 1990s. The “fracking frenzy” caused production to skyrocket, surpassing the million-barrel-per-day mark by 2014. The shape of this production curve has been called a “hockey stick.” Despite low prices in 2014 and 2015, production continued to climb, reaching 1174 kbpd in 2015.

But certainly the steepness of the upward trajectory leveled off in 2015.

Production per Rig (bpd)

“

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”

The Seven Shales

With the current low prices, it is economically rational to leave the highercost domestic resources in the ground. As noted, however, the oil industry is famous for boom and bust cycles, and if prices suddenly surge in a year or two, restoring domestic output will take time.

Figure 8: North Dakota consumption of key liquid fuels

kbpd

“

FUELS & SUPPLY

Impact on North Dakota and Montana demand

The impact of Bakken development came not only on the side of production. It also caused a surge in petroleum product consumption, as droves of people entered the area to work on the developments. The following two figures (Figures 7 and 8) show the trend in petroleum product demand in Montana and North Dakota. Both of these states were relatively small markets, where petroleum product demand was expected to gradually decline.

According to the EIA, Montana’s demand was around 60 kbpd until the shale boom years in the mid-2000s. Demand peaked at over 80 kbpd in 2007. Diesel sales in particular showed enormous growth. As the figure, shows, Montana’s diesel demand was approximately 20 – 22 kbpd during the 1990s. During the decade of the 2000s, it increased to a peak of 38 kbpd in 2007 before subsiding to 29 kbpd in 2013. Demand for liquefied petroleum gas (LPG) and ethanol also grew significantly.

Source: Energy Information Administration (EIA)

The boom time of exploration and development not only increased crude production, it also caused localized growth in petroleum product demand. This demand growth occurred largely heedless of price. In remoter areas of North Dakota and Montana, diesel markets showed especially rapid growth, since truck transit rose so dramatically. Now, on a national basis, low fuel prices are stimulating demand. But in some of the shale basin areas, economic activity has slowed, and people are drifting away. With the current low prices, it is economically rational to leave the higher-cost domestic resources in the ground. As noted, however, the oil industry is famous for boom and bust cycles, and if prices suddenly surge in a year or two, restoring domestic output will take time. Given that many of the producing areas in the Bakken shale region are in remote areas that faced infrastructure and human resources challenges to begin with, restoring output from the Famous Bakken may be slower than in other areas.

Figure 7: Montana consumption of key liquid fuels

kbpd

Niobrara

The Niobrara shale play area and crude production growth The Niobrara shale play straddles Wyoming, Colorado, Kansas and Nebraska. All four states produce crude oil, but Nebraskan output is small at 8 kbpd in 2015. Figure 9 on the next page shows the crude production trend according to the EIA.

Source: Energy Information Administration (EIA)

North Dakota’s petroleum product consumption declined modestly in the 1990s, falling from 54 kbpd in 1990 to 52 kbpd in 1999. The development of the Bakken shale region reversed this, and demand hit a peak of 65 kbpd in 2005. Demand varied since then, but it remained in the range of 57 kbpd to 68 kbpd during the 2005 – 2013 period. Diesel demand had been roughly flat at around 20 kbpd during the 1990 – 2002 period, and it rose to 23 – 33 kbpd thereafter. LPG demand shot up to 15 kbpd in 2005, also responding to the influx of people and the rise in economic activity.

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Wyoming and Kansas had the largest crude production in the 1980s, but as the figure illustrates, production was entering into a period of decline. Wyoming’s crude production peaked at around 350 kbpd in the mid-1980s before falling to 142 kbpd in 2004. New developments then reversed the production decline, and production rose to 240 kbpd in 2015. Wyoming’s geology is rich in fossil energy, and it is a significant producer of coal, natural gas and oil, which are the mainstays of the local economy. fuelmarketernews.com

FUELS & SUPPLY

The Seven Shales

Crude production in Kansas peaked at 207 kbpd in 1985, and leveled off at around 90 – 94 kbpd from 2000 to 2005 before production began to grow again. Production reached 136 kbpd in 2014 before tailing off to 122 kbpd in 2015.

however, has soared. In 2007, average production per rig was 34 barrels per day. This climbed to 382 kbpd in 2014. As additional rigs closed, production per rig rose higher. It averaged 858 kbpd during the first half of 2016. As the remaining, highly productive wells begin to play out without replacements, the drop in output may be steep.

Colorado’s production curve had the most noticeable “hockey stick” shape. Production was in the range of 80 – 88 kbpd in the 1980s before declining to 50 kbpd in 2000. LTO developments allowed Colorado’s crude output to grow sevenfold between 2000 and 2015. In 2015, Colorado’s crude output was 327 kbpd.

Wyoming also achieved a major turnaround in production. Crude output fell from around 350 kbpd in the early 1980s to around 150 kbpd in the early- and mid-2000s. It reversed its downward trend and rose to 240 kbpd in 2015.

Crude Prodiuction (kbpd)

Figure 9: Crude production, Niobrara area states

Source: Energy Information Administration (EIA)

Loss of active rigs, and gain in drilling productivity in Niobrara The next Figure 10 shows the number of drilling rigs at work in the Niobrara area along with the average oil production per rig. The rig count has shown considerable variability. It peaked at 116 rigs in 2008, then fell sharply to 52 active rigs in 2009. The rig count then rose to 100 in 2014.

Global crude prices remained low throughout 2014 and 2015, and the rig count dropped sharply to 51 rigs in 2015 and 21 rigs in the first half of 2016. Production per rig,

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Rig Count

Production per Rig (bpd)

Figure 10: Niobrara rigs and production per rig

Source: Production per EIA, active rigs per Baker Hughes

Demand for key petroleum fuels in the Niobrara states Figure 11 on the next page provides a look at consumption of key petroleum fuels in the four Niobrara states. Colorado and Kansas have the largest markets, according to the EIA. Colorado and Kansas are gasoline-dominated markets. The Nebraska market is slightly weighted toward gasoline, but the diesel market is close in size. The Wyoming demand pattern is more reliant on diesel. Demand growth is fairly sedate, with demand for key fuels growing at an average rate of 0.58%/year over the 2004 – 2013 period for the four states. It is possible that the additional oilfield activity and increased demand for transport stimulated diesel demand, because the diesel market grew at rates of 1.62% per year from 2004 to 2013, a significantly higher rate of demand growth than for the other fuels. Excluding diesel, demand for key fuels grew at a rate of only 0.12% per year from 2004 through 2013.

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The Seven Shales Crude production in Louisiana was 547 kbpd 1981, and it has been on a downward trend, falling below 200 kbpd in 2008. As was the case in Arkansas, production stabilized during the peak years of Haynesville output, then declined once again. Output averaged 173 kbpd in 2015.

Wyoming is one of the largest coal-producing states, accounting for 39% of the coal mined in 2013. In 2014, approximately 88% of Wyoming’s electricity generation came from coal, and 11% came from renewables, chiefly wind.

Figure 11: Consumption of key fuels in the four Niobrara area states

Crude Prodiuction (kbpd)

Texas is well known for the spectacular reversal of its crude production decline. Production of 2554 kbpd in 1981 declined to 1073 kbpd in 2004, before the shale boom hit. Production then soared to 3547 kbpd by 2015. Haynesville’s output was very small, however, compared to the output from Eagle Ford and Permian.

Figure 13: Haynesville production: gas-oriented with an early peak

Haynesville

Oil and gas output in the Haynesville shale area The Haynesville shale play underlies portions of northeastern Texas, northwestern Louisiana, and southwestern Arkansas.

Texas and Louisiana have such a massive oil and gas industry that the Haynesville output plays a less noticeable role, but its development and output has been important at the local level. The Haynesville area is natural gas-oriented. Texas is by far the largest crude producer in the country, and Louisiana has a significant output level as well. Arkansas has a small industry. Figure 12 below shows the crude production trend according to the EIA.

Unlike the Permian and Eagle Ford plays, Haynesville was developed mainly for its natural gas output. Production began to ramp up in 2007 – 2009 and it reached a peak of 9840 billion cubic feet per day (bcf/d) in 2011. In Figure 13 following, Haynesville’s oil production can be seen to be a mere fraction of the natural gas production, when it is converted to natural gas-equivalent terms. The figure also shows how quickly some developments can peak. Without a steady stream of investment in replacement wells, production is not sustained for long. The economics in Haynesville did not warrant a steady stream of investment in recent years.

Arkansas produced 50 kbpd of crude in 1981, and this gently declined to 16 kbpd in 2006. There was a slight recovery and leveling off at 16 – 19 kbpd thereafter, consistent with the increased natural gas production in the Haynesville play.

Crude Prodiuction (kbpd)

Figure 12: Crude production, Haynesville area states

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FUELS FUELS&&SUPPLY SUPPLY

The Seven Shales in recent years. Louisiana’s fuel demand had been growing very slowly, with only LPG showing significant demand growth. Texas was the only state showing significant growth in demand for all key fuels except for jet fuel. According to the data published by the EIA, Texas fuel demand grew at a rate averaging 2.29% per year from 1990 to 2013. These states have relatively large LPG markets, with a number of natural gas processing plants in the Haynesville area. n

Consumption (kbpd)

Figure 15: Haynesville states consumption of key fuels

The next Figure 14 shows the number of drilling rigs at work in the Haynesville area along with the average oil production per rig. The rig count peaked at 224 rigs in 2010, then fell to 149 active rigs in 2011. The rig count then dropped sharply to 45 rigs in 2013, bounced back to 51 rigs in 2014, and fell to 25 rigs in the first quarter of 2016. Production per rig jumped from 4 bpd in 2011 to 23 bpd in 2013 and 2014 and 28 bpd during the first quarter of 2016.

Editor’s Note: This is the first installment of a two-part article. Look for the second part to run in the Fall print issue of FMN Magazine.

Author’s note: Unless otherwise noted, the sources of data for the charts are the U.S. Energy Information Administration (EIA) and Baker Hughes for rig counts. The data are estimates for the first half of 2016.

Rig Count

Production per Rig (bpd)

Figure 14: Haynesville rigs and production per rig

Dr. Nancy Yamaguchi Nancy is an author and petroleum industry expert specializing in the advanced analysis of energy markets.Dr. Yamaguchi is the President of Trans-Energy Research Associates, Inc. focusing on a wide spectrum of fuel related issues such as economics and the environment. She possesses a strong interest in global oil industry, including supply, demand, trading trends, as well as transport, refining, product blending, alternative and reformulated fuels, product quality and price behavior.Dr. Yamaguchi can be reached at nyamaguchi@trans-energy.com

Source: Production per EIA, active rigs per Baker Hughes

Demand for key petroleum fuels in the Haynesville states Figure 15 provides a look at consumption of key liquid fuels (gasoline, jet fuel, diesel, LPG and ethanol) in the three Haynesville states. Texas has by far the largest market, with demand for key fuels of over 3 million barrels per day in 2013.

Key fuels demand in Arkansas was 170 kbpd in 2013, and demand in Louisiana was 504 kbpd. Arkansas demand is mainly gasoline and diesel, but the market has been shrinking FMNMagazine

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$ ?

by Adam Panayi

DEF Demand in North America continues to grow, so why do prices keep falling?

You could be mistaken in thinking that

According to our survey of producers and buyers for our quarterly publication, the Monitor: North America, DEF consumption reached approximately 480 – 500 million gallons in North America in 2015, a growth of over 30% on the previous year. Our expectations are that there will be increases of the same magnitude or greater in 2016, with an expanding SCR fleet driving higher consumption. The North American SCRequipped medium- and heavy-duty vehicle fleet totalled 1.76 million units in January 2016, a 32% increase since January 2015, and the number of SCR-equipped Class 8 vehicles hit the one million mark in November. Truck sales were relatively strong in 2015 and are developing modestly in 2016. While demand from the construction and mining equipment segments seems to have stagnated, you still have a very healthy picture for demand growth in the coming years.

So why do DEF prices keep going in the opposite direction?

Well, the supply side of the market is still

relatively unsettled—as the market expands new players come into the market hoping

to get in on the action. There are currently 71 API DEF production license holders, of

which 15 were issued in 2015 and six so far in 2016. That makes a 30% increase in the

last 18 months. The incumbents are clearly

keen to hold onto or increase their piece of the pie, especially as the pie keeps getting bigger, and are willing to use competitive pricing as well as their market position,

t

there is no better place to be than a supplier in today’s DEF market. As demand for commodities of all shapes and sizes has weakened on the back of softer Chinese demand and slower growth in the global economy, the DEF market continues to post double-digit growth in a market backed by legislation and the widespread adoption of selective catalytic reduction (SCR) technology. But success is never without complications, or suitors, and the DEF market is an increasingly tough place to operate.

First the good news: demand.

customer and service networks to protect their position. Add to this the fact that urea, the key raw material for DEF

production, has lost 31% of its value since the start of the year, and you start to see why both producers and distributors

complain of lower prices and margins.

DEF Demand in North America continues to grow, so why do prices keep falling?

t

FUELS & SUPPLY

So where do we go from here?

There are a number of developments on the supply side.

First,

CONSOLIDATION

there is consolidation. In the last month we have seen Old World Industries complete the purchase of Victory Blue, creating the largest non-urea producing DEF producer and distributor in the market. The DEF business is largely a logistics play, because basically you are shipping 67.5% water, and on the national level, scale is everything. We would not be surprised to see further consolidation of the bigger players in the coming years.

SOURCING Second, the sourcing of urea is becoming increasingly varied. Many market players are now looking overseas, primarily to China, in order to maintain margins and ensure security of supply. We expect imports of automotive-grade urea to expand significantly in the coming five years, reducing the reliance of DEF producers on domestic supply.

PRICES Finally, our margin analysis suggests that prices both for urea and DEF are nearing (but not quite at) a floor, so while falling prices may be coming to an end, don’t expect a great bounce any time soon. n

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Adam Panayi

Adam is Research Manager at Integer Research. On 25 – 27 October, Integer Research will hold the 9th Integer Emissions Summit & DEF Forum 2016 in Chicago. The summit will welcome over 400 senior executives from North America and beyond to share essential information on legislation and developments in the emissions control technology and DEF markets. Integer will also be publishing a DEF Market Forecast in the coming months providing a DEF demand forecast to 2025. To register for the conference visit Integer’s website and to express an interest in the DEF Market Forecast to 2025, email publications@integer-research.com.

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ELD Implementation Marches On—The electronic logging device (ELD) final rule published on December 16, 2015, by U.S. DOT’s Federal Motor Carrier Safety Administration (FMCSA) continues towards its compliance date of December 18, 2017. To comply with the final rule, Motor Carriers must use ELDs for interstate drivers of commercial motor vehicles who currently use a driver’s record of duty status to record their hours of service.

Motor carriers that install and require drivers to use automatic on-board recording devices (AOBRDs) may continue to use the AOBRD until December 16, 2019.

The final rule requires motor carriers to install FMCSA-registered and certified ELDs that meet specific standards, including being connected (“integrally synchronized”) to the vehicle engine for automatic recording of driving time and capture of date and time, vehicle position, and operational data of the vehicle.

Source: U.S. DOT, Federal Motor Carrier Safety Administration

Bottom Line ELD implementation will ultimately drive further regulatory oversight of Motor Carriers.

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by Maura Keller

Taking the Station to the Customer

I

magine driving hundreds of miles each week, but never having to stop at a gas station. No, you aren’t driving an electric vehicle. Rather, you are part of a growing number of consumers who have signed up with residential mobile fueling programs whereby the gasoline is brought to them.

Agricultural entities, construction companies, farmers and some transportation companies have been paying diesel fuel delivery companies for years to fill up their tanks. But delivering hundreds of gallons of gas through quiet residential neighborhoods or a corporate campus to fill up people’s cars while they work or sleep is a new trend.

Residential mobile fueling is a growing trend in cities across the country. As Anna Roubos, director of communications at Filld, explained, her company came into being as a result of one of its founders running out of gas and, while trying to find a nearby gas station, wondered whether there was a better way to get gas.

“He tried finding a service that would deliver gas to him, and when he realized no such service existed, set out with his friend to eliminate the gas station errand for everyone,” Roubos said.

“

Today, Filld provides services to Silicon Valley and San Francisco in California.

“Our customers order regularly and many report that they haven’t stopped for gas since their first order with Filld,” Roubos said. “We see a lot of success with three kinds of people: stay-at-home parents, power commuters and tech-savvy early adopters who enjoy a variety of on-demand services.”

So how do residential or on-demand mobile fueling programs work? Filld, for example, charges the lowest price of the three stations closest to you plus a small delivery fee, typically $3. Within their service area, they deliver gas to your vehicle where you are, 24/7.

“We are getting requests for expansion from around the U.S.,” Roubos said.

“Getting gas is something almost everyone has to do and almost no one enjoys. We service individuals, groups and fleets of vehicles. We currently don’t integrate with fleet card services.”

“Our customers order regularly and many report that they haven’t stopped for gas since their first order with Filld. We see a lot of success with three kinds of people: stay-at-home parents, power commuters and tech-savvy early adopters who enjoy a variety of on-demand services.”

Anna Roubos, Filld

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RETAIL OPERATIONS

Taking the Station to the Customer

Filld sources from the same wholesale distributors as traditional gas stations and they use Ford F250 trucks that carry three DOT-approved 100-gallon aluminum tanks.

“

one-hour it costs $5.99 and for a three-hour window it’s $3.99. Purple Plus is a monthly membership designed to help consumers get the most out of Purple while providing cost savings. Purple Plus offers two tiers of monthly membership: Standard and Express. Standard costs $7.99/month and Express costs $15.99/month. Regardless of the type or length of service chosen, Purple customers can choose between unleaded 87 octane or unleaded 91 octane fuel in Southern California, and unleaded 87 octane or unleaded 92 octane in Seattle.

“We use weights and measurescertified custody meters and a 50-foot hose reel so we can reach the vehicle wherever it’s parked,” Roubos said.

“Our trucks are also equipped with spill containment kits and two fire extinguishers.”

Available in three major cities in California and in Seattle, Purple also is currently providing on-demand fueling services, working to provide service to additional cities throughout the U.S. in the future.

Purple assigns couriers who fulfill the customer orders to local top tier gas stations where they can get the amount of gas to complete the order.

Using the Purple app, consumers simply select the length of their preferred service window (one hour or three hours) and the location of their vehicle. All the customer has to do is make sure that the gas tank door is open before Purple services their car.

“Our customers are everyone from parents who are too busy to get gas to the everyday commuter that prefers not to wait in long lines at the gas station. We are also working with corporate accounts such as hotels, residences and car fleets.”

Jeff Dove, Purple

“We have developed our own equipment to deliver gas while leveraging portable fuel containers of five gallons,” Dove said. “This equipment consists on a smart dolly and gravity nozzle. Both are IP protected.”

“The concept came when my wife kept asking me to go fill up her car,” said Bruno Uzzan, CEO of Purple. “I thought that in today’s age with all of the technology at our fingertips, there has to be an on-demand service to provide fuel.

So I set out with my co-founder to see how we could make it happen.” Backed

by Uber co-founder Oscar Salazar, the company is part of a growing market for fuel on demand.

Currently Purple is operating mainly in Los Angeles, but they also have some activities in Orange County, San Diego and Seattle.

“Our customers are everyone from parents who are too busy to get gas to the everyday commuter that prefers not to wait in long lines at the gas station,” said Jeff Dove, marketing director at Purple. “We are also working with corporate accounts such as hotels, residences and car fleets.”

There are one- and three-hour windows when a car will be serviced by Purple. For FMNMagazine

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Purple’s couriers also never carry more than 30 gallons of fuel and therefore they are compliant with regulatory hassles. Purple service providers are required to comply with all Department of Transportation, Environmental Protection Agency, and local municipalities’ safety and quality control measures. And service providers are fully insured.

“But we are actively working with regulators to keep reinforcing safety

RETAIL OPERATIONS

Taking the Station to the Customer

for each order,” Uzzan said. In response to the concern of city fire departments about mobile trucks being used to fuel consumer vehicles, many of the residential mobile fueling companies are being careful to limit the size of their gas tanks to stay under limits outlined in the International Fire Code, a guideline followed by many U.S. states.

Filld works with over 40 local, state and federal regulators to ensure the safe transport of its fuel. What’s more, their drivers are highly trained and have commercial class C licenses, TSA clearance and HAZMAT certification.

While Filld and Purple have made inroads on the West coast, Booster Fuels is introducing the concept of residential mobile fueling to northern Texas, as well as Northern California.

Specifically, Booster Fuels partners with large businesses to offer ondemand fuel service at corporate

campuses across the region. Employees park their cars, request a fill-up on the Booster Fuels app, leave their gas cap open and when they return after the work day is done their car is filled. Employees can request a “Boost” between 7 am and 4 pm.

By employing the same GPS technology used by ondemand ride sharing companies, such as Uber, Booster users simply request fuel from their car once parked.

Booster drivers verify GPS location via make, model, color and license plate.

The premise of Booster Fuels means that by servicing employee cars in the parking lot, their commute times are lessened because they don’t have to stop for fuel.

So what does the future hold for mobile fueling programs for individual consumers? Industry experts envision a future where smarter refueling creates a world with fewer gas stations and greater access.

“Purple has been growing rapidly and our members love our service,” Dove said.

“Most people put up with going to the gas station because there has been no alternative. We are working hard to continue to provide the best service we can.” n

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by Joe O’Brien

Past, Present and Future of Fueling In the early 1990s, there were

over 200,000 gas stations in the United States. Since then, the number of gas stations steadily declined during the past 15 years or so to include approximately 140,000 gas stations. However, there are signs that the contraction has plateaued, and there are even indications of possible growth.

What does this positive industry development mean for today’s fuel retailers?

A symbiotic relationship that exists between retail fuel and c-stores is having a direct impact on the success of both enterprises. Although the retail fuel market contracted over the past 15 to 20 years, the U.S. c-store industry has experienced significant growth—increasing from 90,900 stores in 1985 to more than 154,000 in 2016, according to NACS. With over 80% of convenience stores also selling motor fuels, it is reasonable to conclude that the c-store growth is contributing to the relative stabilization of the retail fuel industry.

In addition, the data show that fueling remains consumers’ primary impetus for visiting a retail fuel site and c-store sales drive profits. According to NACS, the convenience store industry is America’s leading source for fuel, with more than 80% of c-stores selling fuel. Not surprisingly, more fuel marketers are adding convenience stores and c-stores are adding retail fuel to their sites for the mutual benefit of each side of their operation. For today’s time-starved consumers, this combination helps promote a one-stop-shop customer experience.

As the retail fuel landscape—and consumer preference—continues to evolve, fuel marketers should carefully consider the investments they make to their sites in order to contend in an increasingly competitive market. Will investing capital in gasoline and diesel infrastructure pay off long-term? Maybe, maybe not.

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“”

RETAIL OPERATIONS

As the retail fuel landscape—and consumer preference—continues to evolve, fuel marketers should carefully consider the investments they make to their sites in order to contend in an increasingly competitive market. Will investing capital in gasoline and diesel infrastructure pay off long-term? Maybe, maybe not.

While we can’t project with any certainty the longevity of traditional fuels, customer experience has been shown to be a key contributor to establishing repeat business. Therefore, it is essential that fuel marketers determine what will inspire their customers to choose their site over that of their nearest competitor. Both new fuel retailers and longtime fuel marketers should take a look at industry trends and identify potential revenue opportunities that can boost their margins.

Here are a few to consider.

In addition, E15 is showing signs of growth. Growth Energy, a nonprofit organization that promotes the ethanol industry, reports that E15 is now being offered at convenience stores in 26 states. Kum & Go, Sheetz, Inc., MAPCO, Murphy USA, Thorntons Inc., Cenex and Protec Fuel are among the retailers already offering this alternative fuel. Growth Energy projects that more than 700 fuel sites will be selling E15 by the end of 2016.

an eye 1 Keep on emerging fuels Although the alternative fuels market is still maturing, E15 and biodiesel, in particular, are showing indications of growth.

According to data from the U.S. Energy Information Administration, consumption of biodiesel has increased more than 450% from 2010 to 2015, and for the month of January, biodiesel consumption almost doubled from 2015 to 2016.

Bolstered by higher renewable fuel volume obligations for 2016 and 2017, biodiesel is poised to take off.

Adding one or both of these fuels to your forecourt will likely attract new customers. With equipment compatibilities for alternative fuels on the rise and numerous funding incentives currently available for blender pumps, retailers who begin offering these emerging fuels now will position themselves to capture profits as consumption grows.

In addition, E15 is showing signs of growth. Growth Energy, a nonprofit organization that promotes the ethanol industry, reports that E15 is now being offered at convenience stores in 26 states. Kum & Go, Sheetz, Inc., MAPCO, Murphy USA, Thorntons Inc., Cenex and Protec Fuel are among the retailers already offering this alternative fuel. Growth Energy projects that more than 700 fuel sites will be selling E15 by the end of 2016.

mobile 3 Add payment/ordering technology

One of the takeaways from the c-store success story is the industry’s response to meeting consumers’ changing preferences, e.g., increasing fresh food offerings. While still an evolving platform, more consumers are embracing mobile payment technology, with Millennials and higher-income households leading the way. With EMV authentication processes slowing transaction speeds, annoyed consumers may begin to shift to mobile wallet technology just to avoid traditional card-based transactions altogether. Diversifying your payment platforms may not only attract customers with more disposable income, it may reduce your site’s credit card fees and increase customer throughput.

Adding one or both of these fuels to your forecourt will likely attract new customers. With equipment compatibilities for alternative fuels on the rise and numerous funding incentives currently available for blender pumps, retailers who begin offering these emerging fuels now will position themselves to capture profits as consumption grows.

sophisticated 2 Implement marketing platforms

on today’s 4 Capitalize powerful software programs

Although the alternative fuels market is still maturing, E15 and biodiesel, in particular, are showing indications of growth.

From environmental compliance management to competitive fuel pricing strategies, retail fuel is much more data-driven than it was just 15 years ago. Today’s back-office, fuel management and POS programs not only automate traditional bookkeeping and reporting procedures, they significantly simplify data analysis. By presenting actionable information that managers can apply to improve operations, these programs help reduce operating costs and increase profits.

According to data from the U.S. Energy Information Administration, consumption of biodiesel has increased more than 450% from 2010 to 2015, and for the month of January, biodiesel consumption almost doubled from 2015 to 2016.

Bolstered by higher renewable fuel volume obligations for 2016 and 2017, biodiesel is poised to take off.

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RETAIL OPERATIONS

“ ”

Grow with the Flow

the 5 Remember power of branding

As the retail fuel market is on the precipice of a rebirth, existing and new station owners should not underestimate the value of branding. One study of 10,000 fueling customers showed that regional stations that leveraged corporate branding by presenting a consistent image in order to maintain a welcoming, familiar and tidy appearance increased customer loyalty.

Aligning your station with a corporate partner that values and supports brand recognition is a proven method for increasing customer throughput.

the details, 6 Mind big and small

As the number of gas stations shows signs of growth, fuel marketers need to proactively respond to changing consumer preferences in order to remain competitive—ranging from the fuel offered on the forecourt to the payment services offered

Lessons from the Success of C-Stores

With EMV authentication processes slowing transaction speeds, annoyed consumers may begin to shift to mobile wallet technology just to avoid traditional card-based transactions altogether.

through mobile phones. And don’t underestimate the impact seemingly small details can have—a worn-out squeegee can be a real turn-off to a motorist who really needs it. Taking care to diligently maintain those forecourt fundamentals is essential to maintaining customer satisfaction.

Whether supplying the day-to-day accessory items that keep customers happy or providing leads on blender pump financing, petroleum equipment consultants can help fuel retailers profit from their operational improvement strategies.

In touch with the challenges facing fuel marketers, trusted fuel equipment advisers will keep retailers’ operational goals in mind, help identify equipment investment opportunities that are in alignment with those goals and help retailers develop strategies for implementing them. It’s a partnership that will help marketers position their fuel site for a profitable future. n

More synergy exists between fuel stations and convenience stores than ever before. With that in mind, there is much fuel operations can learn from the success of c-stores. Here are three key c-store fundamentals that fuel retailers can use to build customer loyalty at their station:

1

The faster, the better. For many of today’s consumers, speedy transactions correlate to nothing short of an improved quality of life. Fuel marketers that facilitate quick transactions through efficient circulation plans and secure payment systems are more likely to maintain customer loyalty than marketers that neglect this consumer pain point.

2

Cater to multi-taskers. As an extension of modern timesaving behavior, consumers are more apt to multi-task than ever before. Marketers that facilitate a “one-stop-shop” approach allow consumers to fuel up, wash their cars, grab a take-out meal and in some cases do their banking all in one errand. Catering to consumers’ penchant for completing multiple, everyday activities quickly not only increases customer satisfaction, it creates a lucrative upsell opportunity.

Joe O'Brien Joe O’Brien is Vice President of Marketing at Source™ North America Corporation.

He has more than 20 years experience in the petroleum equipment fuel industry.

Contact him at jobrien@sourcena.com.

3

Adapt to changing demands. Convenience stores have increased sales recently by adapting to changing consumer preferences for fresh food offerings. With consumers’ mindsets shifting toward eco-friendly, sustainable practices, fuel marketers can apply this same principle on the forecourt by addressing the increased demand for alternative fuels.

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The May 2016 Freight Transportation Services Index (TSI) published by U.S. DOT’s Bureau of Transportation Statistics (BTS) shows continued sector weakness in the for-the-hire freight transportation sector into 2016.

According to BTI, the TSI-Freight Index, which is based on the amount of freight carried, rose 0.2 percent from April to 121.8 in May, reflecting continued weakness from the 2015 peak of 122.8 in October and the historical peak of 123.7 in December 2014.

BTS research has shown a clear relationship between economic cycles and the TSI, reflecting changes in production, personal income and consumption, imports of goods, employment and manufacturing growth.

Source: U.S DOT, Bureau of Transportation Statistics

Bottom Line TSI continues to reflect the economic weakness in place since 2014.

READ MORE

at fuelmarketernews.com

WHOLESALE & FLEET OPERATIONS

Can Fleet Drivers Drive Fuel Savings?

by Vlad Collak

Because fuel is typically one of the top

three expenses for fleets, it is only natural that fleet managers and fuel procurement managers care about their fuel purchasing decisions. While fleets leverage a variety of fuel types and have many procurement options, I thought it would be interesting to analyze diesel purchases at retail merchants. As software developers, we have access to both nationwide retail prices and transactional data from our fleet management clients. I’d be curious to know what kinds of savings fleets could expect if their drivers simply paid more attention to fuel purchases.

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Specifically, it is the drivers who could save their fleets substantial amounts of money since they are deciding when and where to purchase fuel. If they choose to use their fleet cards at a lower-cost location, say, one mile down the street in the same direction, the savings can be substantial. By simply postponing refueling until they are in a different part of town, provided they knew prices would be cheaper, drivers are enabled to make better purchasing decisions. More importantly, assuming they do go through the trouble of paying attention where they fuel, what would the anticipated financial impact be for a fleet?

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WHOLESALE & FLEET OPERATIONS

SMALL FLEET with Few Locations To get some answers to the previous question, we obtained a list of actual fuel transactions from a fleet that was willing to participate in our analysis.

The fleet is located primarily in the Chicago area.

I analyzed approximately 11 months of their diesel purchases for 107 vehicles between June 2015 and April 2016. For each of their fuel transactions, I found the lowest cost fuel within a 1 – 15 mile radius and compared the per-gallon cost to the retail price the fleet paid (ignoring discounts).

As one can see below, the total per vehicle opportunity for retail diesel savings in the Chicago area for about a year is roughly $60. In other words, if a driver always purchased at the lowest cost location within fifteen miles of where he/she fueled, over the course of a year that would have translated to $60 of savings for that vehicle. This number is essentially a theoretical maximum amount one could save. Obviously, the caveat is that most fleets will not go out of their way to save few pennies at the expense of productivity or burning more fuel, so stations that can provide savings would already have to be in areas where drivers are expected to be anyway.

LARGE FLEET with Many Locations While the variance of fuel cost in the Chicago area seems low and seemingly provides very limited opportunity to save, I wondered if other parts of the country would fare differently. To give us another data point, I analyzed a larger fleet with 859 diesel vehicles, and more importantly, one that operates in multiple states. I looked at three months of data and extrapolated the amount of savings for a year. Using the same methodology as above, I analyzed data for 31 states and approximately 9300 fueling transactions. As one can see, the savings opportunity for this fleet seems much better. While our previous example only provided $60/year savings for each vehicle, this particular fleet could have saved up to $455/year per vehicle. For a fleet with 1000 vehicles, this would represent over $455,000 of savings, which does not seem all that insignificant.

Radius

”“

1 mile

3 miles

5 miles

8 miles

15 miles

Total Savings/vehicle/mo

$1.17

$3.00

$3.77

$4.22

$4.94

Total Savings/vehicle/year

$14.00

$36.00

$45.00

$51.00

$59.00

SMALL FLEET Yearly Savings/Vehicle 15 miles 8 miles 5 miles 3 miles 1 mile $-

$50

$20

$30

$40

$50

$60

$70

It is the drivers who could save their fleets substantial amounts of money since they are deciding when and where to purchase fuel. If they choose to use their fleet cards at a lower-cost location, say, one mile down the street in the same direction, the savings can be substantial. By simply postponing refueling until they are in a different part of town, provided they knew prices would be cheaper, drivers are enabled to make better purchasing decisions.

Radius

1 mile

3 miles

5 miles

8 miles

15 miles

Total Savings/vehicle/mo

$3.94

$11.56

$16.69

$23.34

$37.92

Total Savings/vehicle/year

$47.00

$139.00

$200.00

$280.00 $455.00

LARGE FLEET Yearly Savings/Vehicle 15 miles 8 miles 5 miles 3 miles 1 mile $-

$50 $100 $150 $200 $250 $300 $350 $400 $450 $500

Given that the two data sets I analyzed rendered different results, it seems that variance of retail prices is somewhat location specific. To better understand this, I averaged the difference between the retail price (this fleet paid) and the lowest cost price for the same fuel in the area between 1 – 15 miles on a stateby-state basis. (I made the assumptions that no specific fleet location implemented any kind of fuel purchasing program encouraging drivers to purchase cheaper fuel, and that all drivers are, on average, similar to each other when it comes to fuel purchasing decisions.)

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Within one mile, the spread was anywhere between 10 – 14 cents/gallon with the highest spreads in Alabama, Connecticut and Oklahoma. In other words, in Alabama one could find a merchant with diesel fuel that is, on average, 14 cents cheaper per gallon within a mile. In other states such as Arizona, a similar spread is hard to find.

fuelmarketernews.com

Alternatively, the spread between our transaction cost and the lowest priced diesel within a 15-mile area was up to 58 cents/gallon. Specifically, in California, Indiana and Louisiana, the spread was as high as 48 – 58 cents per gallon on average. The smallest spread was in Washington, where driving fifteen miles away, the price of diesel would only have been about 4 cents lower compared to the price the fleet paid already.

15 MILE SPREAD $0.70 $0.60

Vladimir Collak

$0.50 $0.40 $0.30 $0.20 $0.10 $-

LA IN CA OK FL MI AL NE PA OH KY TX NJ NY MS NH CT SC ME GA TN WI NM IA MO IL MA CO KS AZ WA

In summary, my analysis shows that fleets could indeed save money if they only implement programs that encourage drivers to select lower-priced locations.

However, the results may vary since savings seem to be location-dependent.

Further study would have to be conducted to explore whether savings in certain locations are consistent over time as well as possible differences within various markets in each state. n

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Vladi currently serves as president and CEO of Ignite Media. Ignite builds mobile and web solutions primarily for the Oil & Gas industry that includes clients such as Mansfield Oil, Enbridge, Total Safety, Universal Plant Services and others. Prior to Ignite, he served at FuelQuest as manager of research and development and at Xerox Connect as principal consultant providing technology solutions to clients including Continental Airlines and Equifax. Vladimir holds a Bachelor of Science degree in Information Technology. He also holds an MBA degree from the University of Texas at Tyler. He can be found on his blog at www.collak.net and at vlad@collak.net.

PEI Revises Recommended Practices on DEF Storage, Dispensing

Five Years Seems Like Ages Ago

Taking lessons learned during the past

five years into account, PEI’s Diesel Exhaust Fluid (DEF) Committee recently released the second edition (2015) of RP1100. The document makes technical corrections and clarifications to the original work and adds guidance on several key topics related to DEF storage and dispensing.

As was true in for the first edition, Steve Hieber of PWI, Inc., in New Oxford, Pennsylvania, chaired the committee of experts who drafted the revision. Hieber expressed his gratitude for the knowledge and cooperation of all the committee members.

PEI published the first edition of RP1100: Recommended Practices for the Storage and Dispensing of Diesel Exhaust Fluid (DEF) in 2010 in response to changes in federal emission requirements for diesel vehicles and a new diesel engine technology: selective catalytic reduction (SCR).

The emission requirements lowered the allowable oxides of nitrogen from diesel vehicle exhaust. And SCR, which uses DEF for after-treatment of the vehicles’ exhaust, was emerging as the accepted solution to meet those requirements.

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That first edition was intended to provide basic guidance on the new DEF storage and dispensing equipment that would best preserve the product’s quality and prevent releases into the environment.

Five years later, SCR-equipped diesel vehicles and DEF-related infrastructure are firmly established as essentials of the U.S. transportation system. Annual DEzF consumption in the U.S. is expected to increase from 400 million gallons in 2015 to 1 billion gallons in 2019. And much has been learned in the process by installers, service contractors, fuel marketers and other DEF stakeholders.

WHOLESALE & FLEET OPERATIONS

Here are eight of the most important changes, clarifications and additions in this version:

by Rick Long

2Material

Compatibility

To prevent contamination or an unintended release,

equipment that comes into contact with DEF—including tanks, dispensers, piping and other associated components—must be compatible with the product.

The 2010 version of RP1100 included examples of compatible and incompatible materials which were referenced in two standards: the International Organization for Standardization’s ISO 22241 and the German Institute for Standardization’s DIN 70070.

1Labeling As the DEF industry has matured during the past five years, so has the regulatory environment in which the industry operates. One regulatory development has to do with labeling requirements. Effective January 1, 2016, the National Conference on Weights and Measures (NCWM) added requirements for the labeling of DEF dispensers to its Handbook 130, the document that covers engine fuels, liquids and fueling systems.

The 2015 edition removed the reference to the DIN standard.

“ISO 22241 has gained wide acceptance in the industry in the last few years,” Hieber said. “DIN 70070, on the other hand, is seldom cited and has essentially become obsolete. As a result, the committee thought it would be unwise to reference both documents in the new edition.

In particular, we wanted to avoid any opportunities for conflict or confusion if one of the standards changed in the future and the other did not. Given ISO 22241’s prominence, sticking to that standard was the obvious choice.”

“Handbook 130 has been adopted in full by nearly 20 states, and many other states accept portions of the document,” Hieber said. “The PEI DEF Committee felt it was important for users of RP1100 to know that specific language is now required on DEF dispensers, so we amended Chapter 6 to point users to Handbook 130 for those labeling requirements.”

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As in the first edition, however, the reference to ISO 22241 is not meant to specify the only materials that are compatible.

“While we elected to defer to the work ISO has done in identifying compatible and incompatible materials, readers should be aware that the ISO materials lists are for guidance only,” Hieber said. “Manufacturers may test other materials for compatibility with DEF as long as the test conditions reflect the expected temperature range and contact time to give a fair assessment of any material degradation or other effects.”

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WHOLESALE & FLEET OPERATIONS

Five Years Seems Like Ages Ago

4 Underground

3 Quality

Storage Tanks

The introduction of impurities will degrade DEF and

As DEF quantities have grown during the past few years, underground storage tanks (USTs) have become a common solution for storing the product. The 2010 edition gave early guidance on DEF USTs, noting specifically that:

negatively affect the performance of SCR systems. The first edition of RP1100 stressed the importance of maintaining product quality throughout each phase of storage and dispensing.

1. All DEF USTs should be double-walled, have secondary containment with monitoring or both.

“For this edition, the committee decided to go even further by giving users some guidance on how to ensure that the product is still on spec,” Hieber said.

“One often-used tool for doing that is a DEF refractometer, which tests the concentration of urea in the DEF, so we mentioned that approach in the new document.

2. The inner tank must be constructed of compatible materials.

3. The inner tank and outer containment must be liquid-tight.

The new document further refined the tank requirements.

“Hydrostatic monitoring systems, in which the interstitial space is filled with brine, clearly would cause contamination of the DEF if the inner wall were to leak,” Hieber said. “In the new edition, the committee pointed out this danger, in effect recommending the use of tanks with a dry interstice.”

“It’s important to mention, however, that the committee did not go as far as it could have with specific sampling and testing procedures for determining DEF specifications. The reference to refractometers simply states that the use of this device is ‘one way’ to do it.”

5Overfill

6 Thread

Protection

Sealant

Sometimes one word makes all the difference.

Not every change in the revised RP1100 represents a major shift or new information. Some revisions are clarifications.

One example involves the recommendations on how best to prevent DEF migration through small gaps in seemingly tight joints and fittings.

A change to section 5.2.2.6 in the revised RP1100 is an example.

This section, which addresses overfill prevention, previously stated that tanks “should” be equipped with overfill protection. The new sentence states “equip” DEF USTs and ASTs with overfill protection.

The 2010 document noted correctly that installers should use a sealant on tapered threads to prevent leakage and creep.

The revised document reinforces this point, adding that any sealant used on tapered threads should be compatible with DEF because sealants that are incompatible with DEF could contaminate the product, leak or creep.

The committee’s deletion of the word “should” turned what had been a suggestion into a requirement. This change represents a clear decision in favor of overfill protection.

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WHOLESALE & FLEET OPERATIONS

Five Years Seems Like Ages Ago

7Safety As DEF quantities have grown during the past few years, underground storage tanks (USTs) have become a common solution for storing the product.

The 2010 edition gave early guidance on DEF USTs, noting specifically that: 1. All DEF USTs should be double-walled, have secondary containment with monitoring or both.

2. The inner tank must be constructed of compatible materials.

3. The inner tank and outer containment must be liquid-tight.

The new document further refined the tank requirements.

“Hydrostatic monitoring systems, in which the interstitial space is filled with brine, clearly would cause contamination of the DEF if the inner wall were to leak,” Hieber said. “In the new edition, the committee pointed out this danger, in effect recommending the use of tanks with a dry interstice.”

Status Quo

8 Ballast One concern that has arisen since the first edition was published has to do with ballasting DEF tanks during installation.

“The committee was aware that some installation contractors have used water containing chlorine as ballast when installing DEF tanks,” Hieber said. “New language in Chapter 5 makes it clear that only DEF, distilled water or deionized water should be used as the ballasting medium. This requirement essentially ensures that there will be no risk of contaminating the DEF that is later introduced into the tank.”

After debate, the committee also chose not to change several decisions reflected in the 2010 edition.

Marine DEF

Tank installation practices

In 2010, the drafting committee limited the recommended practices to motor fuel dispensing facilities, repair/maintenance garages and service centers. This excluded marine diesel environments, which use a more concentrated aqueous urea solution (AUS 40) than that used in motor vehicle fueling (AUS 32). Equipment used for the storage and dispensing of AUS 40 must be designed to meet the unique challenges of marine environments. The committee said that the installation, service and maintenance demands of marine applications were beyond their expertise and did not include recommendations for marine facilities. Similarly, no mention was made of a new Marine DEF certification program soon to be launched by the American Petroleum Institute.

Another area the committee did not address in depth was installation procedures for underground and aboveground DEF tanks. As in the 2010 document, the committee instead refers readers to PEI’s RP100 and RP200, the documents that cover the installation of USTs and ASTs, respectively.

“We decided to again rely on the expertise of the PEI committees charged with recommending installation practices, rather than cluttering RP1100 with dozens of pages on a subject we know something but not everything about,” Hieber said. n

Rick Long Rick Long is the general manager and associate general counsel of PEI, as well as editor in chief of the PEI Journal. To learn more about PEI/RP1100, view the complete table of contents or order a printed or PDF copy, visit www.pei.org/rp1100.

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WHOLESALE & FLEET OPERATIONS

Way back in 2012 the hottest buzz at most of the trade shows with an audience interested in

commercial fueling was the conversion to compressed natural gas from diesel. This was certainly a market-driven phenomenon due to the fact that the price spread between diesel and natural gas during the buzz period was up to $2 per energy-equivalent gallon in favor of natural gas. The return on investment for the conversion costs, which are not insignificant, was starkly clear.

COMMERCIAL CNG IN TODAY’S MARKETPLACE

by Keith Reid

“ ” “I think [the environment is] important to people. I think that’s why they start the discussion, but that’s it. But even people with a big mandate have to make the economics work, and if the economics don’t work it doesn’t matter how green it is. You’re only going to get so far.”

In this environment, the push for a mass conversion from diesel to gas has certainly been reduced. And yet with some regularity, including the periods where the price was unfavorable, there have been announcements of new natural gas fueling facilities being opened and additional fleets being added to the list of CNG customers. For a marketer considering the move into natural gas—for this article CNG and not liquefied natural gas or LNG—just how viable is this solution today?

“Several years ago, folks were projecting about anywhere between a 1.5% and 2% growth in new truck sales for CNG,” said Bill Zobel, general manager of business development and marketing for fueling provider Trillium CNG. Trillium was recently acquired by Love’s Travel Stops & Country Stores to enhance its already developing commercial CNG initiatives. “As the fuel prices dropped off, we haven’t really seen much growth in the market, but more of a steady pace at the same build rate that there’s been before. It’s enough to keep the market stimulated. It’s enough to keep it moving forward.”

From a price perspective there is again a positive message, though certainly not the overwhelming one of previous years.

“CNG is less expensive pretty much universally throughout the country,” said Grant Zimmerman, CEO of CNG fueling station operator and fuel provider ampCNG. “And in places where diesel tends to be more expensive, like on the coast, there’s a big differential. When you factor in things like state incentives, the payback for CNG can still be less than a year in some instances.”

Historical Compressed Natural Gas (CNG) Prices vs. Diesel

Price per diesel gallon equivalent ($/DGE)

Grant Zimmerman, ampCNG

Today, of course, the price differential between the two fuels is quite different.

The fracking process that so significantly dropped the price of natural gas has similarly impacted oil prices and the resulting refined fuels. In April of 2014, diesel prices began to drop and in January 2016, both fuels were at price parity. By April 2016, compressed natural gas was, with the exception of the Central Atlantic, about $0.15 more expensive. Since April, diesel prices have rebounded and natural gas prices have remained generally the same (though the absolute latest in retail CNG data is lacking), and CNG is once again enjoying a reasonable $0.20 or more market advantage.

Source: U.S. Department of Energy Energy Efficiency & Renewable Energy, April, 2016

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WHOLESALE & FLEET OPERATIONS

Commercial CNG in Today’s Marketplace and a division of U.S. Venture, Inc. “They know where their costs are going to be into the foreseeable future. Oil... could it go lower? Yeah, but most folks in the industry and in transportation feel it is going to go back up.”

Another cited advantage with CNG is greater price stability. The domestic nature of natural gas along with its abundant supply through fracking tends to insulate it from global market issues. Although oil has become notably less volatile than it was during the first decade of the 2000s, also through similar fracking-related supply benefits, its movement tends to be more significant.

“With natural gas you have much more price stability, where [a fleet customer] feels comfortable that they can make the move,” said Bill Renz, general manager of U.S. Gain, a CNG station operator and fuel supplier

While Renz doesn’t anticipate $100 per barrel oil anytime soon, nor do most analysts in the industry, oil moving up over time into the $50 – $70 range is a common assumption which improves the long-term CNG price perspective. “From a lot of these fleets’ and shippers’ perspectives, they’re fine making the move now, knowing that they’ve got price stability and knowing that more than likely in the next few years, those more significant savings will be there,” Renz said.

Beyond price there are other incentives driving fleet conversions, most specifically carbon reduction. This encompasses brand enhancement efforts focused on sustainability and is facilitated by various economic incentives. However, at the end of the day the green that matters most is the color of the dollar.

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“

”

“For us, since oil has dropped, we’ve actually never been busier.

We’re definitely looking at volume of gallons, selling more and more.

The reason is that you’ve got the big dogs getting in the game.”

Bill Renz, U.S. Gain

WHOLESALE & FLEET OPERATIONS

Commercial CNG in Today’s Marketplace

Today’s Fleet Customer CNG fueling providers generally noted that while the rush of interest in the fuel has slowed, the expansion of fleets already committed to the fuel continues.

“The fleets that haven’t done CNG so far are taking a little longer to buy the first truck,” Zimmerman said. “But the guy who’s thinking about his fortieth truck, or hundredth truck, or two hundredth truck is moving ahead as fast as they were. I’ve done some analysis that says if this market continues at the current pace, we’ll have three times as many trucks on the road in just a few years as we have today.”

The initial fleet focus centered on slow-fill technologies for return-to-home fleets. A waste disposal company would be a perfect example of this market. With the trucks parked overnight, a filling solution using a less expensive lower-pressure compressor and electrical off-peak hours notably reduced some of the more significant overhead costs with the fuel. While this remains a solid, established market, regional over-the-road type fleets linked to an established off-site fueling network using fast-fill technology is also an increasingly attractive market, and one more in line with a traditional fuel retailer or marketer.

“For us, since oil has dropped, we’ve actually never been busier,” Renz said. “We’re definitely looking at volume of gallons, selling more and more. The reason is that you’ve got the big dogs getting in the game. I think three years ago when oil was high, a lot of smaller, private fleets were making the move to CNG. But there was less volume. Now you have companies like Unilever and Anheuser-Busch.”

Renz noted that they are typically involved for the greener aspects—sustainability and a domestic fuel—but that when they commit to the fuel they do so with a lot of volume. Even so, they do benefit financially when moving to CNG. “In the past everybody wanted a payback less than two years. For those where sustainability is important, as long as they’re getting a three- to four-year payback, which we can still provide, they’re moving forward,” he said.

In fact, even a marginally supportive fuel price differential becomes more attractive to such high-volume fleets. “[Where] you’re looking solely on the financials, those higher mileage applications really make the most sense in today’s environment,” said Scott Perry, vice president of supply management and global fuel products for the Fleet Management Solutions business segment of Ryder Systems, Inc. Ryder has been very aggressive, and remains so, in providing CNG opportunities throughout its truck leasing program. “With that differential between diesel and natural gas being compressed with more fuel being utilized in those higher mileage operations, you’re generating more savings in return to offset that incremental premium for the vehicle.”

(See the Ryder sidebar for more information on its CNG efforts.)

One issue with CNG and fleet adoption (though hardly unique) is an aversion to trying something new.

“You’re asking someone to operate differently than they’re used to operating, and people get fired for doing something new if it’s not working out. Nobody gets fired for doing things the way they’ve always been done,” said Zimmerman. “So, you have to FMNMagazine

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overcome that. We’ve got a growing number of case studies of industry peers. It doesn’t matter what industry you’re in—I’ve got a success story.

You’ve got us. You’ve got an increasing number of mainline guys like the leasing companies—Pensky and Ryder—who are increasing their fleets.

So there’s a lot of ways to help somebody get over that hurdle. But, it’s like the first time you jump off of the high dive. No matter how many people you saw do it before, you got to do it yourself.”

Zimmerman also noted that a number of fleets have safety concerns with compressed natural gas and fear potential explosions. He stressed that such concerns are grossly exaggerated.

“You should see the way they test these things. They shoot basically armored rounds at highly pressurized tanks of natural gas, and they don’t explode. Of course they puncture, but they don’t explode,” he said. “We’ve had rollover accidents and high speed collisions where the most robust part of the truck was actually the CNG system.” He noted that the industry is also maturing, and that there is increasing training for firefighters and first responders to make situations involving CNG even safer.

WHOLESALE & FLEET OPERATIONS

Commercial CNG in Today’s Marketplace

Marketers Making the Move

CNG locations. There’s another two being built. We’ve got every major corridor, and every major market covered in our operating markets. If you’re operating natural gas from a regional or even local perspective, there’s pretty darn good opportunity that you can get fuel, and do it successfully, without having to really stretch, or run out-of-route or do unusual things that don’t fit your typical business model.”

For marketers to provide CNG as part of a more traditional station model, it’s useful to have customers in place to use that fuel.

Similarly, fleets want to have a fueling infrastructure in place to serve their vehicles before they make the jump. This can represent a challenge for both groups—so who goes first?

“It can be a ‘chicken and the egg’ issue with selling CNG as the fleets are looking for the fueling infrastructure and the companies providing the infrastructure need fleets,” said Joel Hirschboeck, superintendent of commercial and alternative fuels at La Crosse, Wisconsin-based Kwik Trip. The company has been an aggressive marketer of CNG and a range of other alternative fuels for commercial customers, which is particularly exceptional given its strong convenience store roots. “We really did our best to eliminate that within our footprint. Right now we actively operate 32

Hirschboeck noted that one advantage of doing it that way is getting more fleet adaption through a limited testing phase. “Instead of having to get a fleet to commit to a 30-truck roll out, they can go with two or three trucks, or whatever they’re comfortable with,” he said. “They can get an understanding of the technology and the differences between the natural gas vehicle and a diesel vehicle. They can make the modifications to their shops, if that’s something that they’re planning to take part in, and make the modifications to

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“It can be a ‘chicken and the egg’ issue with selling CNG as the fleets are looking for the fueling infrastructure and the companies providing the infrastructure need fleets.

Joel Hirschboeck, Kwik Trip

WHOLESALE & FLEET OPERATIONS their operations. Not that there’s anything majorly significant, it’s just a different way of thinking sometimes, and understanding what those differences are. Then transition further into natural gas on their typical trade cycles.” (See the Kwik Trip sidebar for more information on its CNG efforts.)

Helping put such a network in place can involve an existing diesel marketer working with its customers to determine interests and opportunities. Once enough interest is generated and a perhaps an anchor fleet is identified, the process can begin moving forward with greater assurances for both sides of the fueling equation.

For a marketer looking to move into CNG there are both similarities and some significant differences. With the cost of a CNG fueling station running anywhere between $1 million and $3 million (depending upon the number of lanes and desired fill capabilities), it’s not something that would generally be undertaken lightly.

Also, there can be notable operational costs related to the electricity required to

Commercial CNG in Today’s Marketplace drive the compressor(s) that similarly scales with providing higher fill rates.

However, the ability to connect higherpressure gas lines can reduce compressor requirements and costs when providing faster fill capabilities.

On the user experience side, there are more similarities than differences compared to fueling with diesel, which is absolutely the goal (and also where spending more on infrastructure comes into play). “We fill 8 – 12 gallons per minute, so a typical truck fill takes less than 15 minutes,” Zimmerman said.

“Drivers, whenever they stop, will do some safety checks, update their logs, wipe the windshield—all that sort of stuff—and typically that walk-around takes longer than filling at one of our stations.”

That approach is certainly the goal for Kwik Trip. The company uses fast fill technology and incorporates it in line with its diesel fueling equipment. CNG fueling cannot be more disruptive than diesel or the company would risk losing its core diesel customers.

Zobel noted that the customer base overlaps existing commercial diesel customers. There are synergies available to market to this group, both to generate revenue as well as to provide a covering play to keep that customer from looking elsewhere for such solutions. However, delivering CNG to those customers is an entirely new proposition.

“I think one of the problems that the petroleum marketing community has today is that many of them view it as just another piece of petroleum equipment. It’s really not,” Zobel said.

“CNG systems do not move liquid, they move gas. They are expensive.

They are very efficient, finely tuned pieces of equipment that to operate reliably require more maintenance than the existing diesel or gasoline pumps they have today. There’s a whole systematic process that has to be put into place if you’re going to move into this particular alternative fuel. Providers like us can help folks manage that going forward.” n

Truck Technology Eases CNG Adoption A variety of developments on the technology front have helped CNG fueling move

from the return-to-home day fleet, to the regional and over-the-road fleets that would need to fill up away from home. Much of that has come from the truck side.

Bill Zobel, general manager of business development and marketing for fueling provider Trillium CNG, noted that the heavy-duty Cummins Westport IXS12 G 12 liter engine has really changed the game as the 9 liter engine was a little underpowered for those applications. “Its performance is very good. You’ve got to give a lot of credit to Cummins Westport for taking their time with that engine and making sure that they had the bugs worked out before they put it into commercial service,” said Zobel.

However, he emphasized that the workhorse ISL G 9 liter engine has been no slouch. That displacement supports the refuse fleets, to the point where about 50% or more of all new refuse truck sales are compressed gas. In the transit market, some 25% to 30% of new truck or new bus sales are compressed natural gas.

“Those two markets have been around for a long time and have very good, reliable solutions for the drive train and have really, really taken off. And they’re fairly solid growth prospects for the compressed gas industry,” he said.

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WHOLESALE & FLEET OPERATIONS

Commercial CNG in Today’s Marketplace

Kwik Trip—An Early Adopter and Leader Lacrosse,

Wisconsin-based Kwik Trip has been an aggressive promoter of commercial fueling throughout its retail footprint, and beyond that, of alternative fuels to those commercial customers. CNG has been fully supported in those efforts. The company has added truck-accessible side diesel to over 125 of its locations, or about 25% of its stores.

“You’ve got small town stores with maybe 2 diesel pumps all the way up to the full-on travel center with 6 – 8 lanes of diesel, showers, parking—all of that,” said Joel Hirschboeck, Kwik Trip’s superintendent of commercial and alternative fuels. “When you start looking at what’s the next phase in fuel, and what are the opportunities to continue to advance and gain market share, compressed natural gas really stood out as that next viable option.”

Hirschboeck noted that space for the equipment and accessibility are the major on-site hurdles, and the company’s previous efforts minimized those concerns.

“If you’re a regional delivery fleet in our footprint, you really can make it work regardless of where you need to go,” said Hirschboeck. “If they have a store nearby their home, they can always fuel at the end or beginning of a shift. Otherwise they have opportunity to fuel in route. The other advantage that brings is that you don’t have to put so much money into tanks on the vehicle if you can accommodate a mid-day or intra-day fueling with hours of service.

Every driver’s going to shut down for 30 minutes at the 8-hour mark. There’s an opportunity to stop and fuel, and take care of that. It’s starting to kind of pull together that way.”

Advancements beyond the engine have also made a difference. Chris Hanners, alternative fuels product manager for Worthington Cylinders notes that cylinder design can help increase truck range and the viability of CNG for regional fleets. The increased range is credited to the use of an aluminum tank liner.

“Essentially that liner conducts heat better than, say, a plastic version of the same type of CNG tank,” said Hanners.

“As you pump natural gas in a fast fill situation you generate heat. As heat is generated, pressure also increases, which decreases the ability to add more fuel. But because we have that metal liner it reduces the heat and allows you to essentially get more gas in the same fast fill situation than maybe using a different approach.”

Hanners noted that the improved capacity varies with tank size, scaling up with larger tanks, but tends to provide an increase of 15% to 25% compared to other approaches.

Safety can also be a nagging concern from fleets considering a conversion. That is something Worthington takes very seriously.

“Our number one priority is safety, and we pride ourselves on that each and every day,” said Hanners. “We have a 40-year history of producing tanks and we were really the pioneer in developing carbon composite fiber tanks. We have never had a tank failure in the field. You can imagine what pride we take in that with safety being our company’s number one priority.”

Hanners noted that the metal liner also enhances its safety. “The rigid metal liner supports the composite fibers and minimizes composite flexing or breaking during an impact event,” he said. “The metal liner essentially holds roughly 10% of the load of the carbon fiber. Worthington manufactures our tanks to above and beyond the minimal safety factor that’s required.”

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WHOLESALE & FLEET OPERATIONS

Commercial CNG in Today’s Marketplace

Ryder Remains Solid on CNG Ryder offers businesses a range of commercial truck leasing and

service options. The company was an eager and early promoter of CNG for those customers with interest, and it remains so today.

“Our customers really rely on us to be looking at emerging technologies, and how those may fit into their business,” said Scott Perry, vice president of supply management and global fuel products for the Fleet Management Solutions business segment of Ryder Systems, Inc. “It’s very much a portfolio approach. We’re still very focused on providing them with high quality diesel through our diesel distribution network, but we also see that the technology is changing, and as emissions regulations continue to create opportunities for new technologies, we’re constantly evaluating what technologies may play a role in satisfying some of that demand. Right now we see natural gas playing the strongest role within that portfolio as an alternative to diesel. We have focused a lot of our resources around partnering with our customers and providing them support and expertise as they’re evaluating whether it makes sense to deploy it within their fleet.”

Ryder handles everything for the fleet from the new vehicle specification and configuration to the fuel system configuration (how much fuel needs to be stored onboard the vehicle to support their distribution needs, or their duty cycle). Ryder also has a number of national partners that can help a fleet evaluate whether there’s an existing retail fuel infrastructure that they can leverage for their distribution needs. If there’s enough mass or a need in a specific market, a partner may be able to step in and build a station to help support fleet adoption using their fuel volume potentially as an anchor fleet.

The company also supports upkeep and maintenance. “That’s really the key value driver for us—our maintenance network and our willingness to invest in upgrading our maintenance facilities, which are fully compliant today for diesel vehicle maintenance,” Perry said. “But whenever you introduce natural gas vehicles, it triggers a completely different standard of requirements with regard to ventilation systems and methane detection systems and just the overall design and configuration of the shop. That’s an area where we’re willing to work with them and make that investment in our maintenance facility to be able to support a high degree of uptime and reliability of that technology.”

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Under the “Fixing America’s Surface Transportation” (FAST) Act, the U.S. Department of Transportation’s Federal Highway Administration (FHWA) is seeking nominations for “zero-emission” and “alternative fuel” corridors from local and state officials.

According to U.S. DOT Secretary Foxx, “We can’t have Smart Cities without Smart Highways. Making sure drivers with alternative fuel vehicles can use the national highway system, rather than being limited only to local areas, is the next step in advancing America’s transportation network.”

“By identifying where alternative fueling stations can be found we can accelerate the use of innovative next-generation vehicles, improve air quality, reduce greenhouse gas emissions and ensure our transportation network meets the needs of 21st-century drivers,” said FHWA Gregory Nadeau.

The new provision will develop a process to make formal corridor designations featuring access to plug-in electric vehicle (EV) charging and hydrogen, propane and natural gas fueling sites along major highways.

Source: U.S. DOT, Federal Highway Administration

Bottom Line The alternative fuels network will become more visible nationally, thereby expanding access, increasing utilization, and encouraging further network infrastructure investments by fuel retailers.

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BUSINESS OPERATIONS

by Virginia Pajarito

Reducing Distracted Driving Five Ways Employers Can Help Drivers Stay Focused on the Road FMNMagazine

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Various studies have revealed that using a mobile phone impairs driving ability. A University of Utah study found that using a cell phone while driving, whether handheld or hands-free, delays a driver’s reactions as much as having a blood alcohol concentration at the legal limit of .08 percent.

”

Multi-tasking, the need for information at the tip of your fingers,

and the desire to stay connected are strong forces in today’s society. Unfortunately, if done behind the wheel, it is much more likely that you will be involved in an accident. The U.S. government estimates that 421,000 people were involved in an accident involving a distracted driver in 2012.

What is Distracted Driving?

While the meaning may seem clear, the term distracted driving has been used to characterize dissimilar driver conditions. Some studies use the terms inattention and distraction interchangeably.

Although daydreaming and drowsiness can be considered inattention, the term distraction is a specific type of inattention that occurs when drivers focus their attention away from driving to focus on some other task in its place. Therefore, distracted driving is anything that takes your hands, eyes or attention away from driving.

Although there are many potential sources of driver distraction, we can classify distracted driving into three categories:

• Visual—when the driver looks at something other than the road • Manual—when the driver takes his or her hands off the wheel • Cognitive—when the driver’s mind is engaged in another activity and is no longer paying sufficient attention to what is happening on the road

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The use of a mobile phone while driving often involves all three types of distractions: the driver looks at the phone to make a call or read a text message, handles the phone to make a call or to type a message, and becomes mentally engaged in the conversation or text message discussion.

Various studies have revealed that using a mobile phone impairs driving ability. A University of Utah study found that using a cell phone while driving, whether handheld or hands-free, delays a driver’s reactions as much as having a blood alcohol concentration at the legal limit of .08 percent.

Although talking on a cell phone while driving is dangerous, texting, instant messaging and emailing can be much worse.

A Virginia Tech Transportation Institute study concluded that people who text and drive are 23 times more likely to be involved in accidents or near-accidents as compared to other drivers.

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BUSINESS OPERATIONS

Lawsuits comprising of employees distracted by cell phones and other devices while driving have resulted in multi-million dollar settlements. Liability cases can be particularly severe for employers that provide employees with or require employees to use mobile phones.

Employers who require employees to drive as part of their job duties should be aware of the prevalence of distracted driving and should strive to restrict it. The safety of employees and others is the primary concern, but employers should also be aware of the liability exposures distracted driving can create. Lawsuits comprising of employees distracted by cell phones and other devices while driving have resulted in multi-million dollar settlements. Liability cases can be particularly severe for employers that provide employees with or require employees to use mobile phones.

Third-party liability can be sustained based on the legal principle of vicarious liability, or respondeat superior. This legal doctrine provides that an employee was acting within the course and scope of his or her employment at the time the accident occurred, and therefore the employer is held responsible.

Furthermore, an employer may be considered negligent for its own conduct if it encourages or permits employees to use cell phones or other hand held electronic devices without adequate training and rules in place with regard to safety.

Reducing Distracted Driving Given the prevalence and potential severity of distracted driving, what should you do to prevent or minimize distracted driving within your organization?

1 Educate your drivers on the importance of keeping their eyes on the road, their hands on the wheel and their minds on the most important task—operating the motor vehicle.

2 Define your own policies, in addition to regulations and laws, to curb use of in-vehicle devices that draw attention away from the road.

Incorporate federal, state and local standards/laws, and develop your policy to exceed those standards and laws.

3

Advise drivers to familiarize themselves with the controls and features of the vehicle and set their destination address in the GPS before departure.

4 Set the example. As a leader, do not text, send an email, make a phone call or dispatch while driving.

Operationally, resist the urge to justify potentially distracting behavior. As an organization, decisions are made, such as requiring employees to respond to dispatch while on the road, without thinking about the impact on distraction and how the organization is causing those behaviors. If you have employees who drive as a part of their job responsibilities and must contact the person immediately, consider establishing a protocol such as calling the employee’s phone two times consecutively, which signifies to the driver they need to find a legal and safe place to park and respond to the inquiry.

It is clear from other traffic safety concerns such as drinking and driving, speeding and safety belt usage that consistent enforcement is the best strategy in changing behavior. Laws and policies that prohibit unsafe driving behaviors are essential because they form the basis for a societal response. This map shows the states that currently have laws prohibiting texting and handheld phones.

Ban against texting and driving Ban against all handheld cellphones for all drivers

In additions to the laws above, some states have additional restrictions, some pertaining to novice drivers and bus drivers. For more information, go to http://www.distraction.gov or http://www.ncsl.org/research/transportation/cellularphone-use-and-texting-while-driving-laws.aspx.

While not an entirely new issue, distracted driving has become a serious highway safety problem that has been increasing in importance with the introduction and use of new, sophisticated communications and information technology. Through widespread awareness of the challenges and complexities of this problem, policymakers and employers alike can provide leadership and develop solutions and strategies to reduce death and injury connected with distracted driving. n References 1. U.S. Department of Transportation, National Highway Traffic Safety Administration, Traffic Safety Facts 2. National Safety Council, Understanding the distracted brain.

Why driving while using hands-free cell phones is risky behavior 3. Governors Highway Safety Association, Distracted Driving— What Research Shows and What States Can Do 4. Governors Highway Safety Association, Distracted Driving, Survey of the States 5. Virginia Tech Transportation Institute, www.vtti.vt.edu 6. AAA Foundation for Traffic Safety, aaafoundation.org 7. Shell Oil Company, shell.com

Virginia Pajarito

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Ensure employees are held accountable for following your policies, and do not forget distraction when conducting vehicle accident investigations.

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Senior Loss Control Consultant 213.689.4285 vpajarito@lockton.com

fuelmarketernews.com

BUSINESS OPERATIONS

Five Things that

WRECK YOUR CUSTOMER SERVICE If you ask petroleum marketers about their companies’ top competitive advantages, customer service is almost always included on the list. Most companies believe delivering memorable, great customer service is an easy thing to accomplish and automatically assume their customers are being well taken care of by customer service representatives. In reality, it’s often a part of the business that could use an extreme overhaul.

by Ann Pitts

In today’s business climate, first class customer service is tougher than ever to achieve, and it’s a fact that customers either stay or go based on their experiences when things go wrong. The cost of getting a new customer is five times the cost of customer retention, so it makes perfect economic sense that customer service truly be a top competitive advantage.

Why is it so tough to truly give customers the best experience? Is it possible that newer technology, while making companies more efficient, actually gets in the way of delivering the best in customer service? From phone automation to the myriad selection of other software and automation used to run a business, it always comes down to the people— the employees—to create a positive outcome. It’s up to your front line folks to defuse a customer who is unhappy with a problem they might have even created.

Historically, the health insurance industry has been frustrating to deal with. Believe it or not, insurance companies are making great strides in improving customer service. Issues could originate from so many varied sources that it was often tough to track down where the problem started—was it the doctor, coding, hospital, etc.? Blue Cross Blue Shield has tackled improving its customer service by adding staff and reducing on-hold wait time. Once the call is connected, representatives can improve the calling experience by using technology in a positive manner. Three-way calling has become part of the process. If there’s a problem with a doctor’s office, the rep gets the doctor’s office on the call with the patient to resolve the issue.

They make every attempt to solve problems while the customer is on the call, even if it means being on hold for a few minutes.

Am I a happy camper? Or one mad, gold-status frequent flier, feeling like a non-valued customer?

Calling back immediately, I had a totally different experience.

Customer service rep #2 answered the phone with a calm, confident friendly tone. No rushed, stern clipped voice here.

He spent about a minute on the actual problem, not lingering on what I had done wrong but going completely into problemsolving mode. I was no longer marinating in what I had done to create this situation, but was lifted right into “let’s fix this.” I learned that the reason the price tripled was simply supply and demand. The travel-savvy airline employee performed some quick searches and suggested if I could travel to my destination the day before, I could snag that ticket for the original price and stay in an off-season, reasonably priced hotel. Making the trip the day before originally planned saved me three times as much, even with the extra night’s hotel stay, and made me a very happy customer. The call took five minutes and the results turned me from an unhappy, out-the-door-to-another-airline flier into a problem-solved happy customer.

one two

The first call was a disaster. The customer service rep answered the phone right off the bat with a stern, clipped tone and was quick to point out the problem was my fault; she could offer me nothing. That’s it— we are done here. My questions on how this could’ve happened and why the ticket price spiked were of no concern to her, as she didn’t want to discuss or even listen to my questions. After five minutes of getting nothing I asked to speak to another representative. She replied that no one could help me, and when I persisted she actually hung up.

Telling a customer “you will have to call the _________ department.” Instead, explain why another department needs to be involved, and facilitate the transfer with a three-way call introducing the customer to the other employee, explaining the issue at hand.

three

I immediately called the airline knowing I was most likely completely responsible for the problem, but hoping there was something they could do to help. Maybe there was a thread of technology that was tied to my purchase—one that would be visible and allow me to complete the ticket purchase at the original price? It was a long shot, but I was a loyal, long-time customer who just needed some help.

Employee using an “I am right, you are wrong and I am bored with the job” tone of voice. If customer service folks are handling 50 customers a day, it’s still important to handle each call with focus, kindness and clarity.

Using company policy as a roadblock to helping customers.

If indeed company policy is standing in the way of satisfying an irate customer, be creative and find another way to create the fix. Great customer service providers know there is more than one way to find solutions.

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A recent experience with an airline illustrates the best and the worst in customer service, all taking place within 30 minutes.

After purchasing an airline ticket for a business trip, I realized a few hours later that I had not received the standard email confirmation. Logging on to my account, it became apparent that I had not completed the transaction, and the trip was not booked. Easy to fix, I logged back in to book the trip but was shocked to see that the ticket’s price had tripled in just a few hours.

Taking cues from other industries’ customer service strengths and weaknesses, let’s examine five things that wreck your customer’s experience:

Employees taking their frustrations out on the next customer, based on an experience with the previous customer. Customer service staff must be able to shake off one call before going on to the next. Excellent service is not about manuals and policy but about employee behavior and attitude.

five

When is the last time your customer service person solved your customer’s problem while they were holding? When a customer calls in with a billing problem, does your customer service staff attempt a three-way call with another employee who can drill down and hopefully resolve the issue quickly? Or does your customer fall into the black hole of voice mail and sticky note follow up?

Technology systems that inhibit, rather than help, customers get their issues heard and solved. Telephone and other automations should be fast and efficient, showing ultimate respect for customers’ time. It’s a good idea to call into your own company every now and then, checking auto responders and navigation of the system.

First class customer service is tougher than ever to achieve, but is absolutely essential to a healthy, thriving business.

Complaining, unhappy customers can be turned into loyal business partners when handled by employees with the right focus and skill set. Arm customer service reps with tools, knowledge and information for terrific results. n

Ann Pitts

Ann is President of The Pitts Group, a company dedicated to assisting Petroleum Marketers increase cash flow by improving accounts receivable results. Staff training, sharing of best practices and strengthening company policy are all part of The Pitts Group program. Ann is an experienced business speaker and trainer who has enjoyed focusing on the petroleum industry for over 12 years.

Contact: Cell: 817.304.1533 email: ann.pitts@pittsgroup.net

Solutions for Hiring Quality Drivers Despite Shortage

by Maura Keller

ROUTING THE DRIVER SHORTAGE

The driver shortage facing the

petroleum industry, and many others, is creating a challenging environment for businesses of all sizes. But rushing to fill empty positions rather than exercising due diligence when hiring transportation employees can cause problems to arise and hinder the effectiveness and efficiency of the transportation components of your business.

According to the HireRight’s Transportation Spotlight Report, 59% of respondents noted that finding, retaining and developing talent was the top business challenge, ahead of regulations and risk management. The report found that many companies in the transportation industry are investing in digital recruiting tactics geared towards a younger and broader audience. Of the top investments for 2016, 73% of companies noted they would be putting resources towards finding qualified candidates. And referrals continue to be the industry’s leading recruiting tactic (84%), followed by online job boards (66%) and corporate websites (65%). Print media declined 9% from 2015, mirroring a noticeable shift from recruiting active drivers looking for a new job to engaging more passive driver candidates through digital channels.

Mary Borsecnik, corporate marketing communications specialist at J.J. Keller & Associates, said there are two key steps to take for driver selection and screening within the industry. First, create a “driver qualification policy” and develop firm standards for qualifying applicants.

BUSINESS OPERATIONS As Borsecnik explained, when a company does this, it is setting the bar for minimum driver qualifications by establishing the maximum amount of risk it is willing to accept with any new driver. These standards can include the driver applicant to be a minimum age, have a minimum number of years of driving experience, have no more than a certain number of preventable accidents within the past year and/or years, have no more than a certain number of violations over a period of time, have no more than a certain number of driving jobs over a length of time, and so on.

Secondly, use the Federal Motor Carrier Safety Administration’s (FMCSA) tool, the Pre-employment Screening Program (PSP).

“The PSP makes crash records for the last five years and roadside inspection data for the last three years available to motor carriers when conducting background searches for hiring purposes,” Borsecnik said. “This tool allows motor carriers to become more informed in the decisionmaking regarding new hires.”

“ ”

“During the interview portion of the selection process, there are also certain personality traits companies should be evaluating to determine if a driver is a good fit for their team. Assessing traits like motivation, personality and values during this time will help determine whether your potential drivers have the right demeanor to fit in with your fleet.”

Brian Thomforde, Truckdriver.com Because of the current driver shortage, it is tempting for hiring companies to fill their jobs with drivers that meet only minimum qualifications with approved

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background checks and a clean driving record. When it comes to selecting drivers, a strong focus should always be paid to their safety record. But driving time without incidents, background checks and assessments are just the beginning of that process.

“During the interview portion of the selection process, there are also certain personality traits companies should be evaluating to determine if a driver is a good fit for their team,” said Brian Thomforde, owner of Truckdriver.com.

“Assessing traits like motivation, personality and values during this time will help determine whether your potential drivers have the right demeanor to fit in with your fleet.”

The best drivers want to be hired. They are also getting smarter—instead of applying for each job one at a time, or combing through help wanted ads, they want to apply for a wide variety of jobs as quickly as possible. Because of this, the best candidates today are going to online

BUSINESS OPERATIONS

Routing the Driver Shortage

“ ”

“There are about a million ways to market a company and recruit drivers but, if you have a limited advertising spend or low name recognition within the industry, then focus on referrals from current employees and partners.”

Gary Lewis, Freight Exchange job portals that specialize in a variety of driving jobs. As Thomforde explains, today’s candidates also want to submit their application to many recruiters at one time.

According to Gary Lewis, president at Freight Exchange, a Redwood Logistics Company, the starting point for managing the driver shortage really needs to be a belief that the media hype on the driver shortage is misdirected.

“The industry needs to shift its mindset to the fact that there is a driver quality shortage,” Lewis said. “From that perspective, companies can look at their recruitment processes. We believe that one of the best practices in driver selection and screening is a simplified, easy to use application process that clearly sets expectations for the applicant. The best way to screen is to encourage applicants to self-select into a company’s culture and operations.”

One example that Spencer highlighted is that when hiring commercial drivers, motor carriers will routinely contact the insurance agent to have drivers added to the business insurance policy. The agency will then run a Motor Vehicle Report (MVR) to determine if the driver meets the underwriting guidelines of the policy. In some instances, insurance agencies provide the MVRs they ordered to their clients for employment purposes.

“This practice poses considerable risk to not only the insurance agency but also to the motor carrier, as it may potentially violate consumer privacy regulations,” Spencer said.

Additionally, Lewis suggested that companies could increase screening quality when recruiter compensation ties to retention, rather than a straight number of hires.

“Also, the final say on a new hire should not be a recruiter but someone more closely tied to the driver job, such as a fleet manager or supervisor,” Lewis said.

When screening drivers or any candidate in a regulated industry like trucking or transportation, it’s important to have a consistent and clear screening process. Federal regulations require employers to obtain a motor vehicle record from every state in which a driverapplicant has held a license during the past three years and a threeyear work and drug/alcohol history on all applicants. Developing systems where protocols and processes for collecting, reviewing and retaining the required documents are clear and consistent is important for both compliance and candidate experience. Investing in more than just the minimum required screening can help with fit and retention. Using external sources that are beyond the driver’s ability to influence such as Commercial Driver’s License File (CDLIS), or even criminal record searches may give you more insight.

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“Due to disparate state laws and record management systems, the process for collecting the required records for drivers can be onerous, but it must be thorough,” said HireRight’s Steven Spencer, managing director of transportation. “This can create a challenge for hiring and getting drivers on the road when there is a nationwide driver shortage.”

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So where are the best places to find qualified candidates?

Motor carriers can develop relationships with educational institutions and, in effect, build an apprentice program where the student, or driver candidate, learns his/her way into a professional driver status.

According to Borsecnik, there are also the more traditional ways, such as sponsoring job fairs, Internet recruiting and classified advertisements in newspapers, magazines, newsletters, radio and television.

“But one of the most effective ways is word of mouth from your existing drivers,” Borsecnik said. “Usually, a driver referral program accompanies this activity. This program encourages current drivers to assist in recruiting efforts of the company by rewarding them in some manner when they do bring a qualified driver to the ranks.” fuelmarketernews.com

BUSINESS OPERATIONS

Shortcuts to Avoid It is tempting to limit your screening timeframes to only three years and only to any information you can obtain from digital employment databases.

However, there are many employers around the country that do not file electronic reports to the databases.

“If you can’t find complete records for a candidate’s three-year period online and there are no employment gaps reported by the driver, make sure you file manual requests with the employers in question to validate all of the information you have in front of you,” Thomforde said.

Lewis points to a myriad of shortcuts he sees taking place throughout the industry including: • Ignoring the application employment history. The best determination of future behavior is past behavior and, if an applicant has major issues in his/her past work experience, there will likely be issues again.

• Making a hiring exception without leadership approval. This goes back to recruiters not having the final say in hires, as mentioned above.

Leadership is in their position because of their experience and expertise in the industry, and final hiring of an applicant should rest with them.

• Overselling what you can deliver.

Honesty from recruiters is absolutely essential, and man drivers will tell you they’ve been burned by false advertisement or promises in a job. The fastest way to lose a driver is to not set real expectations up front.

“ ”

Routing the Driver Shortage

“Because our industry is facing a driver shortage but the jobs still need to be completed, it is tempting to fill available opportunities with drivers that meet only minimum qualifications. Safety records, background checks and certifications should be just the beginning of the screening and hiring process.”

Brian Thomforde, Truckdriver.com Cost-Effective Screening

The most cost-effective way to get new hires screened is to choose the right human resources and employment software suite. To reduce the amount of

Weak orientation or limited fleet manager engagement. Drivers are essential members of a company’s team. They are front line employees and need to have the resources available to continuously perform their jobs, have their concerns heard and addressed and feel that they are valued.

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time and investment in hiring drivers, employers need to select a solution that automates as much of the screening processes as possible. From background checks to health screens to electronic verification, there are software solutions out there, which are designed to improve all of these processes.

“There are about a million ways to market a company and recruit drivers but, if you have a limited advertising spend or low name recognition within the industry, then focus on referrals from current employees and partners,” Lewis said. “I’d also advise keeping pay packages simple. Sign-on bonuses, retention and performance bonuses are commonplace in this industry, but if a company places those dollars in baseline pay, then drivers know exactly what they are getting.”

Another simple and cost-effective option to help reduce costs and expedite the physical and medical exam process is to implement a pre-exam medical questionnaire (post-offer for incumbent drivers). These small steps will expedite the information gathering and review

BUSINESS OPERATIONS process and make the candidate feel that they are being treated fairly and have a role in the process.

Mistakes to Avoid The biggest mistake Thomforde sees from hiring companies is focusing too much on improving “efficiency” in their hiring process without regard for simultaneous improvement in the effectiveness of their hiring process.

“Because our industry is facing a driver shortage but the jobs still need to be completed, it is tempting to fill available opportunities with drivers that meet only minimum qualifications,” Thomforde said.

“Safety records, background checks and certifications should be just the beginning of the screening and hiring process. More thorough reporting in the ‘core screening’ and ‘conditional screening’ portions of the process, along with the implementation of personality testing, will help hiring companies make fewer mistakes when they are looking to grow their teams.”

Lewis adds that often, recruiters who are speaking with multiple candidates daily can fall into the trap of becoming robotic, and more probing, critical follow up questions are not asked. Additionally, leadership can unknowingly place too much pressure on hires versus addressing the underlying issues of poor net performance.

“Most importantly, don’t buy into other competitors’ turnover numbers,” Lewis said.

“No one is the same.”

The biggest mistake Spencer sees made is not focusing on the candidate experience.

There are so many requirements for screening drivers that this can often become the sole focus for employers.

“However, in such a competitive industry, providing a positive candidate experience is critical to keeping candidates engaged,” Spencer said. “Have a transparent process, proactive communications and updates about the status of the background screen and hiring process, and well designed web portal or mobile access point for submitting information, asking questions or checking in.

This is critical to the candidate experience, and this needs to have an equal focus to compliance and requirements.”

Routing the Driver Shortage

Maintain a Safe Driving Environment Safety is key to a successful driving career. Once hired, there are various ways companies can integrate new drivers into a safe driving environment. Aside from the required regularly scheduled programs like physicals or drug and alcohol testing, hiring companies should work on creating an encouraging work environment for their teams.

Borsecnik recommended immediately assigning the newly hired driver to one of your seasoned veteran drivers, who can serve as a mentor. This gives the new driver someone to relate to and learn from.

“It also gives the veteran driver a sense of worth to upper management and the company,” Borsecnik said. “Having a mentoring environment in your company can pave the way for future job development and assignments that other drivers can work toward.”

Lewis said that by engaging safety associates on the front end helps eliminate the negative connotation of the role. It is important to assess and train to change unsafe practices regularly or part ways with non-performers.

“Rewarding safe behavior can also help motivate others,” Lewis said. “Display pictures of safety award winners, highlight exceptional CSA scores and celebrate safety milestones.”

Newly licensed drivers and those between the ages of 21 – 25 are more likely to have accidents, although these incidents are usually minor and involve backing and close quarter maneuvering, according to Jim Paterson, director of safety and training at the Center for Transportation Safety (CTS), which is a part of Element Fleet Management, a leading provider of fleet risk management and driver training solutions.

“The more critical accidents begin to occur once the driver becomes complacent which can coincide with FMNMagazine

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comfort and experience,” Paterson said. “At CTS, our hiring requirements reach out to these individuals.”

Furthermore, new employees are provided training that includes an extensive defensive driving course followed by a development drive and road certification.

“Refresher training will be provided if required,” Paterson said. “Corporate policies and training for fatigued driving, cell phone use or distracted driving, vehicle inspection and hours of service are also provided during this training.”

With the driver shortage expected to worsen in 2016, the transportation industry is going to new lengths to attract and retain drivers. Wellness programs and other methods of improving the quality of life for drivers, while relatively new to motor carriers, also are effective methods for driver retention. “From wellness programs such as smoking cessation and safety and accident prevention, to increased pay or recognition and rewards, to driver appreciation events and flexible work arrangements, new offerings are helping employers attract candidates and convince them to become employees,” Spencer said.

Training to company safety policies and protocols is important. Over onethird of HireRight’s survey respondents offer safety and accident prevention programs and a similar number are reporting longer orientation and training programs.

“Thirty-two percent of survey respondents also said they utilize a driver liaison or mentor as a retention tactic,” Spencer said. “Onboarding and training are important to ensuring safety and regulatory compliance in the transportation industry. Driver health and wellness programs can contribute to overall safety while also supporting driver retention. By making health a priority through relevant benefits and programs, companies can mitigate risk and demonstrate their commitment to their workforce.” n

Obtaining A Driver’s Employment History It is not uncommon during driver shortages for companies to use the DOT qualifiers as a hiring model. In other words, simply qualify the driver by ensuring the dates match and there are no gaps in employment. Paterson with CTA said it’s important that you do not simply collect the employment history, but that you spend time analyzing it.

For Example: Your company operates in a four-state region with average age equipment. You have a local day shift delivery job opening, which pays $16/hour, 40 hours guaranteed, but no overtime.

There are infrequent times when the driver must travel to a surrounding state and the job does require manual labor. It costs your company $1200 to bring on a new driver. You are looking to hire Bob. Bob has held three jobs in the last three years; he has a clean driving record and meets all of the company standards. Here is his employment history, which has been confirmed and all qualifications are complete.

Unemployed: 1 month #1 Trucking Company (an over-the-road company): 3 months, pay $0.42 per mile, average 2500 miles per week Reason for leaving: Needed to be home with family

#2 Trucking Company (a six-state regional carrier with new equipment): 6 months, pay $0.32 per mile, average 2000 miles per week Reason for leaving: Not enough money #3 Delivery Company (a local delivery company with old equipment) 2 years, pay $18.00 per hour, overtime offered weekly Reason for leaving: Found a better job If you stop here, the DOT qualifiers indicate Bob is a go.

After interviewing Bob and analyzing the employment history properly, you might come to a different conclusion.

In reality, #3 Delivery Company was probably a good fit for Bob. Unfortunately, he saw something new and shiny with #2 Trucking Company’s name on it and decided to go for the glitter. Once there he realized his family needed more money but #3 Delivery Company maintained a “No Rehire” policy prohibiting him from returning. Seeking additional income, Bob applied with #1 Trucking Company. He was quickly made aware of his family’s discontent with his time away from home and was forced to resign.

Would you still hire Bob? Even though you are under the gun to fill the position, is Bob truly the right choice? Will he make a good long-term employee? What are you offering him that others have not? Are you making a wise investment or will you be filling the seat again in a couple of months?

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Despite Glut, U.S. Land Rig Count Rises—Oil dropped to the lowest in three months in New York after U.S. producers increased drilling for a fourth week even as the market contends with high U.S inventories of both crude oil and refined fuels coupled with signs of soft demand growth.

While U.S. oil explorers have boosted the number of active rigs since the start of June by 55 to 371, Government data show U.S. gasoline supplies are at the highest seasonal level in decades, which may spur refiners to shut sooner than usual for maintenance and cause an earlier rise in crude inventories as refinery operations are slowed.

Oil rigs have been put back to work in seven of the past eight weeks in the U.S., according to Baker Hughes, and U.S. crude production increased a second week through July 15, according to data from the EIA. Sources: Baker Hughes, Bloomfield Energy, U.S. DOE Energy Information Administration

Bottom Line The cost of importing crude is higher than drilling for it in the U.S., an indicator of cheaper recovery costs in U.S. land-based fields, and producers can make money drilling for new supply even at the current market’s low crude price.

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DEF

Solution Providers

Diesel Exhaust Fluid is an established and growing opportunity for petroleum marketers and retailers. Here are solution providers that facilitate that product offer.

Bennett Pump Company Bennett DEF dispensers are designed for use in commercial and retail locations where demanding users require durability, ruggedness and affordability.

Bennett DEF units have the option to be heated or non-heated, so they’re safe to use in any environment without any additional protection. Bennett DEF dispensers are available as stand-alone, single-product or dual-product dispensers. There is also an add-on kit for existing Bennett Big Fueler dispensers.

Bennett DEF dispensers provide innovative technology for both fleet owners and retail fuel marketers. With over 95 years of fuel dispenser manufacturing experience, Bennett is committed to providing you the correct blend of technology, styling, price and service—this dedication continues with the Bennett DEF dispenser line. www.bennettpump.com

Blackmer brand has stood for unparalleled product performance, superior service and support, well-timed innovation and a commitment to total customer satisfaction. Blackmer® has developed a line of sliding vane pumps specifically for use in diesel exhaust fluid applications. The models included are SX1-DEF, STX2A-DEF, STX1220A-DEF and STX3A-DEF models. All Blackmer SX/STX-DEF Series pumps have been designed to meet the precise compatibility requirements that DEFhandling demands. www.blackmer.com

www.BlueSkyDEFna.com

Brenntag North America, Inc.

Blue1USA Blue1USA is one of the nation’s leading manufacturers of proven, reliable diesel exhaust fluid storage and dispensing equipment. With thousands of DEF systems in use across North America, we offer the very best long-term value that will help maximize your vehicle’s uptime. www.Blue1USA.com

Blackmer Blackmer® is a leading global provider of innovative, high-quality rotary vane, regenerative turbine, screw and centrifugal pump, and reciprocating compressor technologies for the transfer of liquids and gasses. Since 1903, the

the highest quality DEF to satisfied customers throughout the U.S. and Canada. Whether in vehicles large or small, on- or off-road, Blue Sky DEF is a trusted and environmentally responsible emissioncontrol solution for diesel-powered engine operators everywhere. Blue Sky is more than just a manufacturer of high-quality diesel exhaust fluid. We are the DEF experts. Our representatives work with you to develop customized DEF programs and strategies to meet your needs, regardless of whether you are in charge of a modest truck fleet, a large rail or marine business, a sprawling power generation station or anything in between. With quantities ranging from bottle to bulk, we have the right solutions for you.

Blue Sky DEF Blue Sky is a premier diesel exhaust fluid supplier with regional manufacturing and distribution centers across North America.

Since 2010, Blue Sky has been providing FMNMagazine

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Brenntag is a worldwide leading distributor of diesel exhaust fluid. With an expansive and efficient DEF distribution infrastructure compromised of over 140 stocking locations across the U.S. and Canada, Brenntag employs stringent quality processes that ensure the product meets specifications. Brenntag’s commitment to DEF quality incorporates a comprehensive and integrated quality system and a supporting delivery infrastructure. Brenntag is committed to meeting the ISO 22241 standard 100% of the time. The purity of DEF must be maintained at all levels along the supply line to ensure the end customer does not experience equipment and downtime costs associated with out-ofspec DEF. With 15 dedicated DEF sales representatives, Brenntag is available to assist your dealer network in growing your DEF market share. www.brenntag.com/north-america

DEF ROUNDUP

DEFBooty, LLC DEF is a simple product made up of Urea and Deionized water. It would be that simple if DEF were not so susceptible to contamination. That contamination comes in the form of dirt and dust that you find on all jobsites.

Knowing the propensity of DEF to contamination, the DEFBooty™ was invented: a simple, economical device that easily slips over the outside of any DEF cap. By using the DEFBooty, you prevent the mistake of the wrong fluid going in the wrong tank (i.e.DEF in the Diesel tank). That can be a $10,000 or more mistake. What may be considered more important is the prevention of contamination falling into the DEF tank on refilling. By keeping the DEF cap lid and surrounding areas clean you lessen the likelihood of contamination falling in the tank. The DEFBooty limits your exposure and prevents downtime and costly repairs. www.defbooty.com

Dennis K. Burke

Flowserve

Dennis K. Burke offers remote tank monitoring on fuel, lubricant and DEF tanks, so no matter what industry you are in and what products you use, chances are we have a remote monitoring solution that will solve your product needs. No more sticking your tanks, calling in orders, or handling unexpected run-outs. We monitor your inventory remotely, wirelessly and seamlessly, allowing us to bring the right amount of product at the right time. Dennis K. Burke, Inc. runs continual remote tank monitoring to constantly monitor your inventory levels and automatically schedule deliveries, ensuring you always have adequate product on hand and allowing you to spend your time focusing on your business, instead of your inventory. Wireless and Paperless so you can worry less.

Flowserve is a recognized world leader in supplying pumps, valves, seals, automation and services to the power, oil, gas, chemical and other industries. With more than 16,000 employees in more than 50 countries, we combine our global reach with a local presence. More flow equals less time to fill the DEF tank. And less time spent there means more machine productivity. The CT6 pump, engineered for use with dispensing DEF from intermediate bulk containers and drums, features a sixchamber diaphragm design that provides customers with a higher flow rate than existing products in the market and wetted parts compatible with diesel exhaust fluid. The CT6 can pump up to 18 gallons per minute and is available with either a 12- or 115-volt electric motor. Popular configurations include bracket mount for attaching to a caged IBC, or vertical mount with integrated Micro Matic® 4 pin coupler for direct mounting onto a Micro Matic valve in a DEF IBC or drum.

www.burkeoil.com

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www.flowserve.com

Fluidall Backed by a combined three decades of reputable industry experience, our storage tanks have a limited lifetime warranty. Fluidall’s DEF Shelter: store, dispense and protect the purity of bulk diesel exhaust fluid within a secure climate-controlled footprint.

Our complete DEF Shelter solutions are constructed with a CNC cut powder-coated aluminum shelter assembled with a heavy-duty stainless steel rivet system, which shields the inside containing the polyethylene storage tanks and a sealed MicroMatic dispense and fill system. These pre-assembled Shelters utilize all DEF approved storage and dispense components to maintain and protect the purity of your diesel exhaust fluid. www.fluidall.com FMNMagazine

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DEF ROUNDUP eliminating timely labor costs and increasing profits. Hose Master guarantees the quality and performance of all its flexible metal connectors.

Franklin Fueling Systems Franklin Fueling Systems offers a complete system of Diesel Exhaust Fluid (DEF) compatible products all from a single manufacturer. Our system is designed together – to work together, resulting in unmatched system performance and an energy efficient means of keeping DEF from freezing at low temperatures. Diesel exhaust fluid will freeze at approximately 12°F (-11°C). For colder climate installations, no DEF system is complete without a means to prevent this fuel additive from freezing in the lines and costing you potential sales. Franklin Fueling Systems provides a state of the art recirculation system as part of our TS550 evo™ tank gauge that not only gives you complete control of your DEF system, but also provides you with energy cost savings throughout the life of the system as well as upfront cost savings on equipment. www.franklinfueling.com

GEMRIK USA GEMRIK USA is an industry recognized designer and fabricator of DEF storage and dispensing solutions. When DEF first surfaced in the U.S. we recognized the need for an affordable and functional option in the DEF and other liquids storage, protection, and dispensing arena.

Our products are built with everything that is needed to perform our goal of offering affordable protection for mini bulk of DEF and other tote stored industry liquids without “unnecessary overbuilding.” This has allowed us to bring a high quality, functional and affordable product to the market. We also offer related options like insulation, heater (with thermostat), DEF pumps, DEF hose reels, plus much more.

We proudly announce the introduction of our new PRO-Go™ Series of DEF Storage and Dispensing units. This new line continues our tradition of excellence in quality, concept, function and affordability.

Every PRO-Go™ model includes an external dispensing cabinet complete with a DEF pump, digital meter, stainless steel automatic dispensing nozzle and 15' dispensing hose. Also standard is our new 4" forklift accessible base. All units remain fuel-island friendly at 48" wide. www.gemrikusa.com

www.hosemaster.com

Gorman-Rupp Company When you specify Gorman-Rupp, you benefit from worldwide service centers, knowledgeable engineers and application assistance. Gorman-Rupp has over one million square feet of the most modern manufacturing and warehousing facilities found throughout the world. Gorman-Rupp has been manufacturing pumps, pumping systems and providing superior fluid-handling solutions since 1933. Many innovations introduced by Gorman-Rupp have become industry standards and the Petroleum line of pumps is no exception.

Gorman-Rupp manufactures self-priming centrifugal pumps designed for pumping clean, non-abrasive petroleum products. Common applications include bulk plants, tank farms, barges, tank cars, trucks and aircraft refueling. Pumps are designed for jet fuels, gasoline, fuel oil, DEF, petrochemicals, biofuels, ethanols and other petroleum based liquids. www.GRpumps.com

KleerBlue offers a full range of DEF storage and dispensing equipment solutions, from gravity kits to mini-bulk and bulk storage tanks, commercial to retail dispensers, and transfer systems from 2-wheeled carts to automated platforms, as well as fully automated ratio blending skids. KleerBlue’s patented industrial-grade ratio blender is known for its precision, accuracy, and reliability. It can run around the clock and consistently output the desired blends. The KleerBlue system allows distributors to receive 50%, 40% or 32.5% and blend it to 40% or 32.5%.

The software and high quality equipment can do the complex calculations to ensure customers receive the proper blends. The system can automatically blend the volume of DEF needed and send the blend to a specific tank or zone to await loadout.

Contact KleerBlue today to uncover how to incorporate DEF blending into your operations to protect margins and supply or other storage and dispensing solutions. www.KleerBlueSolutions.com

Hose Master Hose Master DEF flex connectors offer a highly flexible solution when transferring diesel exhaust fluid. Designed and manufactured to meet the specific corrosive environments encountered in this application, Hose Master’s DEF connectors are constructed from 100% stainless steel, feature increased flexibility with Hose Master’s proprietary hydroforming process and are fabricated with a unique tube seam weld technology that resists oxidation.

DEF connectors are available with hex male or female union fittings, and are offered in the same designs as the Fire Shield QuickClamp assemblies.

QuickClamp configurations make flex connector installations as simple as possible—offering installers the ability to fasten one or both ends of a flex connector within a piping system with the minimal use of tools, thus FMNMagazine

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MISCO Refractometer MISCO Refractometer, in business for more than 60 years, is a respected industry leader in the field of refractometry. We maintain this leadership position because refractometers are all we do—just refractometers. Refractometers are not just a catalog item or sideline business for us, they are our only business.

That’s what makes us unique. Protect your SCR-equipped vehicles from accidental DEF dilution or tampering with the MISCO DEF Tester. The MISCO Palm Abbe DEF-201 and DEF202 are handheld digital refractometer

DEF ROUNDUP models designed specifically for testing the concentration of urea-based diesel exhaust fluid. By applying a urea-specific temperature compensation, we achieve a higher level of measurement precision, +/-0.1% percent-by-weight. Proper urea concentration is critical for sustaining reduced diesel emissions which, besides being good for the environment, can save the diesel exhaust fluid consumer money, prevent damage to expensive SCR components, and help identify tampering. www.misco.com/DEF

after disconnection. This makes OPW Kamvaloks perfect for transfer points where product loss is unacceptable and is approved for DEF applications. Fluids will only flow there is an appropriate connection, keeping the operator safe and the commodity inside the line. A machined groove around the mating adaptor and easy lever actuation are two more advanced design features that allow the Kamvalok to operate in highpressure environments.

small family owned company that is growing quickly. We have been in the feed and fertilizer business for over 40 years and started supplying DEF over four years ago. We are also a distributor of poly chemical, poly water and fiberglass tanks that range in size from 50 gallons up to 42,000 gallons, depending on the tank best suited for your needs. www.qualitydefsolutions.com

www.opw-es.com

Rovanco Piping Systems OPW OPW is a global leader in fluid handling, management, monitoring and control solutions for the safe and efficient handling of fluids from the refinery to the commercial and retail points of consumption. OPW 21Gu™ DEF Nozzles provide outstanding durability in the harshest of climates because of OPW’s Unique Mis-Filling Prevention Device (MFPD). Other DEF nozzles can leave expensive trucks vulnerable to fuel contamination, but the 21Gu™ comes equipped with magnetic internal components that will only release DEF when inside an appropriate filling receptacle. Plus, OPW’s strict manufacturing process guarantees DEF compatibility, allowing you to maintain focus on generating revenues—not babysitting your station. www.opwglobal.com

PEAK Commercial & Industrial Peak Commercial & Industrial is one of the premier global producers of diesel exhaust fluid. In addition to producing our branded DEF solution—BlueDEF, we also supply the specialized equipment, pumps and bulk storage solutions to dispense it. Our complete end-to-end solutions are simple, reliable, costeffective and maintain the critical purity of DEF no matter what the application or installation. From drum and tote pumps to our Mini-Bulk system that fits easily on a fuel island to full underground systems, we have the solution to fit any customer’s needs. The purity of DEF is the critical reason for choosing a diesel exhaust fluid supplier; Peak Commercial & Industrial is dedicated to delivering the highest quality DEF and bulk dispensing solutions, all serviced by one of the largest network of DEF manufacturing and distribution systems in the U.S. www.PEAKHD.com

www.rovanco.com

OPW Engineered Systems OPW Engineered Systems has been a global leader in developing loading and coupling systems for the safe and efficient loading and unloading of all types of critical hazardous fluids. Our system designs meet a wide range of needs from the modest demands of drum-filling applications to the highvolume loading and unloading requirements of major chemical and petroleum facilities. OPW’s Kamvalok® Dry Disconnect Couplers bring unique poppet action to eliminate spillage of any residual liquid contained within the line

Rovanco manufactures diesel exhaust fluid piping systems designed to transfer fluids from your holding tanks to dispensers in either an Above Ground or Below Ground operation.

All of Rovanco’s DEF piping systems can be constructed utilizing any of the approved materials for the carrier pipe—HDPE, FRP or stainless steel.

Rovanco’s most popular above ground system is made with a HDPE carrier pipe with electrofusion fittings.

Rovanco also has DEF approved plastic compression fittings that do not require any special tools. We can manufacture the product with different carrier pipe types, any size, any insulation thickness, multiple heat trace conduits, different jacket types as well as custom painted jackets. Rovanco even carries the heat trace to make us the one stop shop. These piping systems made by Rovanco are under strict quality standards. Rovanco has provided miles of DEF piping already for several hundred stations—so look to Rovanco for the experience you need and DEF piping systems that work.

Semler Industries, Inc. Quality DEF Solutions Quality DEF Solutions is a registered company specializing in the manufacture and supplying of diesel exhaust fluid. Our products are API Certified and ISO 22241 compliant. Quality DEF Solutions is located in San Saba, Texas, and we are a FMNMagazine

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Semler Industries brings over 100 years of innovation in a variety of industries with concentrated efforts in turnkey solutions for the petroleum and chemical markets. Throughout the growth of DEF around the world, Semler has produced a variety of blending, bulk transfer, storage and dispensing systems to meet its

DEF ROUNDUP customers’ unique needs. Semler’s engineering team has designed a comprehensive line of DEF equipment to service the various levels of stakeholders in the industry, from producers to end-users. Semler is a prime candidate to build and deliver the right system to fit your needs. www.semlerindustries.com/products

Source North America Corporation With decades of fuel industry experience, Source North America Corporation provides both the equipment and expertise that fuel site operators and contractors need to optimize diesel exhaust fluid (DEF) applications. As one of the largest stocking distributors of petroleum/ liquid-handling equipment for the construction and maintenance of fueling facilities, Source offers a full range of DEF equipment for retail and commercial applications. Source’s DEF equipment solutions include

aboveground storage and dispensing systems, underground storage tanks, submersible pumps and DEF-compatible piping, as well as dispensing essentials such as filters, hoses and nozzles. For small operations requiring DEF solutions, Source provides small transfer pumps for 55gallon drums. In addition to its portfolio of DEF equipment, Source offers a suite of services, including its SOLUTIONS Design Group and Warehouse on Wheels program, that help contractors and fuel site operators streamline diesel and DEF construction projects and site upgrades. www.sourcena.com

and debris and those responsible for transporting and dispensing DEF are typically not well versed on proper handling practices to prevent contamination. Once contaminated DEF enters an SCR system, the damage is irreversible. Thunder Creek is an industry leader when it comes to handling DEF offroad. We’ve pioneered solutions for delivering DEF that are both clean and convenient. All solutions are made in full compliance with the ISO 22241 Standard.

They are equipped with Thunder Creek’s exclusive closed 2-in-1 DEF Pumping System. Together this maintains ISO Compliance for Life. www.ThunderCreek.com

®

Thunder Creek Equipment Equipment operators in agriculture, construction, oil fields, mining and other off-road industries are responsible to deliver DEF to machinery in the field. This “last mile” presents unique challenges.

The environment is laden with dirt, dust ®

®

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Titan Chemical Transfer Solutions Titan Chemical Transfer Solutions (Titan-CTS) is a leading provider of closed system transfer equipment for the Diesel

DEF ROUNDUP Exhaust Fluid (DEF) and Agriculture Chemical industries. As an OEM, integrator, and distributor of pump systems, valves, couplers, brackets, flow meters and controls, hoses and other accessories, Titan-CTS offers Purpose-Built solutions for specific markets and products throughout the United States and Canada. www.TitanCTS.com

Our low cost TMS6000 suite of software products provides enhanced security, control and data management for fluid custody transfer systems. We can combine our software product with PLC and SCADA controls for complete systems integration with online monitoring and support. TMS has designed, built, automated or installed its custom systems at over 150 locations across North America (Canada, USA, Mexico), Chile, France and the UK. TMS has over 30 years’ experience in the petroleum and propane industries. www.totalmeter.com

Total Meter Services Inc. TMS is a design/build, and software and automation service company specializing in storage and handling of liquids. TMS has the facilities and resources in house to design, fabricate, assemble and install DEF systems for loading racks, transport/dispensing vehicles, and custody transfer dispensing for all applications from locomotives to individual vehicles. We do loading racks, modular skids, tank farms, bulk plants, small terminals, marine, rail and locomotive fueling, in addition to DEF.

Yara North America, Inc. Yara’s knowledge, products and solutions grow farmers’, distributors’ and industrial customers’ businesses profitably and responsibly, while protecting the earth’s resources, food and environment. We foster a culture that promotes the safety

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of our employees, contractors and customers. Our industrial and environmental solutions improve air quality by reducing emissions from industry and transportation, and serve as key ingredients in the production of a wide range of goods. Since 2004, we have been at the forefront of the development of DEF and its compatibility with SCR technology in Heavy Duty trucks, buses, passenger cars and non-road mobile machinery.

As the world’s largest producer of DEF, we can ensure product quality, guaranteed sourcing and reliable distribution through our large number of production plants and terminals.

Founded in 1905 to solve emerging famine in Europe, today, Yara has a worldwide presence, with close to 13,000 employees and sales to more than 150 countries. www.yara.com

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FUEL MARKETER NEWS

INDUSTRY NEWS GC Express Customers Get Perks for Paying with Smartphones at the Pump GC Express, a gas station in Caro, Michigan, is now offering a free coffee or fountain drink to customers paying with the Team One Credit Union Mobile Banking App on their smartphones for fuel purchases of $10 or more.

Consumers can use the mobile app to pay at the pump as a result of GC Express’ implementation of the AnyWhereMobile payment service from MShift Inc., which is seamlessly integrated in-store and at the pump with Verifone Commander Site Controller.

Team One Credit Union is the first financial institution in the United States to issue MShift’s patented AnyWhereMobile Payment Network app, making it available for its members to use on their iPhone and Android devices.

To pay with AnyWhereMobile, Team One members open the mobile banking app on their smartphone, scan the QR code at the pump or the register, and authorize the transaction using their PIN or fingerprint. Once the transaction is complete, they receive a receipt for their purchase via the mobile banking app.

More than 30 other local merchants near Team One are also accepting AnyWhereMobile payments.

AnyWhereMobile transactions are equivalent to real-time funds transfers within a bank or credit union. There is no risk of insufficient funds for the merchant, as it is not an ACH transaction. In addition to highly secure transactions and reduced risk, AnyWhereMobile reduces transaction costs for merchants, and they

can invest the difference into improving and expanding their customer rewards programs to increase customer participation and retention.

Commander Site Controller is Verifone’s single site management software platform that supports all petroleum and card brands, providing increased speed in at-the-pump and in-store payment acceptance, fueling operations and back office control. It incorporates a Conexxus Mobile standard-based API to streamline gas stations’ and convenience stores’ ability to support mobile payment apps while improving business processes, reducing costs and increasing productivity. n

Mark VII Celebrates 50th Anniversary Mark VII Equipment Inc., the North America subsidiary of WashTec AG of Germany, the world’s largest manufacturer of vehicle cleaning systems, is commemorating its 50th year in business. Founded in 1966, Mark VII was one of the pioneers of automatic car washing and is a market leader in soft-touch, touch-free and hybrid wash systems.

“We’re proud of our history as an innovator in the car wash business,” said Chris Andersen, CEO of Mark VII. “It’s a testimony to our people, products and customer focus that we’ve reached this milestone and continue to be an industry leader.”

The anniversary events feature guest appearances by Mark VII’s founder Harry Matthews, Arvada mayor Mark Williams, and the executive team of Mark VII’s German parent company WashTec. n FMNMagazine

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Wayne to Provide Dispensers at Multiple Gate Petroleum Sites through USDA Grant Wayne Fueling Systems, a global provider of fuel dispensing, payment, automation and control technologies for retail and commercial fuel stations, is supplying fuel dispensers to Gate Petroleum for the first time. Gate will be working with Protec Fuel Management LLC of Boca Raton, Florida, who, with biofuel grants supplied from the USDA, will help install dispensers at its new ethanol fueling sites in the state.

After receiving the grant, Gate sought out the best vehicle to deliver their product choices to the consumer through this grant. After a visit to Wayne’s Austin, Texas, facility in December 2015, Gate chose the Wayne Helix™ 3+1+1 dual blender fuel dispenser.

“In the ever evolving world of consumer petroleum products, the Wayne fueling dispenser provides GATE with the ability to offer its customers with the broadest range of products at the pump,” said Mitchell Rhodes, Chief Operating Officer, Gate Petroleum. “In addition, the enhanced technology offered by Wayne allows for enhanced monitoring at the pumps, providing better service and a safer and more secure customer experience.”

The grand opening of the first completed Gate refueling site was on Thursday, July 14, 2016, in Jacksonville, Florida. The event included a raffle for Wayne sponsored fuel cards among other promotions. n

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INDUSTRY NEWS

Propel Fuels Low-Carbon Diesel to Power City of Carlsbad’s Fleet

install their ClearView™ wetstock management service product on Morrisons’ fueling network. Morrisons is one of the United Kingdom’s leading supermarket and fuel retailers.

In partnership with California’s low-carbon fuel brand Propel Fuels, the City of Carlsbad is now fueling with advanced renewable diesel: Propel Diesel HPR (High Performance Renewable). The move immediately improves local air quality and reduces the city’s fleet greenhouse gas emissions by up to 80% at no additional fuel cost or modifications to their fleet. While produced from 100% renewable inputs, Diesel HPR meets the ASTM D-975 diesel specification for use in all diesel engines, providing a seamless transition to the fuel for the city’s diesel fleet vehicles.

This is the first win for Wayne’s ClearView wetstock management product since the acquisition of Vianet Fueling Solutions earlier this year. The solution solves both compliance and operational challenges for fuel retailers.

Renewable diesel outperforms petroleum in emissions, engine performance and value, providing cleaner and more efficient combustion, as well as significant reduction in harmful nitrogen oxide (NOx) and fine particulate (PM 2.5) emissions. NOx and particulates are directly linked to air quality in California, negatively impacting children, people with lung diseases and driver health.

The City of Carlsbad is among the first city fleets in California to adopt low-carbon fuel renewable diesel. Carlsbad will run Diesel HPR in a range of Fire Department and Public Works heavy-duty vehicles including fire trucks, dump trucks and vacuum trucks serving the community.

Propel is the largest retailer of low-carbon fuels in California, operating stations across the state, and providing commercial and bulk delivery for business and government fleets. Drivers can find the nearest Propel locations and fuel pricing by downloading Propel’s mobile app, available in the Android and Apple app stores. n

Wayne Installs First ClearView™ Wetstock Management Service Product on Morrisons’ Fueling Network Wayne Fueling Systems, a global provider of fuel dispensing, payment, automation, and control technologies for retail and commercial fuel stations, has announced that they have been awarded a contract to

This will also be the first time that Morrisons will be utilizing a wetstock management service that brings greater visibility of wetstock loss and reduces environmental risk. The collaboration of the two companies establishes a new holistic approach that brings together the existing asset compliance and maintenance services—already provided

by Wayne—to deliver significant and tangible operational savings to Morrisons.

Morrison’s full network rollout for ClearView wetstock management services installation began on May 1 of this year and is now fully operational. The company operates 344 petrol filling stations in the United Kingdom. n

World Fuel Services Corporation to Acquire PAPCO, Inc. and Associated Petroleum Products, Inc. World Fuel Services Corporation announced that a wholly-owned subsidiary of the company has signed definitive agreements to acquire two U.S. land fuel distributors: PAPCO, Inc., which services retail, commercial and industrial customers with fuel, price-risk management products and fleet card solutions throughout the Mid-Atlantic region of the United States, and Associated Petroleum Products, Inc., which provides fuel and related services to agricultural, automotive, construction, and commercial and industrial customers in the Pacific Northwest. The aggregate purchase price for both companies will be approximately $230 million and will be funded through the company’s existing credit facilities.

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revenue of $1 billion and APP is headquartered in Tacoma, Washington, with 275 employees and 2015 revenue of $600 million. Both are leading distributors of gasoline, diesel, lubricants, propane and related services in their respective regions.

Excluding the impact of one-time acquisition-related expenses and amortization of acquired intangible assets of approximately $4 million and $9 million respectively, the transactions are expected to be $0.22 to $0.26 accretive to earnings on a Non-GAAP basis in the first twelve months. n

NACS State of the Industry Report of 2015 Data Now Available NACS has released the NACS State of the Industry Report of 2015 Data, the convenience and fuel retailing industry’s premier benchmarking tool and most comprehensive collection of data and trends.

Published since 1972, the NACS State of the Industry Report provides valuable information to help industry stakeholders maximize their company’s growth and profitability. This year’s 203page report examines economic conditions and their potential impact on the industry. The report includes a comprehensive selection of charts and tables that focus on every area of the industry’s 2015 performance, including financials, store operations, merchandising, foodservice, fuels sales and quartile analysis.

According to the report, U.S. convenience stores reached record instore sales of $225.8 billion in 2015, higher than overall industry sales in 1998. Overall industry sales for 2015 reached $574.8 billion, evidence that the value of convenience continues to resonate with consumers.

Purchasers of the NACS State of the Industry Report of 2015 Data will also receive the Fact Book as a downloadable, self-extracting file. Now in its 29th edition, the Fact Book provides a detailed statistical account of industry data over the past several

INDUSTRY NEWS years—or in some cases, decades—as well as a historical recap of the industry and key definitions and events that have shaped it. The Fact Book will be available in late July. n

ZAK® Fuel Additive – The Official Fuel Additive of NASCAR®, is Now Available at the Gas Pump After nearly two decades of engineering industry-leading, professional grade automotive performance products, ZAK Products® announces the launch of ZAK Fuel Additive—the Official Fuel Additive of NASCAR. This exclusive product is available to consumers at the pumps of select Murphy’s U.S.A. locations. ZAK Fuel Additive is designed to provide customers a convenient way to optimize their vehicle’s performance during their regular fuel fill-up.

Adding ZAK Fuel Additive is as simple as pressing a button during your regular fill-

up at the pump. The Official Fuel Additive of NASCAR is blended into the tank simultaneously as the gas is being pumped and is engineered to provide perfect blending ratios with a gas purchase—no pour-in required.

Customers can select from three additive options, Essential, Enhanced or Premium, depending on their vehicle needs. ZAK Fuel Additive is safe to use on all vehicle makes and models and is designed to enhance performance with all grades of gasoline.

ZAK Fuel Additive cleans and protects a vehicle’s fuel system by quickly and safely removing power-robbing deposits that build up over time. It cleans fuel injectors, increases fuel economy, protects fuel system components, prevents costly repairs and enhances vehicle performance. Consumers can conveniently experience the benefits of using the Official Fuel Additive of NASCAR by simply pressing the button while they are already at the pump. n

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AXI International Unveils Portable Laser-Powered Particle Counter for Instant Fuel Diagnosis AXI International, a global leader in intelligent fuel management systems, has introduced their latest technology: the AXI Particle Counter, a self-contained system that provides instant cleanliness diagnostics on the condition of fuels and oils.

AXI’s Fuel Particulate Monitor (FPM) carries significant importance by addressing the impact of the fuel degradation process, a leading cause of accelerated maintenance for diesel engines and generators. The particle counter uses advanced software with a graphic data display to identify the level of contamination in a fuel sample, which can be stored on-board. This cleanliness level quantifies fuel quality to ISO 4406 or NAS standards to indicate the need to take remedial action with the fuel supply.

INDUSTRY NEWS The FPM is equipped with a laser-based sensor that uses light blocking technology for particle detection.

Particles pass through an optical flow cell, blocking portions of light in proportionate size to the particle.

These shadows are registered by an optical receiver and displayed in real time on an LED screen. The particle counter also features a relative humidity sensor to detect the presence of water—the catalyst to microbial growth and a host of other potentially catastrophic conditions. n

Energi of Canada Launches Property & Casualty Programs in Parts of Western and Atlantic Canada Energi of Canada announced the launch of its property & casualty programs for Energy business in parts of Western and Atlantic Canada. The new Energy programs provide unique risk management solutions and insurance offerings for energy related risks in the following segments: • Fuel Distribution • Fuel Transportation • Energy Contractors • Renewable Energy • Alternative Energy Solutions Energi’s programs in Canada will be offered only to companies who exhibit a commitment to loss prevention and who implement industry best practices. The program will first be offered in Alberta, British Columbia, Nova Scotia, New Brunswick and Prince Edward Island, and will expand to other provinces in the coming months.

Energi of Canada is a subsidiary and the international program arm of Energi, a leading provider of specialized insurance programs to more than 1,000 energy companies in the United States. n

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Gilbarco Veeder-Root Dispenser Payment Terminal is PCI PTS 4.0 Certified and Supports EMV Payments Gilbarco Veeder-Root, a leading fueling systems provider, announced the launch of FlexPay™ IV as the next generation of its industry-leading line of EMV-certified dispenser-based payment terminals.

Gilbarco jointly developed FlexPay IV with Verifone, a world leader in payments and commerce solutions, to enable gas stations and convenience stores to securely accept EMV (“chip card”) payments from consumers at the pump.

The first PCI PTS 4.x certified fuel dispenser payment terminal in the U.S. that supports EMV, Gilbarco’s FlexPay IV provides retailers the ability to upgrade their fuel dispensers in advance of the October 2017 EMV liability shift, which applies to the petroleum forecourt. In addition, FlexPay IV also supports NFC, mobile wallets, encryption and 2D barcode scanning, as well as future regulatory changes.

In addition to enabling the use of EMV, NFC and other payment methods at the pump, FlexPay IV provides gas stations and convenience stores the ability— through Applause TV powered by Pump Media—to engage consumers while they are pumping gas with timely news and entertainment content along with product advertisements that help drive consumers from the pump and into the convenience store for in-store, high margin purchases. Pump Media from Verifone Media is the largest and most powerful digital out of home (DOOH) network in the petroleum forecourt market.

FlexPay IV is now available in new Gilbarco Encore® 700 S dispensers, and also as a field retrofit for legacy dispensers installed in the field. n FMNMagazine

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QuikTrip Launches New In-Store Private Label Credit Card Program In Partnership with First Bankcard® QuikTrip Corporation, one of the nation’s premiere convenience and gasoline marketers, and First Bankcard®, a division of First National Bank of Omaha and a leading issuer of credit cards, announce the launch of a new QuikTrip private label credit card program.

The new QuikTrip Credit Card, which can be used at any QuikTrip throughout the United States for food, fuel and other qualified purchases, will provide rewards points and fuel discounts to card holders.

All fuel purchases made with the QuikTrip credit card will receive a three-cent per gallon discount. During the first two billing cycles, cardholders will receive a statement credit for an additional 22-cent discount on their fuel purchases up to a 200-gallon limit.

In addition, cardholders will earn 100 bonus points upon approval and one point for each dollar spent on qualified QuikTrip in-store purchases. Each 200 points will earn cardholders a $10 QuikTrip gift card. Bonus savings and other promotional offers are planned throughout the year.

QuikTrip Corporation is a privately held company headquartered in Tulsa, Oklahoma. Founded in 1958, QuikTrip has grown to a more than $11 billion company with 700+ stores in 11 states. n

OPW Acquires Tokheim ProGauge OPW, a global leader in fluid-handling solutions, announced it has acquired Tokheim ProGauge. ProGauge provides automatic tank gauge solutions, including a variety of tank probes, consoles, and related software and calibration services for service stations to measure and monitor fuel tank levels.

David Crouse, President of OPW said, “The addition of ProGauge augments

INDUSTRY NEWS OPW’s product offerings with an extended family of automatic tank gauge solutions, including wireless mag probes, tank truck mag gauges, 3D laser tank calibration and fuel quality sensors. With this acquisition, we are looking forward to offering our customers even more options to support their commercial and retail fueling needs.”

Stefano Scatena, General Manager of ProGauge said, “ProGauge is thrilled to join the OPW team. This move will allow us to introduce our world-class products into new markets and regions as part of the overall OPW suite of fueling solutions.” n

Dover to Acquire Wayne Fueling Systems Ltd. Dover announced that it will acquire Wayne Fueling Systems Ltd., which is owned by Riverstone Holdings LLC, for $780 million in cash. This will combine Wayne’s product offerings with OPW and Tokheim creating a comprehensive product set for all major regions of the world.

Wayne is a global provider of fuel dispensing, payment, systems and aftermarket services for retail and commercial fuel stations. Wayne’s advanced payment and systems solutions position the company to capitalize on the emerging conversion of U.S. based fuel retailers to EuroPay, MasterCard and VISA (“EMV”) chip security technology. Through its global network of distributors and service partners, Wayne’s products are sold and supported in over 140 countries.

Wayne is headquartered in Austin, Texas, and has manufacturing operations in Austin, Sweden, China and Brazil.

“We are extremely excited about the acquisition of Wayne,” said Robert A. Livingston, President & Chief Executive Officer of Dover. “Wayne’s product line fits perfectly with OPW and Tokheim, particularly Wayne’s U.S. dispenser, payment and systems businesses.

Together, the collective business will offer an end-to-end solution that will benefit our customers in the growing

global retail fueling market. The addition of Wayne positions Dover to more fully participate in the high growth EMV upgrade cycle underway in the United States. This transaction also provides significant margin enhancement opportunities, driven by synergies across the businesses.”

“Today’s announcement marks an exciting new milestone in our 125-year history,” said Neil Thomas, Wayne CEO. “We believe that combining Wayne’s innovative products and technologies with Dover’s existing retail fueling equipment portfolio will significantly benefit customers around the world.

Much has evolved and changed at Wayne over the years, but we have held true to our core values since the very beginning: putting our customers first; leading the industry with new products and technology; being a global business—in mindset as well as geographic presence; and doing all of this the right way—with an unwavering commitment to quality, safety, and integrity.”

Thomas added, “We are thankful to Riverstone for their unwavering support and the investments that they have made to strategically position the Wayne business for future growth.

Joining the Dover family will create exciting new opportunities for our employees, customers, and other business partners.”

Annual revenue for Wayne in 2016 is estimated to be approximately $550 million. The purchase price multiple is approximately 10 times 2016 expected EBITDA, not including the estimated annual run-rate synergies of approximately $30 million which are expected to be achieved over a three year period. In 2016, Dover expects the transaction to be dilutive to continuing earnings per share, including normal transaction-related costs, purchase accounting and related interest expense, subject to timing of the close of the transaction. The transaction is anticipated to be modestly accretive to continuing earnings per share in 2017, due to the one-time costs to achieve synergies, and including normal purchase accounting amortization and related interest expense. The company will update the earnings impact of this transaction upon closing. n FMNMagazine

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Davinscroft, Inc. Partners with Pinnacle for Fuel Management Davinscroft, Inc. has partnered with Pinnacle Corp. to manage fuel inventories with Pinnacle’s Fuel Smart platform.

Davinscroft markets refined products, including gasoline, distillates, asphalt and various unfinished intermediate streams in the U.S. Gulf Coast and New York Harbor markets. The Company is headquartered in Durham, North Carolina, with operations centered in Houston, Texas.

Davinscroft, in conjunction with their key partners, Professional Energy and Bunker Holding, is expanding its enterprise with entry into the fuel supplier market.

The Fuel Smart component provides up to the minute data on fuel inventories across all terminals. Davinscroft plans to use the technology to manage large Bills of Lading and mitigate its tax reporting risk.

The Pinnacle Corporation (www.pinncorp.com) is a leader in the automation technology industry, focusing on the rapidly evolving convenience store and petroleum industries. Pinnacle delivers products that automate the broad spectrum of convenience store operations and supply chain management of fuel operations. Nationwide, Pinnacle’s products and services are used daily in thousands of convenience outlets to automate and improve store operations and by fuel marketers to increase their efficiency in the complex management of fuel delivery. n

Patriot Capital Expands National Sales Force In response to continued growth throughout the industry and to support fuel retailers and c-stores in achieving the EMV shift before the October 2017 deadline, Patriot Capital has added three experienced equipment-financing experts to its national sales team.

Bringing nearly 30 years of commercial sales and management experience to the Patriot Capital team, Joseph C. Moceri has been named Business Development Manager. A graduate of Northeastern University and an accomplished executive,

INDUSTRY NEWS Moceri spent more than two decades in the enterprise environment at ExxonMobil, ending his tenure there as Sales Manager.

Most recently he served as President at Commercial Lubricants, a multi-milliondollar lubricant distributor.

extensive experience in tailoring financial solutions to customers in a variety of industries. Brian will provide additional Patriot coverage to the Midwest U.S. retail and commercial fueling markets. n

Overseeing Patriot Capital’s equipment financing operations in Florida, Alabama, Mississippi and Tennessee are Jonathan Carrizzo, a corporate finance professional with more than 15 years’ experience in financial analysis, sales, equipment leasing and high-level business operations.

Carrizzo comes to Patriot Capital from the American Safety Council. A graduate of the University of Connecticut, he previously held executive positions at Canon Financial Services, G.E. Capital, and Ever Bank, and has extensive experience in real estate and equipment financing.

Franklin Fueling Systems Launches FFS PRO: University

Brian Wolfgang brings more than 16 years’ equipment financing experience to the Patriot Capital team, including executive positions at TCF Equipment Finance, a division of TCF National Bank, Key Equipment Finance, and SMT Leasing Company. A graduate of Delaware Valley College in Pennsylvania, Wolfgang has

Franklin Fueling Systems, a global leader in Total System Solutions™ for retail petroleum equipment systems, announced the launch of FFS PRO: University. This new full-feature platform will serve as a premier training, certification, and resource tool for installation professionals. Through this new online and live training and accreditation service, fuel system installers can get trained and certified in the safe installation and maintenance of all Franklin Fueling Systems’ products.

FFS PRO: University has been designed with Franklin’s Total System Solutions™ approach and built on a platform that

focuses on installer safety at every step.

The new platform capitalizes on practical end-to-end installation by functional areas of the petroleum equipment system and installer competence. This provides the installer with a holistic view of how the individual components are designed to work in harmony as a complete system. As a prerequisite for all training, installers are required to take a Fueling System Safety certification course to educate them on potential site dangers and prepare them for work in hazardous environments. n

The Kent Companies Completes PDI/Lottery Rollout PDI, a leading provider of enterprise-class automation software systems to the convenience retail, petroleum marketing and foodservice industries, announced that The Kent Companies completed its rollout of PDI/Lottery.

This latest addition to PDI’s retail product suite significantly reduces the time needed to receive, count, audit, and review scratchoff lottery ticket inventory. PDI/Lottery also enables store personnel to easily manage inventory in vending machines while also reconciling deliveries and activations for books loaded in the machine.

Using proprietary scan technology, c-stores can capture accurate information about lottery inventory while reducing the amount of time spent on the inventory process itself. “Our old method, which required us to count using pen and paper, would take about 30 minutes,” said Ross Gentis, IT manager for The Kent Companies. “With the lottery software, we use the PDI handheld to scan the barcode on each ticket. The process has been reduced from 30 minutes to less than two.”

The barcode on each ticket provides all the information a c-store needs to track the inventory in more detail than traditional item inventory, including game, book and ticket number. Since personnel are not required to manually enter data, there are fewer opportunities for human error. “The biggest problem we had was that we were spending thousands to recoup five cents. From accounting to store-level staff, we had several people trying to track just one inventory item.

Since shifting to this method, the tracking

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INDUSTRY NEWS is done every shift, and we have a more accurate view of sales and losses in real time.”

The Kent Companies is also using the new wireless capabilities introduced with PDI/Enterprise 8, which allow managers to post counts from the sales floor directly to the back office. The West Texas chain began beta-testing PDI/Lottery earlier this year and recently completed implementation for all 39 Texas-based Kent Kwik sites. n

FireStream WorldWide, Inc. Acquires CloudFuel Dispatch LLC Firestream WorldWide, a leading provider of automation solutions for the downstream and midstream petroleum industry, has acquired CloudFuel Dispatch LLC, an innovative developer

of smartphone and tablet apps. The transaction will complement and expand FireStream’s offering for companies distributing fuel on tank wagons/bobtails (metered) and transports (non-metered).

Since 2006, FireStream’s Symbology product has provided the ability to capture metered deliveries on tank wagons. In 2011, the Company rolled out its iPad application, DeliveryStream, for transport trucks. CloudFuel adds the ability to capture metered deliveries on smartphones and tablets by connecting with meters via Bluetooth.

Smartphone adoption is growing faster than any technology in history. A study by Pew Research reveals that over 72% of the U.S. population uses a smartphone… and in the 18 – 34 age group, the number climbs to 92%. The data overwhelmingly suggests that most people in the U.S. expect to “do business” using smartphone technology. FireStream’s acquisition of CloudFuel represents its growing commitment to smartphone, web and mobile applications. n

Test Your FMN Acumen The list below represents acronyms used in this issue of Fuel Marketer News.

ACE

American Coalition for Ethanol

API

American Petroleum Institute

API

Application Programming Interface

AST ASTM AUS

Aqueous Urea Solution

BBD

Biomass-Based Diesel

bbl/d

Barrels per day

Bcf/d

Billion Cubic Feet per Day (Natural Gas)

BTU

British Thermal Unit

CDLIS

Commercial Driver’s License File

CNG

Compressed Natural Gas

CRM

Customer Relationship Manager

Slipstream® Premium Marine Fuel Stakes Territory in New Jersey DM2 Software, Inc., a leading provider of business-management software solutions for petroleum marketers, is pleased to announce that, in addition to offering Sage Payment Solutions credit card processing services, it has partnered with Century Business Solution to offer petroleum marketers with another choice in service providers. Century Business Solutions was founded by a management team of payment industry experts and is a registered ISO/MSP of Wells Fargo Bank, and is also a First Data partner.

Century offers competitive rates and next day funding without locking customers into long term contracts or charging installation, annual maintenance, upgrade, support or consulting fees. n

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What Does That Mean

?

EBITDA

Earnings Before Interest, Taxes, Depreciation and Amortization

NAS

National Aerospace Standards

EEC

European Economic Community

NBB

National Biodiesel Board

Aboveground Storage Tank

EIA

National Conference on Weights and Measures

American Society for Testing and Materials

U.S. Energy Information Administration

NCWM

EMV

EuroPay MasterCard VISA

NFC

Near Field Communication

EPA

Environmental Protection Agency

NOx

Nitrogen Oxide

ERP

Enterprise Resource Planning

OEM

Original Equipment Manufacturer

FMCSA

Federal Motor Carrier Safety Administration

PCI

Payment Card Industry

PEI

Petroleum Equipment Institute

GDP

Gross Domestic Product

POS

Point of Sale

GHG

Greenhouse Gas

ppm

Parts per Million

PSP

Pre-employment Screening Program

RFA

Renewable Fuels Association

RFS

Renewable Fuel Standards

RP

Recommended Practices

SCR

Selective Catalytic Reduction

SOX

Sarbanes-Oxley Act of 2002

TSA

Transportation Safety Administration

ULSD

Ultra Low Sulfur Diesel

UST

Underground Storage Tank

HAZMAT Hazardous Material ISO

International Organization for Standardization

CSA

Compliance, Safety, Accountability

kbpd

Thousand Barrels per Day

CTS

Center for Transportation Safety

LNG

Liquefied Natural Gas

DEF

Diesel Exhaust Fluid

LPG

Liquefied Petroleum Gas

DOC

Diesel Oxidation Catalyst

LPW

Lumens Per Watt

DOOH

Digital Out Of Home

LTO

Light Tight Oil

DOT

U.S. Department of Transportation

MH

Metal Halide

DPF

Diesel Particulate Filter

MVR

Motor Vehicle Report

E15

Blend of 15% Ethanol and 85% Gasoline

NACS

National Association of Convenience Stores

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ADVERTISER’S INDEX

Our Advertisers Company

Page

Company

Page

ADD Systems

34

Lock America

Afton Technologies

12

MidContinental Chemical Co, Inc. 28

AIMS

5

OPW

31

American Coalition for Ethanol

55

Patriot Capital

Ascentium Capital

7

Inside Back Cover

Automated Wireless

43

RDM

27

Biobor Fuel Additives

19

REG

8

BlueSky DEF

38

RINAlliance

89

Cummins & White

79

Rovanco

90

Dennis K. Burke

75

Scully

96

DM2

66

SkyBitz Petroleum Logistics

70

Flowserve

58

Source North America

41

FormaShape

Inside Front Cover

Tanknology

45

Texas Food & Fuel Association

93

FPPF

Back Cover

Thunder Creek

37

Global Tank Truck Conference

64

Trinium

23

Gorman-Rupp

17

ValvTect Petroleum Products

46 – 47

Integer

83

Voyager/US Bank

51

Keystone Structures

60

Yara/Air1

86

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81

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