Winter Issue 2016
Your Source for News and Information
Gulf Sees the Light
Western Hemisphere Oil Ebbs and Flows How Oil Price Bottoms are Formed Charting a Path for a Successful Phase 2 EMV Conversion
SUPPLY, MARKETING, DISTRIBUTION, TRANSPORTATION & LOGISTICS
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A note from Your Source for News and Information
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convenience store retailers indicated that they expect the robust sales in 2015 to continue into the first quarter of 2016— driven primarily by lower fuel prices at the pump.
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Is it redundant to say these are “interesting times” in the fuel business when the “interesting” part never seems to cease? With every coming new year, we first look back at a series of challenges that we as an industry had to overcome… and, then we look forward and see even more challenges facing us in the new year. It seems that the Keystone XL pipeline is finally dead (or is it?), low crude prices are dropping lower every day (but for how long?), and wholesale and retail fuel prices are dropping even lower. Today, as we go to print, I just paid $14.22 to fill my car’s gas tank with 87 octane unleaded gasoline for $1.18/gallon. What?! No one predicted we would ever see these low market prices again—is this even bottom? For an answer to the last question, see Joe Petrowski’s article on pages 28 – 29 in this issue. Many media prognosticators are trying to pre-blame the current global economic slowdown on cratering oil prices and not long-term economic instabilities such as those currently present in China. But traditionally, lower energy prices lead to economic benefits for both consumers and commerce as costs drop and disposable income increases. The economic benefits are already becoming apparent as the latest NACS quarterly Retailer Sentiment Survey of
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I personally believe our industry has every reason to be optimistic about the coming year. You will likely have to be creative and work smarter to deal with the changes in regulation, market conditions and price fluctuations, but I am always amazed at the resilience of the successful marketers in our industry. In this print issue of Fuel Marketer News, our energy-expert columnists deliver objective analyses of the facts, changes and trends in our industry and what that means to you as a fuel marketer. Whether traditional fossil fuels (gasoline and diesel) or alternative fuels (ethanol, isobutanol, biodiesel, CNG, LPG, hydrogen, and electric)—we strive to thoroughly and objectively cover the information that matters to your business. We definitely live in “interesting times” in the fuel business. Our goal at FMN is to provide you with valuable information, education and analysis from the seismic shifts in crude production to the nuances of motor fuels retailing and forecourt technology. We promise to work hard in 2016 to make sure you have every reason to make us your go-to news site for motor fuels marketing, retailing and supply. Register for our e-newsletter at www.fuelmarketernews.com to get in the loop as new content gets posted. Registration is free, and the process is short and easy.
And another interesting year gets underway…
TABLE OF CONTENTS
FUELS & SUPPLY
POLICY BRIEF: Jobs Take Second Place to Climate Image
POLICY BRIEF: Final Renewable Fuel Standards for 2014, 2015 and 2016
Massachusetts Leads the Nation in Energy Efficiency by Ed Burke
Western Hemisphere Oil Ebbs and Flows by Dr. Nancy Yamaguchi
How Price Bottoms are Formed and Why We are at One Now in Energy by Joe Petrowski
WEX Set to Acquire EFS by Shane Dyer
The Year of Technology by John Eichberger
Important Considerations for Gas Stations and C-Stores when Migrating to EMV by Dan Yienger
Charting a Path for a Successful Phase 2 EMV Conversion by Joe O’Brien
44 SPECIAL SUPPLEMENT: GULF OIL Gulf Sees the Light by Keith Reid
WHOLESALE & FLEET OPERATIONS
On-Site Fueling: Meeting Customers’ Needs by Maura Keller
57 MOBILE FULEING ROUNDUP BUSINESS OPERATIONS
Seven Ways Employers Can Reduce the Number of Workers’ Compensation Claims Involving an Attorney by Greg Cushard and Shawn Switzer
Recap: 8th Integer Emissions Summit & DEF Forum by Keith Reid
The Only Energy That Matters by Doug Haugh
77 INDUSTRY NEWS 90
Gulf Sees the Light
A change in ownership launches a notable change in focus Western Hemisphere Oil Ebbs and Flows
by Dr. Nancy Yamaguchi
How Price Bottoms are Formed and Why We Are at One Now in Energy by Joe Petrowski
Charting a Path for a Successful Phase 2 EMV Conversion by Joe O'Brien
The Only Energy That Matters by Dough Haugh
FUELS & SUPPLY POLICY BRIEF
by Keith Reid
Jobs Take Second Place to Climate Image President Obama announced on
November 6 that he was formally rejecting the Keystone XL Pipeline. Not really a surprise, since the Administration has consistently talked about having an open mind on the pipeline, particularly during previous elections cycles, but has always managed to oppose the pipeline when circumstances forced action.
For example, on February 24, 2010, Obama vetoed a bill authorizing the Keystone with the following rationale: “The Presidential power to veto legislation is one I take seriously. But I also take seriously my responsibility to the American people. And because this act of Congress conflicts with established executive branch procedures and cuts short thorough consideration of issues that could bear on our national interest— including our security, safety and environment—it has earned my veto.” As noted in a previous Policy Brief, the president was referencing the fact that the legislation was put on his desk before a State Department review of the pipeline had been completed. Opponents readily point out that the ongoing review by the
current administration’s State Department has gone on for over six years, and appears to be functioning as a delaying tactic. This, of course, is the same administration that routinely bypasses Congress on other environmental issues to accomplish through government agencies and regulation what cannot be passed through cap and trade legislation. The same administration that bypassed Congress to implement an executive amnesty. The same administration that bypassed Congress to modify components of the already passed Affordable Care Act. The list goes on. The timing of this latest announcement was undoubtedly to enhance Obama’s image before the then-pending Paris climate talks. As Obama said in his announcement: “America is now a global leader when it comes to taking serious action to fight climate change, and frankly, approving this project would have undercut that leadership.” While the talks are currently ongoing, if history is any indication, then they will go nowhere as the developing world
fights over how big a check the Western economies must write to appease their requests for climate justice, while China and India (the nations most impacting long-term carbon production) ignore any commitments of substance. They have more nationally focused energy policies that value jobs and economic growth. As we also previously covered, even if you believe in the unsettled science on human-influenced climate change, rejecting the Keystone serves no environmental purpose while costing the United States jobs. As we have outlined in much greater detail, Canada will process the tar sands, the bitumen will be shipped to a useful location, it will be processed into fuels (perhaps in a less environmentally responsible manner than in the United States) and that fuel will be burned. Net win… somebody else. It should be noted that Canada might wait out the current administration, in which case the future of the pipeline is still up in the air. As previously was the case, the responses to this formal announcement broke along traditional lines.
Canada will process the tar sands, the bitumen will be shipped to a useful location, it will be processed into fuels (perhaps in a less environmentally responsible manner than in the United States) and that fuel will be burned. Net win… somebody else.
The Oil Industry
API President and CEO Jack Gerard said the president’s rejection of the Keystone XL pipeline is a clear example of politics coming before the interests of U.S. workers and consumers:
“It’s ironic that the administration would strike a deal to allow Iranian crude onto the global market while refusing to give our closest ally, Canada, access to U.S. refineries,” said Gerard. “This decision will cost thousands of jobs and is an assault to American workers. It’s politics at its worst. Unfortunately for the majority of Americans who have said they want the jobs and economic benefits Keystone XL represents, the White House has placed political calculations above sound science. Seven years of review have determined the project is safe and environmentally sound, yet the administration has turned its back on Canada with this decision and on U.S. energy security as well.”
Organized Labor After decades of Democrat support, organized labor discovers just how little influence it has compared to the greens, when push comes to shove. Terry O’Sullivan, General President of LIUNA – the Laborers’ International Union of North America – made the following statement today regarding the Administration’s decision on the Keystone XL Pipeline: “President Obama today demonstrated that he cares more about kowtowing to greencollar elitists than he does about creating desperately needed, family-supporting, blue-collar jobs. After a seven-year circus of cowardly delay, the President’s decision to kill the Keystone XL Pipeline is just one more indication of an utter disdain and disregard for salt-of-the-earth, middle-class working Americans. The politics he has played with their lives and livelihoods is far dirtier than oil carried by any pipeline in the world, and the cynical manipulation of the approval process has made a mockery of regulatory institutions and government itself. We are dismayed and disgusted that the President has once again thrown the members of LIUNA, and other hard-working, blue-collar workers, under the bus of his vaunted “legacy,” while doing little or nothing to make a real difference in global climate change. His actions are shameful.” In its Final Supplemental Environmental Impact Statement Keystone XL Project Executive Summary, issued in January 2014, President Obama’s own State Department concluded that building the Keystone XL “is unlikely to significantly affect the rate of extraction in oil sands.” Worse, reviewing the impact of not building the Keystone XL, the same report concluded that, “the total annual Greenhouse Gas (GHG) emissions (direct and indirect) attributed to the No Action scenarios range from 28 to 42 percent greater than for the [Keystone XL].” But facts apparently mean as little to the President as the construction jobs he repeatedly derided as insignificant because they are “temporary.” Ironically, the very temporary nature of the President’s own job seems to be fueling a legacy of doing permanent harm to middleand working-class families. From this decision on the Keystone XL, to the attack on quality healthcare through the so-called “Cadillac Tax,” to his efforts to ship good jobs overseas through the TransFMNMagazine
Pacific Partnership, Barack Obama’s disdain for working people is evident. The President may be celebrated by environmental extremists, but with this act, President Obama has also solidified a legacy as a pompous, pandering job killer.
The Greens NRDC’s Suh Hails His “Courageous leap forward in climate fight.” President Obama today rejected the proposed Keystone XL tar sands pipeline—for all the right reasons. The following is a statement by Rhea Suh, president of the Natural Resources Defense Council: “This represents a courageous leap forward in the climate fight. Rejecting the Keystone XL tar sands pipeline is right for our nation, for our children and for our planet. It would have locked in, for a generation or more, massive development of among the dirtiest fuels on the planet—posing a serious threat to our air, land, water, and climate. The proposal, pushed largely by the fossil fuel industry, was a recipe for disaster. In no way was the pipeline in America’s national interest. “Dangerous climate change is the central environmental challenge of our time, and it’s time for everyone to step up now and meet that challenge.” Natural Resources Defense Council trustee Robert Redford reacted to President Obama’s rejection of the Keystone XL tar sands pipeline with thanks to all involved in the fight today. The following is a statement from the long-time environmental activist with deep involvement in the campaign against the pipeline: “Today marks a huge turning point in our fight to leave a better future for our children and generations to come. People all over the country banded together to demand a stop to this shortsighted, destructive fossil fuel project. Thank you, to the President and all those who rallied against the pipeline.”
Editor’s Note: Robert Redford, between his mansions and private jet travel, has a carbon footprint that would likely put a small town to shame. n
FUELS & SUPPLY POLICY BRIEF
by Keith Reid
Final Renewable Fuel Standards for 2014, 2015 and 2016 The final Renewable Fuel Standards 2014 – 2016 have been
announced, making some parties happier than others. The ethanol camp in particular was perturbed, even though the volumes could reasonably be considered a “glass half-full” compared to those under consideration in previous EPA announcements. The volumes are greater than those fairly recently proposed, but they are lower than the mandated volumes which were waived. As EPA noted, the mandated renewable fuel volume requirement for 2016 would have been 22.25 billion gallons without the waiver, and it is now 18.11 billion gallons. The final 2016 standard for advanced biofuel is nearly 1 billion gallons, or 35%, higher than the actual 2014 volumes, while the total renewable standard requires growth from 2014 to 2016 of over 1.8 billion gallons of biofuel, or 11% higher than 2014 actual volumes. EPA also pointed out that biodiesel standards grow steadily over the next several years, increasing every year to reach 2 billion gallons by 2017. Here are EPA charts giving the breakdowns:
Final Renewable Fuel Volumes 2014
Cellulosic biofuel (million gallons)
Biomass-based diesel (billion gallons)
Advanced biofuel (billion gallons)
Renewable fuel (billion gallons)
(Units for all volumes are ethanol-equivalent, except for biomass-based diesel volumes which are expressed as physical gallons.)
Final Percentage Standards 2014
EPA noted in the rule summary: Our decision to finalize volumes for total renewable fuel that rely on exercising the general waiver authority is based on the same fundamental reasoning we relied upon in the June 10, 2015, proposal. Despite significant increases in renewable fuel use in the United States, real-world constraints, such as the slower than expected development of the cellulosic biofuel industry and constraints in the marketplace needed to supply certain biofuels to consumers, have made the timeline laid out by Congress impossible to achieve. These challenges remain, even as we recognize the success of the RFS program over the past decade in boosting renewable fuel use, and the recent signs of progress towards development of increasing volumes of advanced, low GHG-emitting fuels, including cellulosic biofuels. We believe that the RFS program can and will drive renewable fuel use and, indeed, we have considered the ability of the market to respond to the standards we set when we assessed the amount of renewable fuel that can be supplied. Therefore, while this final rule applies the tools Congress provided to make adjustments to the statutory volume targets in recognition of the constraints that exist today, we believe the standards we are finalizing today will drive growth in renewable fuels, particularly advanced biofuels, which achieve the lowest lifecycle GHG emissions. In our view, while Congress recognized that supply challenges may exist as evidenced by the waiver provisions, it did not intend growth in the renewable fuels market to be stopped by those challenges, including those associated with the “E10 blendwall.” The fact that Congress chose to mandate increasing and substantial amounts of renewable fuel clearly signals that it intended the RFS program to create incentives to increase renewable fuel supplies and overcome constraints in the market. The standards we are finalizing will provide those incentives. The full PDF of the EPA rule can be found here: http://www2.epa.gov/sites/production/files/201511/documents/rfs-2014-2015-2016-annual-rule-frm.pdf
FUELS & SUPPLY POLICY BRIEF
Final Renewable Fuel Standards for 2014, 2015 and 2016
Feedback to the announcement had few surprises (Note: the full responses for the following quotes are readily available at the following organizations’ websites):
The National Association of Convenience Stores: NACS is continuing to review the more than 200-page rule, but at first blush is pleased that EPA exercised its waiver authority to set renewable volume obligations (RVO) lower than the levels mandated by Congress. Further analysis is needed, and NACS welcomes input from members regarding how these numbers will impact the fuels marketplace.
Petroleum Marketers Association of America:
The new biofuels blending volumes for 2014, 2015 and 2016 are not expected to require the introduction of E15 gasoline. PMAA is opposed to volumetric ethanol blending mandates for gasoline that would require the introduction of E15 until all practical and legal UST compatibility issues are settled for petroleum marketers. PMAA advocated this position to the EPA via written comments and public testimony. PMAA also recently met with the White House Office of Management and Budget to express the industry’s concern over a possible E15 mandate should ethanol blending levels be set too high in this round of annual renewable fuel blending requirements.
Renewable Fuels Association President and CEO Bob Dinneen released the following statement:
“EPA’s decision today turns our nation’s most successful energy policy on its head. When EPA released its proposed RFS rule in May, the agency claimed it was attempting to get the program back on track. Today’s decision, however, fails to do that. It will deepen uncertainty in the marketplace and thus chill investment in second-generation biofuels. Unlike Big Oil, the ethanol industry does not receive billions in tax subsidies and the RFS is our only means of accessing a marketplace that is overwhelmingly and unfairly dominated by the petroleum industry. Today’s decision will severely cripple the program’s ability to incentivize infrastructure investments that are crucial to break through the so-called blend wall and create a larger market for all biofuels.”
“Today’s decision will severely cripple the program’s ability to incentivize infrastructure investments that are crucial to break through the so-called blend wall and create a larger market for all biofuels.”
Bob Dinneen, Renewable Fuels Association
more to protect consumers. EPA’s final rule relies on unrealistic increases in sales of higher ethanol fuel blends despite the fact that most cars cannot use them. Motorists have largely rejected these fuels.”
Growth Energy and its members are pleased to see that the President and the Environmental Protection Agency have recognized the need to move the renewable fuel industry past the so-called blend wall for the sake of America’s climate, energy security and rural economy. While this rule still relies on a flawed methodology that sets renewable fuel volumes below the statutory levels enacted by Congress, it is an important improvement from the proposed rule, and moves us closer to getting America’s most effective climate policy back on track and providing certainty for biofuels in the marketplace.
American Coalition for Ethanol:
“When Congress enacted the Renewable Fuel Standard it voted to side with those of us who said ‘yes we can’ reduce greenhouse gas emissions from motor fuel, ‘yes we can’ allow consumer access to E15 and flex fuels, and ‘yes we can’ spark innovative ways to produce cleaner fuels,” said Brian Jennings, the Executive Vice President of the American Coalition for Ethanol. “While we appreciate that the Administration made incremental improvements compared to the proposed RFS rule, unfortunately, today they are choosing to side with those who say ‘no, we can’t.’ Regrettably, EPA’s final RFS rule protects the old way of doing business by obstructing consumer access to cleaner fuels, stifling competition in the marketplace, and undermining innovation. Given all the President hopes to accomplish at the international climate talks which begin in Paris today, it is inconsistent for the Administration to unravel the most effective policy at their disposal to support low carbon fuels.”
The National Biodiesel Board:
“This decision means we will displace billions of gallons of petroleum diesel in the coming years with clean-burning biodiesel. That means less pollution, more American jobs, and more competition that is sorely lacking in the fuels market,” said NBB CEO Joe Jobe. “It is a good rule. It may not be all we had hoped for but it will go a long way toward getting the U.S. biodiesel industry growing again and reducing our dangerous dependence on fossil fuels.”
Biotechnology Industry Organization (BIO) Statement:
The final rule for the 2014, 2015 and 2016 Renewable Fuel Standards, issued today by the Environmental Protection Agency, is an unnecessary, unlawful about face for a program that was successfully driving development of cleaner biofuel technologies and reduction of U.S. greenhouse gas emissions. The rule undermines the goals of the statute, and it will continue to undercut investment in advanced and cellulosic biofuels and increase greenhouse gas emissions in the transportation fuel sector. n
American Petroleum Institute:
“EPA has taken a significant step in the right direction by using its waiver authority to lower ethanol mandates, acknowledging the market limitations of the ethanol blend wall,” API President and CEO Jack Gerard said. “However, the agency must do FMNMagazine
FUELS & SUPPLY POLICY BRIEF
by Ed Burke
Massachusetts Leads the Nation in Energy Efficiency For the fifth straight year, Massachusetts was named the national leader in energy efficiency, according to the American Council for an Energy-Efficient Economy (ACEEE) in its ninth annual state scorecard. In 2014, savings from electricity efficiency programs in the United States reached approximately 25.7 million megawatt hours (MWH), a 5.8% increase over 2013. Gas savings for 2014 were reported at 374 million therms, a 35% increase over 2013.
Massachusetts Governor Charlie Baker praised the state’s number one ranking, saying “Being recognized for the fifth year by ACEEE as the nation’s leader in energy efficiency underlines the commitment we have made to reduce ratepayer costs and provide a balanced and diversified energy portfolio for now and the future. Energy efficiency is the most cost-effective, accessible way for Massachusetts to meet our clean energy and climate goals, and help our citizens manage their energy costs.”
ACEEE estimates that utility spending for electric and natural gas efficiency programs in the United States reached $7.3 billion in 2014, and will reach $15.6 billion by 2025. So what kind of return are ratepayers getting? A new ACEEE analysis of the nation’s energy consumption as it relates to economic activity suggests that efficiency measures saved the United States about $800 billion in 2014.
A nonprofit founded in 1980, ACEEE’s mission is to advance energy efficiency as a fast, cheap and effective means of meeting energy challenges. Most folks are probably more familiar with ACEEE for their GreenerCar ratings that come out each year. The ACEEE State Scorecard assesses state policies and programs that improve energy efficiency in our homes, businesses, industries and transportation systems.
The trend continues to gain traction as more states adopt energy efficiency policies and targets. Energy efficiency programs and spending is likely to increase as states draft plans to comply with the Environmental Protection Agency’s (EPA) Clean Power Plan.
So how do the consumers benefit? Among the advances in the last 35 years, ACEEE says the fuel economy of passenger vehicles has improved by more than 25% and energy losses in the U.S. electric transmission and distribution system have been cut by more than a quarter.
Building Energy Codes
Massachusetts earned 6 points out of 7 for its building energy code stringency and compliance efforts.
Combined Heat & Power
ACEEE credits the Commonwealth’s top ranking based on a strong commitment to energy efficiency under the state’s Green Communities Act. The 2008 mandate requires the implementation of three-year energy efficiency plans for gas and electric utilities, among other measures.
The Commonwealth scored 4 out of 4 points for its combined heat and power policies to encourage CHP deployment, including incentives and financing programs. Seven new CHP installations were completed in 2014.
Increasing its score from 2014 by two points, Massachusetts holds its top spot in the 2015 State Energy Efficiency Scorecard, earning 44 out of a possible 50 points. The ACEEE scorecard considers six policy areas in which states typically pursue energy efficiency:
State Government-Lead Initiatives Massachusetts scored 5.5 out of 7 points for state-led energy efficiency initiatives. The state offers grants, rebates, and bond programs to promote investments in energy efficiency. The state leads by example by setting energy requirements for public buildings and fleets, as well as benchmarking energy use.
Utilities Massachusetts earned a perfect score (20 points) for its utility-sector programs and policies for the second straight year. Utilities report high levels of investments in both electricity and natural gas programs, and the state achieved electricity savings of over 2.4% this past year. ACEEE noted that Massachusetts has one of the most aggressive energy efficiency resource standards in the country. Utility revenues are decoupled from sales, and performance incentives are in place to encourage program administrators (utilities) to meet or exceed energy savings targets.
The state scored 0 out of 2 possible points for appliance standards. Although it has had standards in the past, the scorecard noted that Massachusetts does not have appliance efficiency standards in place beyond those that are federally required. So how did our neighboring states score? All of the New England states saw high marks on the scorecard, with Vermont ranking third, Rhode Island ranking fourth and Connecticut ranking sixth. Maine had a tough time funding the Efficiency Maine programs this year, ranking them 14th. New Hampshire trailed with the 20th spot, but it’s worth noting that since 2008, the state reduced its power-sector carbon pollution by 49%. The Granite State is also on track to meet the Clean Power Plan carbon reduction goals ten years early, in 2020 rather than 2030. Speaking of the Clean Power Plan, the states with the leading scores in utility-sector programs and policies were Massachusetts, Rhode Island and Vermont.
The state credits its Mass Save® Energy Saving Programs for its high score in the utility sector. Sponsored by Massachusetts’ gas and electric utilities and energy efficiency service providers, Mass Save® provides a wide range of energy efficiency services, incentives and rebates to help residents and businesses manage energy use and related costs.
Transportation The state earned 8.5 points out of 10 points for transportation policies, such as efficient fleets in state government initiatives, tailpipe emissions standards, targets to reduce vehicle-miles-traveled and a dedicated transit revenue stream. The state also offers consumers incentives for the purchase of high efficiency vehicles.
What about jobs? Massachusetts currently has nearly 100,000 people working in the clean energy sector, with a majority coming from the energy efficiency industry. It’s the fastest growing job creation sector in the state’s economy—with all of this happening just over the past ten years.
FUELS & SUPPLY POLICY BRIEF
Massachusetts Leads the Nation in Energy Efficiency
So how do the consumers benefit? Among the advances in the last 35 years, ACEEE says the fuel economy of passenger vehicles has improved by more than 25% and energy losses in the U.S. electric transmission and distribution system have been cut by more than a quarter.
The Commonwealth’s plans for 2016 – 2018 are currently being finalized. The plans are poised to keep Massachusetts in a position to continue to lead the nation in energy efficiency and to provide benefits for its ratepayers and consumers.
Massachusetts Energy Resources Commissioner Judith Judson proudly noted, “This recognition is the result of collaboration between many public and private stakeholders in transportation, technology, building and energy providers that is setting a higher bar for the future.” n
However, ACEEE has noted that Massachusetts will need to continue promoting energy efficient measures to maintain its reign as the nation’s leader. With other states close on its heels, Massachusetts needs to keep getting those high levels of savings in the utility sector while remaining committed to continually updating building codes as well as working to better benchmark energy use in the private sector. The Baker-Polito Administration says it’s committed to energyefficiency efforts while meeting the Global Warming Solutions Act (GWSA) standards. They recently filed legislation to increase access to clean, cost-effective hydroelectric power. The legislation will allow the state to make the necessary investments in the regional energy infrastructure and provide the needed generation capacity in the face of power plant retirements. Massachusetts’ utilities would be able to collaborate with other New England states to buy clean, base load generation resources in the most cost effective manner possible. The Administration added that the legislation would achieve over 5% of its GWSA emission reduction goals—a 25% reduction of emissions below 1990 levels—by 2020. FMNMagazine
Ed Burke Ed is chairman of the board of Dennis K. Burke, Inc., one of New England's leading suppliers of diesel fuel, gasoline and motor oil products. Headquartered in Chelsea, Massachusetts, the fuel distributor provides services to commercial, industrial and municipal accounts in eleven states. The family-owned business has over 50 years of reliable service. Contact Ed at: email email@example.com; phone 617.884.7800.
Western Hemisphere Oil Ebbs and Flows
FUELS & SUPPLY
Oil flows in the Western Hemisphere: The dictates of a liquid by Dr. Nancy Yamaguchi
here are many factors that influence trade in oil and oil products, but chief among them is one simple idea: oil is a liquid. It flows along the path of least resistance. It flows from a burgeoning pool to a thirsty pool. It flows from where it is not needed to where it is needed. It must be contained as it flows, in pipelines, tankers, trucks and the like. It must avoid blockages to its free flow. And because oil is the largest commodity in world trade, it tends to flow along the least-cost pathways to reach the highest value end uses. These pathways are influenced by public policy, including issues of health and safety, environmental protection, right of way, social justice and international relations. The laws build canals, dams, weirs and the like to control the flow and perhaps to cope with floods. In the Western Hemisphere, geography, economics and politics have shaped an extensive network of oil infrastructure. As an example, the 800-mile long Trans-Alaska Pipeline System (TAPS) was built only after the 1973 â€“ 1974 oil price shock. The high prices and new
concern over oil security made it possible to develop Alaska North Slope (ANS) crude and build TAPS. The project was permitted only after lengthy negotiations with Native American groups and conservationists, many of whom still believe the project was a mistake. Once completed, additional infrastructure was built to allow the transit of oil to refineries in the U.S. West Coast, the U.S. Gulf Coast, and the U.S. Virgin Islands. The Trans-Panama Pipeline was opened in 1982 to facilitate the transport of crude from the Pacific Ocean side of Central America to the Caribbean Sea. When ANS production declined, this pipeline was closed, and in later years it was reversed. It was not considered economically or politically feasible to build a pipeline all the way from the North Slope of Alaska, through Canada, and onward to U.S. refineries. Similarly, the topography of the Americas makes it difficult to build long pipelines running east to west or west to east. The Rocky Mountains form a natural northsouth running barrier in Canada and the United States, as do the FMNMagazine
Coast Mountains, the Cascade Range and the Sierra Nevada mountains. The Sierra Madre range bisects much of Mexico. The Andes separate the West Coast of South America from the rest of the continent. In Canada, there is only one pipeline that runs from east to west across the Rocky Mountains, the Trans Mountain Pipeline. In the U.S., there are none. Most of the pipelines run north and south. This also holds true in Mexico and Latin America. In North America, there are huge reserves of oil, oil sands and shale oils in the central part of Canada and the United States. The North American oil transport network may be likened to a river system, where most to the flow heads south to the U.S. Gulf Coast, where it meets the sea and must change its transport mode. Within the center of North America, the shale boom caused the riverbanks to flood, and there were not enough tributaries to reach new destinations. New trade patterns had to emerge, and most of these have focused on trade links within the Americas, creating a higher degree of Western Hemisphere oil market integration.
Western Hemisphere Oil Ebbs and Flows
change its transport mode. Within the center of North America, the shale boom caused the riverbanks to flood, and there were not enough tributaries to reach new destinations. New trade patterns had to emerge, and most of these have focused on trade links within the Americas, creating a higher degree of Western Hemisphere oil market integration.
We liken the flow of oil to a complex, far-reaching river system. It is not always clear what will happen when a new dam is built or a canal is widened or rerouted. Demand for the liquid remains, however, so it will continue to flow.
The Americas account for approximately 33% of the world’s oil demand, 33% of its proven oil reserves, 30% of its oil production and 28% of its oil refining capacity. The bulk of this is concentrated in North America, with the exception of reserves, where Venezuela is the leader. North America’s oil market has been strongly tied to the markets of Europe and the Middle East. In many ways, it is a simpler matter to ship oil across the North Atlantic Ocean than it is to ship oil across the South Atlantic Ocean, or to ship oil across the Pacific Ocean, particularly when a Panama Canal crossing is involved. Nonetheless, oil trade is flourishing within the Western Hemisphere and a regional petroleum market is becoming more distinct. In this article, we liken the flow of oil to a complex, farreaching river system. It is not always clear what will happen when a new dam is built or a canal is widened or rerouted. Demand for the liquid remains, however, so it will continue to flow. If a dam is removed, what will happen to the waterways downstream? Some of the natural flows in the Western Hemisphere have been reinforced by economics, politics and geography, but the complete free flow of crude oil is stymied by those same factors. In this article, we will discuss how crude flows have changed because of the shale boom in the U.S., the growth in Canadian output, the languishing of Mexican and Venezuelan output, and the strict controls on exports of U.S. domestic crudes. We will also trace the impacts into the refining side and show the impacts on product trade.
Western Hemisphere crude trade The advances in horizontal drilling and hydraulic fracturing have had a profound impact on the U.S. and greater Western Hemisphere oil balance. In the year 2000, the United States produced 5822 kbpd of crude oil. During the first eight months of 2015, crude production averaged 9387 thousand barrels per day (kbpd), an increase of 3565 kbpd. This gain is nearly on a par with Iran’s total output in 2014, which was 3117 kbpd, according to the OPEC Secretariat. It was more than the output of Iraq (3110 kbpd,) Kuwait (2867 kbpd,) and Venezuela (2682 kbpd). Essentially, therefore, the increase in U.S. production has displaced the output of an entire OPEC country. During the same time period, Canadian output grew by 1589 kbpd, greater than the 2014 output of Algeria (1193 kbpd), Libya (480 kbpd) and Qatar (709 kbpd). For many years, forecasts of U.S. oil supply assumed that imports would continue to grow, and that the U.S. would become more reliant on the Middle East. This was to be supplemented by crudes from Canada, Mexico and Venezuela. Figure 1 presents the trend in U.S. crude imports from the top three Western Hemisphere oil exporters, as reported by the U.S. Energy Information Administration (EIA). As the figure illustrates, in the year 2000, Canada, Mexico and Venezuela were roughly equal in the amount of crude oil they exported to the U.S., all in the vicinity of 1.2 – 1.3 million barrels per day (mmbpd). For the three together, the total was approximately 3.9 mmbpd. U.S. crude imports from the Persian Gulf and Africa were close to this amount, at approximately 3.8 mmbpd. Since then, however, Venezuelan and Mexican crude exports to the U.S. have fallen to approximately 0.7 mmbpd each. Both have had political and economic conditions that have constrained exports. In contrast, Canadian exports to the U.S. have grown to 3.1 mmbpd.
Figure 1: Canadian crudes surpass Mexico and Venezuela
FUELS & SUPPLY
FUELS & SUPPLY In addition to the new light tight oil (LTO) output from U.S. shale plays, it is largely because of Canada, therefore, that Western Hemisphere crudes have toppled Middle Eastern and African crudes from their position in the U.S. crude market. As Figure 2 illustrates, the U.S. is importing 4.6 mmbpd of crude from the top three Western Hemisphere crude exporters, up from 3.88 mmbpd in the year 2000. In contrast, imports from the Persian Gulf and Africa have fallen to 1717 kbpd, down from nearly 3.8 mmbpd in 2000. Heavy sour crudes from the Americas have reduced the need for some Middle Eastern sour crudes, while LTO largely has supplanted imports of African light sweet crudes.
Figure 2: Canada propels Western Hemisphere crudes There still are options to streamline crude trade within the Western Hemisphere. A variety of oil trade patterns have emerged because of the U.S. policy regulating exports of domestic crude. As the author noted in a previous issue of FMN, federal policy regulates exports of domestic crude oil under the authority of the Mineral Leasing Act of 1920, the Energy Policy and Conservation Act of 1975, and the Export Administration Act of 1979. This is not a “crude export ban,” but it is a significant hurdle, and it creates a definite barrier to trade. This became much more noticeable because of the increase in LTO production, and most oil producing companies have called for these controls to be lifted.
Canada+Mexico+Venuzuala Persian Gulf +Africa
Source: EIA. 2015 is first half-year average.
Sustained high prices encouraged the development of oil sands resources in Canada and the shale boom in the U.S., and this also stimulated transport infrastructure. Canadian production from oil sands has continued to grow, and U.S. imports have risen dramatically, but expanding the pipeline conduits into and through the U.S. became a challenge. Canada is seeking to send more oil out to the west and east. It is possible to do this, of course, and it is even possible that additional Canadian flows to the west could end up in the U.S. West Coast, while flows to the east could end up in PADD 1 and PADD 2. The U.S. still would be the main recipient. It is not clear that stopping the construction of the Keystone Pipeline, or other possible projects, will halt Canadian development, or reduce Canadian exports to the U.S., but it is likely that the economics of such projects will be even less favorable. Naturally, since the global price is now at low ebb, many new developments are on hold. As this issue of Fuel Marketer News Magazine (FMN) goes to press in December 2015, OPEC has just concluded its meeting in Vienna, and the organization did not take any actions to curb production and support prices. In the author’s assessment, there was no reason to believe that they would do this. So, it was perplexing that so many market analysts expressed surprise, and that stock markets reacted so strongly. The OPEC members with the ability to put production on and off line had indicated that they would wait out the period of low prices to regain market share. It remains to be seen how much non-OPEC production will be shut in, but already the impacts are being felt. FMNMagazine
U.S. crude exports are shown in Figure 3. The restrictions allow trade with Canada, and the figure shows a steep surge in exports to Canada. Historically, Alaskan crude was shipped to the U.S. Virgin Islands, and some quantities of Alaskan and Californian crude were exported to Asia. But these exports vanished when production dropped. Canada remains the main importer. In October 2015, Mexico’s national oil company, PEMEX, received a license to import up to 75 kbpd of U.S. crude. If the restrictions on crude trade are eased even more in the future, the U.S. crude market may become even more firmly tied to the greater Western Hemisphere market.
Figure 3: U.S. Crude exports by destination, 1993–2015 Europe/Other Asia Other America Canada U.S. Virgin Islands
past the Persian Gulf and Africa in the U.S. import picture
Source: EIA. 2015 is first half-year average. fuelmarketernews.com
FUELS & SUPPLY
Western Hemisphere Oil Ebbs and Flows
Changes downstream: Import substitution and the rise of U.S. product exports The rise in U.S. crude production, coupled with the restrictions on its export, has been causing a surge in U.S. refinery crude runs. Currently, U.S. refinery utilization rates are averaging 91.5%. But utilization rates are not uniform across the U.S. They are significantly higher in regions with access to inexpensive crudes. Figure 4 shows the trend in U.S. refinery utilization rates by Petroleum Administration Defense District (PADD.) The PADDs are: PADD 1—U.S. East Coast PADD 2—U.S. Great Lakes and Midwest PADD 3—U.S. Gulf Coast PADD 4—U.S. Rocky Mountains PADD 5—U.S. West Coast, including Alaska and Hawai’i
% Reﬁnery Utilization
Figure 4: U.S. Refinery utilization rates by PADD
P1 Ref Ul P3 Ref Ul P5 Ref Ul
P2 Ref Ul P4 Ref Ul
In the year 2000, PADD 5 had the lowest utilization rates, 87.5%, while PADDs 2, 3 and 4 all had very high utilization rates of 94 – 95% (considered close to the maximum possible rate). The drop in refinery utilization seen in 2008 – 2009 is attributed to the spike in oil prices and the U.S. economic recession, which cut into demand. But the high prices also stimulated domestic crude production from the shale plays that were under development. As the U.S. economy improved in the 2012 – 2015 period, U.S. oil demand rose as well, and refinery throughput climbed. The U.S. Energy Information Administration (EIA) reports that U.S. oil demand rose by 883 kbpd between 2012 and the first eight months of 2015. Gross inputs to refining grew at an even faster rate, increasing by 1070 kbpd during the same period of time, with the excess flowing into the export pool. FMNMagazine
The increase in U.S. production has displaced the output of an entire OPEC country.
FUELS & SUPPLY
Western Hemisphere Oil Ebbs and Flows The growth in U.S. diesel exports has been even more dramatic. Figure 6 shows the growth in U.S. diesel exports by destination. Europe is a key market, with smaller volumes heading to the Middle East, Africa, Asia and the Pacific. The U.S. is now exporting over 1.1 million barrels per day of diesel. Once again, the Western Hemisphere is the main destination. From 1993 through 2004, U.S. diesel exports to the Western Hemisphere typically were around 100 kbpd. They are currently averaging approximately 760 kbpd, and they are reaching even the smallest and most far-flung island markets in the Caribbean. Even though many of these markets are small, collectively they are one of the most important and growing markets in the world.
In contrast, refinery throughput has risen at refineries with access to inexpensive feedstocks. This has reduced product import requirements. In the year 2000, the U.S. imported 1556 kbpd of finished petroleum products. Refined product imports continued to grow, reaching 2075 kbpd in 2005. Following this, crude production and crude runs continued to grow while demand stagnated, particularly during the worst years of the economic recession. U.S. refined product imports dropped from their peak of 2075 kbpd to just 628 kbpd in 2014, before the recent low prices and demand recovery caused a moderate rebound in imports to 778 kbpd during the January – August period of 2015.
Figure 6: U.S. Diesel exports have soared, largely to the Western Hemisphere
As the figure demonstrates, refinery utilization recovered first in PADDs 2, 3 and 4. These are the areas in the center of the country with the best access to pipeline supply of domestic crude and Canadian crude. Refinery utilization on the East Coast and West Coast continued to languish. On the East Coast, utilization rates plummeted below 70%, until some refinery capacity was idled and eventually closed. On the West Coast, utilization rates fell to around 80%. In PADD 5, refinery throughput is now more or less flat, but utilization rates have improved to 86 – 87% because of capacity shut-ins.
In the overall product balance, U.S. refinery net production of petroleum products expanded by 2 million barrels per day during the decade from 2005 to 2015, whereas U.S. demand fell by 1.4 million barrels per day. This has created a swing of 3.4 mmbpd of new refined product in the Western Hemisphere. The change in product trade has been dramatic, with even stronger links to other Western Hemisphere markets. Figure 5 shows the surge in U.S. gasoline exports. During the 1993 – 2006 period, gasoline exports were in the vicinity of 100 kbpd. The drop in demand and rise in refinery throughput caused exports to rise to approximately 400 – 450 kbpd during the last five years. The great majority of this is exported to other Western Hemisphere countries.
Middle East/Africa Europe Asia-Pacific Western Hemisphere
Source: EIA. 2015 is first half-year average.
Figure 7 shows the growth in product exports to Canada, Mexico, and the rest of Latin America and the Caribbean. In the year 2004, exports to these three markets were roughly comparable: refined product exports to Canada were 133 kbpd; exports to Mexico were 209 kbpd; and exports to the rest of the Western Hemisphere markets were 221 kbpd. By the first half of 2015, exports to Canada had grown to 512 kbpd, and exports to Mexico had grown to 646 kbpd. This is significant growth, but it pales in comparison to exports to other Western Hemisphere markets, which are now receiving approximately 1.48 million barrels per day of refined product from the United States.
Figure 5: U.S. gasoline exports have soared, chiefly to other Western Hemisphere markets
Figure 7: Growth in U.S. refined product exports to other Western Hemisphere markets Canada Mexico Latin America/ Caribbean
Source: EIA. 2015 is first half-year average.
Source: EIA. 2015 is first half-year average.
FUELS & SUPPLY
Western Hemisphere Oil Ebbs and Flows
A flood of crude or product, now receding
Oil, as a liquid, needs to flow, and we have used the concept of “path of least resistance” to explain the movement. The Western Hemisphere has a complex web of oil trade patterns, some of which have evolved over decades according to laws of supply, demand and geography. But the Shale Revolution in the U.S. and the increase in oil sands development in Canada created a flood in the center of North America. If we view the oil as following a riverbed, the course tends to run north and south, with few tributaries managing to meander all the way West to the Pacific Ocean or East to the Atlantic Ocean. The flood caused many changes downstream, some of which came about because of the dam caused by U.S. policies restricting the export of domestic crude. Only a certain volume of oil behind the dam could access the spillway and be taken off, and most of this went to Canada, which is itself a net exporter seeking external markets—chiefly the United States. Pipelines and storage were full. Rail and truck traffic rose. North American crude prices fell relative to the rest of the world. Refineries along the path of the flood ran their units flat out, filling product pipelines and sending a growing flow of product out into the rest of the Western Hemisphere and beyond.
Figure 8: U.S. and Canada crude by rail; was 2014 the peak?
Source: EIA. 2015 is Jan-Sep average.
had grown to 140 kbpd. Canadian receipts from the U.S. had grown to 35 kbpd. But was 2014 the peak? Based on data for the January to September period of 2015, all three of these flows have ebbed. U.S. crude by rail is now averaging 817 kbpd. U.S. receipts from Canada are now 106 kbpd. And Canadian receipts from the U.S. are a little under 17 kbpd. Although this data series shows only the first three quarters of 2015, there are many reasons to believe that the flood may indeed be ebbing.
There was a major push to build new transport infrastructure, including the embattled Keystone Pipeline. This line would have eased the passage of both Canadian crudes and U.S. shale play crudes. Now, oil prices have been low for over a year, and they seem destined to remain low in 2016. U.S. and Canadian production are leveling off. The years of wrangling over the Keystone Pipeline were costly and politically divisive, but it is no longer such an important relief valve on the oil river system. Figure 8 offers a final thought on oil flow. When pipelines—the main river channels—were full, the second option was rail. In 2010, the U.S. shipped 55 kbpd of crude by rail. There was also a small amount of rail trade from Canada to the U.S., and from the U.S. to Canada. The growth rail traffic has been astonishing. In 2014, U.S. crude oil by rail had grown to nearly 868 kbpd. U.S. receipts from Canada by rail FMNMagazine
FUELS & SUPPLY
Western Hemisphere Oil Ebbs and Flows political decision. In the political realm, however, nothing happens quickly, so government policy change will not cause an immediate drought or an immediate flood. In the near term, we can expect a gradual increase in crude trade with Canada and Mexico, but probably not an immediate opening of crude trade. If refining in Mexico and other Western Hemisphere markets is expanded, this will reduce the flow of refined products from the U.S. The less expensive resource will flow to where it is needed. There are many forces at work that may affect the flow. On the crude supply side, the opening of Mexico’s oil industry may revitalize its flagging production. Like tides, the oil business has cycles. At this point in history, the low prices discourage the upwelling of oil from pools in shale plays, oil sands deposits and other unconventional oil reserves. There are more pools of oil available at lower cost, or available because of severe need to produce. Many oil producers, OPEC and non-OPEC, depend on oil revenues and cannot afford to shut in production. Others, including Iran, hope to expand output. On the other side of the coin, supply may tighten because of war, political unrest or natural disaster. Trade flows may reach an equilibrium, or the tide may turn. The North American flood is receding, but the rationale behind Western Hemisphere oil market integration remains sound, and the rivers will continue to flow. n
Whether or not a group favors removing the restrictions on crude exports, all must acknowledge the restrictions for what they are: an artificial barrier to trade.
Conclusion: The flood recedes, but the rivers flow The Americas from north to south have an abundance of petroleum resources, a massive amount of refinery capability, and numerous population and demand centers. Channeling resources to their highest-value uses has created an extensive trade network that we have likened to a river system. The flooding of the North American internal river system caused numerous new flows and adjustments. One way or another, the path of least resistance for U.S. and Canadian crudes has been down the center of the continent, down to the U.S. Gulf Coast. But there, both geography and politics create a barrier. First, oil bound for the rest of the world must board a ship, changing its mode. Second, most domestic crude reaches a dam with only limited spillway, governed by export controls. The overflow crude must be refined. This created new flows of refined product that started as a trickle but now reach virtually every country in the Western Hemisphere. The market changed immensely during the shale boom, and it is changing now once again in response to low prices. While U.S. and Canadian crude production will not plummet, certainly it will begin to level. In addition, if the restrictions on exports of U.S. crude are relaxed, this will change flows. The export of refined product in some places may fall in favor of crude exports and/or crude swaps.
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 firstname.lastname@example.org.
Whether or not a group favors removing the restrictions on crude exports, all must acknowledge the restrictions for what they are: an artificial barrier to trade. We have likened it to a dam, with a limited spillway over the top. But upstream from it, who knows how many canals, weirs, ponds and the like have been formed over the years? If we contemplate the massive outflow of refined products as an estuary, certainly it is nourishing for some. If we drain it, some will lose that nourishment. Changing an element in our bioregion will change other flows. These diversions to oil’s flow become a FMNMagazine
READ MORE at fuelmarketernews.com 26
FUELS & SUPPLY
by Joe Petrowski
How Price Bottoms are Formed and Why We are at One Now in Energy Having traded many commodities over a 40 year career, the “old salt” wisdom of my mentors and contemporaries sticks in my mind… The cure for high “prices is high prices. The cure for low prices is low prices. (Short for “markets work.” )
do not grow “toTrees the sky, and do
rarely “ Markets turn on needle
not short crap.
point peaks or bottoms, but round and trough for a period of time.
They do not ring bells at the top or bottom.
Price affects are baking “ingredients—they take
We invested $3 billion per year in domestic energy production.
We shed 3 million barrels per day in U.S. demand by efficiency and fuel shifting.
The time to be “nervous is when
you are relaxed; complacency is the great seducer.
time to manifest.
Applying this to the current energy situation the following can be said: We spent too long above $80/barrel when the marginal cost of production of the largest producer, Saudi Arabia, was $20/barrel. And as a result:
We invested another $1 billion per year in alternate fuel technology like electric, hydrogen and nat gas.
4 The backwardated market
decreased the demand for above ground storage.
Users bought hand to mouth at high prices, and accelerated that trend as prices began to decline.
Prognosticators spewed forth utter nonsense such as: “We are running out of oil; $100 to $150 is what we can expect.” While the mainstream press, academia and government officials were spending their time hand wringing, bloviating and exhibiting hysteria, the entrepreneurs, merchants and business visionaries were pouring capital into new production, fuel saving technology and innovative business models like Uber and Zipcar. Now that the oil price has collapsed, these same prognosticators are seeing an Armageddon of world deflation and a sector that will continue to spiral down. What they are now missing—
Announced capital cuts in new drilling and wells exceed $1 trillion annually, which is almost 50% of new production budget.
Because we are well supplied and the world economy remains soft, it is hard to see an explosive upside. But, just as we became comfortable with $100 oil and were shocked by its price collapse, we are getting too comfortable today with a moderate and low-priced oil market when we have: a change in Saudi leadership; an Iran that may find itself under attack if nuclear negotiations fail; and ISIS in control of Yemen. Add in a Chinese recovery, a Europe that discovers the joy of quantitative easing and an America that rekindles its love of petroleum vehicles and larger SUVs and the fear of $20/barrel will be rightfully seen as another irrational panic.
Why oil bottoms at $35/barrel 1Marginal cost of production of most efficient producer
2 With tanker freight rates at an all-time low, almost
2 With $15 crack spread—makes wholesale gasoline
500 ships representing 375 million barrels are in service storing both crude and products. That number could easily triple over the next two years with large price contangoes, low interest rates and low freight rates.
$1.19/gallon and retail just under $2 where demand explodes domestically
$35 for oil equivalent to $7/nat gas where accelerated switching occurs
3 Non-OPEC production, especially in Brazil, Mexico, and Russia is in steep decline.
4 Foreign demand, especially for diesel, explodes
4 We have 1.5 billion barrels of terminal space in the
5 Takes out November 1995 low
United States. A 10% increase in inventory holds will create demand for 150 million barrels, or 500,000 barrels per day.
With $1.50/barrel cost of carry/year puts 10 year forward at $50, not including optionality value of in ground/in tank physical supply benefit
5 We are seeing unprecedented increase in commercial
forward purchasing of products that are adding almost 1 million barrels per day to the demand base. Just as high prices force demand orward, low prices pull demand from the future to the present.
$35 is inflation adjusted price of $20 oil in 1970 (gas was 36 cents/gallon and you got a promotional glass. I pumped that as 16-year-old.)
6 An emerging trend that has not taken hold but will
have a very bullish impact is the creation of a retail market in fixed-price, fixed-gallon fuel cards. Natural gas, hydrogen and electric vehicle sellers will bundle these cards with GPS guided fuel locations at the time of purchase. Diesel and gasoline cards will also be bundled with loyalty offerings.
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.
This trend is being facilitated by financial players prohibited from proprietary and directional trading, as well as mobile technology. Retailers, product vendors and vehicle merchants will push this, and that will aid in pulling forward demand to the present when price dictates.
Lower Fuel Prices Benefit Retail: Convenience store retailers expect robust sales in 2015 to continue into the first quarter of 2016. They said overall sales in 2015 were strong, with 78% reporting an increase in foodservice sales and 64% reporting an increase in fuel gallons sold. Nearly 78% said that they are optimistic about their business for the first quarter of 2016, compared to only 6% who are pessimistic. Reference: NACS Retailer Sentiment Survey
Bottom Line: Media prognosticators are trying to pre-blame the current global economic slowdown on cratering oil prices instead of long-term market instabilities such as in China. Traditionally, lower energy prices lead to economic benefits for both consumers and commerce as costs drop and disposable income increases.
WEX Set to Acquire EFS At what point does the FTC consider consolidation
in an industry monopolistic? This is a question being
asked lately by those dependent upon fleet card
payment processing services, including independent
by Shane Dyer
card issuers and trucking companies alike. The announcement this week that WEX, Inc. is acquiring Electronic Funds Source (EFS) follows shortly on the heels of Fleetcor acquiring Comdata last fall. This is WEXâ€™s second major fleet related acquisition since buying FleetOne in 2012. We have seen a culmination of mergers over recent years that is centralizing control and power within these two companies. Today, Voyager, which is owned by US Bank, remains the only significant fleet card provider outside of the Fleetcor/WEX juggernauts.
This means many things for our industry. First of all, the consolidation will surely lead to increased fees. As competitive forces are removed from the market, there is less incentive to discount products and services in order to gain market share. About a year ago I conducted a fairly extensive survey of several OverThe-Road (OTR) trucking companies with the objective of identifying the reasons they chose their fleet card provider, why they stayed loyal and how they rated their past providers. A couple of things became apparent.
First of all, EFS, which also owns TCH and T-Chek, appeared to be actively trying to grow their business by reducing or eliminating fees to the trucking companies. As the smallest of the three players in the OTR market, this seemed an obvious strategy. Lower or eliminated fees were the most often cited reason by those surveyed for leaving either Comdata or FleetOne. With EFS being rolled into WEX, we see no other mature OTR solution to generate a similar level of competition.
The survey of OTR companies also revealed another concern the FTC should be considering. Several of the trucking companies had left Comdata or FleetOne because of credit or support issues. Where are they going to turn to now, especially those who are dependent on the OTR focused services such as Express Cash and various OTR system integration points? The implications of this consolidation are sure to have an effect on the competitiveness within the transportation industry as smaller, more challenged OTR fleets find it increasingly difficult to acquire the necessary services outside of the “Big Two.” As for my primary constituency, the petroleum marketers issuing fleet cards, I have two points to make to you. Heaven forbid if we wake up one morning to learn that Voyager has been acquired. Hopefully the FTC would not allow this to happen. At some point the regional fleet customer who has been carrying one of the Big Two cards is going to become more and more likely to recognize your value. You actually may become their only choice if they have determined that neither of the other two is compatible with their business. Maybe this represents a small silver lining for the independent card issuers striving to not be affected themselves by this unprecedented consolidation. n
Shane Dyer Shane is the president of PowerUp Fleet, Inc. He possesses over 32 years’ petroleum automation, operations, and executive management experience with a focus on commercial fleet fueling and cardlock networks. PowerUp Fleet, Inc. provides sales force automation/CRM solutions specific to the petroleum industry along with sales training, sales management and executive consulting services. Contact: (541) 388-5120 or email@example.com and visit PowerUp Fleet at: www.powerupfleet.com
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With so many moving parts to the developing fuels and vehicles industry, it’s difficult to summarize
a single preeminent, influencing factor to it. Yet when we break down the research, the analysis and the storylines that formed throughout 2015, one dominant theme emerges: technology.
THE YEAR OF TECHNOLOGY
From the perspective of new vehicles and powertrains, 2015 saw the rise of the electric vehicle (EV), resulting in a market boasting more than a dozen viable and pure EVs. Through October, nearly 58,000 EVs were sold in the United States, and by model year 2017, there will be multiple EVs for sale in the $30,000 price range that deliver more than 200 miles per charge. This is a huge development that could help boost EV sales beyond California, where the majority of EVs are registered. Technology advancements for newer models of electric vehicles bring more than 200 miles per charge.
In 2015, the momentum to transform self-driving technology into reality really took off. Several companies are actively working on autonomous and semi-autonomous features—and it’s not just the automakers. Google and Apple are exploring self-driving technology, and Tesla has activated an autonomous option in some of its Model S vehicles so drivers can start leveraging the benefits of this technology today.
by John Eichberger
Fully autonomous driving is likely still a long way off. The technology itself is not concerning, but what about the human element? How can a computer navigate FMNMagazine
roadways populated by completely unpredictable human drivers in other vehicles? To facilitate the introduction of a fully autonomous fleet, some of these issues (the human element) must be resolved—and thankfully very smart people are working on them. Beyond complete selfdriving cars, however, a lot of research into autonomous features is already filtering into regular vehicles today. Options like lane departure warning, blind spot indicators, adaptive cruise control, selfparking vehicles—these are all derivatives of research stemming from autonomous operations.
And as vehicles become more similar to a computer on wheels, how the technology appeals to the newest consumers is critical. Vice versa, younger consumers who are just starting to drive are much more open to advanced powertrain technologies than their predecessors. Looking at an even younger generation, affectionately known as Generation Z, EVs won’t appear strange or new at all. As one auto representative said to me: “Kids today already plug in their communications devices, so why should their car be any different?” Further, when they reach driving age, these drivers won’t accept vehicles that don’t enable the safe continuation of full connectivity. The expectation is that the vehicle must become a rolling computer to satisfy the next generation of consumers.
Historic analyses of 2015 will be ripe with evaluations on the effect of $40 oil and the return of sub- $2.00 gasoline in many U.S. markets. But volatility in fuel prices is expected and no pricepoint lasts forever. What’s more sustainable is the clarity we now have about the role technology has in driving the future of transportation. How will stakeholders in the fuels and transportation market capitalize on emerging technology opportunities? Technology is expanding rapidly, and 2016 is likely to show us even more potential for market development. n
Advanced communications and analytical capabilities, both in vehicles and along the roadways, are improving the safety and efficiency of the U.S. travel system. State transportation departments are installing advanced systems to monitor and analyze traffic conditions, communicate with drivers to recommend optimal driving behavior and educate planners on long-term traffic mitigation strategies. Onboard technologies will ultimately integrate with stationary traffic systems and help alleviate congestion and collisions—all by the grace of technology advancements.
Ultimately, the consumer will decide which technologies succeed in the market. Millennials understand the latest smartphone technologies more than they do the horsepower delivered by a 3L V6 engine. Automakers realize this and are focusing on device integrations that appeal to the always-connected consumer. (Of course, ensuring that these features do not distract from the task of driving is a critical element of vehicle design, but from a marketing perspective, the consumer leads.)
Editorial Note: This article ran previously in the December 2015 issue of NACS Magazine
For more information about the Fuels Institute or to get involved, contact John Eichberger, executive director, at 703.518.7971 or email him at firstname.lastname@example.org.
John Eichberger Executive Director, Fuels Institute
READ MORE at fuelmarketernews.com FMNMagazine
for Gas Stations and C-Stores when Migrating to EMV by Dan Yienger
The EMV liability shift that is applicable to all in-store credit and debit card transactions is now in effect, and gas stations and c-stores are beginning to explore ways to upgrade their fuel dispensers to accept EMV in time for the October 2017 liability shift, which applies to the petroleum forecourt.
Unlike in-store payment devices, which are typically replaced every 3 – 5 years, integrated fuel dispenser payment devices are considerably more expensive and are often used for 10 years or more before being replaced. With this in mind, along with the fact that EMV is just one of the many evolutions consumers are starting to see at the counter, and will begin to see at the pump, gas stations and convenience stores should be especially thoughtful as to what the future has in store (no pun intended) for payments and commerce when evaluating EMV solutions for the petroleum forecourt.
Innovation doesn’t end with EMV:
When it comes to new payment methods in the U.S., it’s safe to say that EMV is the most dominant in the minds of merchants and consumers alike due to the recent liability shift kick-off and the focus it’s receiving in the press. Despite all of EMV’s attention, let’s not forget about all of the recent merchant and consumer interest over near field communication (NFC) and mobile wallets—especially when Apple Pay became available in the U.S. and the UK less than six months ago. It was only until October 1st was a month or so away that the topic of mobile payments was arguably more popular than EMV amongst consumers and in the press. In short, when you select an EMV solution for your fuel dispensers, make sure it also has the ability to support other payment methods that will likely become increasingly preferred by consumers in the future.
The reality for gas stations and c-stores is that they’ll be stuck with whatever technology upgrades they make to accept EMV in the petroleum forecourt for a decade or more—unless they want the added expense of having to, yet again, install new payment technology before then.
Boredom at the pump is becoming a thing of the past:
Important Considerations for Gas Stations and C-Stores when Migrating to EMV
Remotely accessing information and Work streamlining day-to-day activities is easier today than perhaps ever before thanks to Smarter, “the cloud.” In fact, the cloud is now even gaining traction in petro space. For Not instance, just recently at the 2015 NACS Show in Las Vegas, Tri Star and truenorth Harder: both announced they’re rolling out a site management platform in order to increase speed in at-thepump and in-store payment acceptance, fueling operations and back office control. In addition to reducing complexity by separating payment, fuel and point of sale (POS) software for easier management, the solution’s cloud-based software management tool allows managers and owners to track real time data for all aspects of their business, including payment, in-store and forecourt operations.
What do you do while you’re at the pump filling up your tank? You’re either zoning out, using your mobile phone—despite advisories not to do so—or regretting the time being wasted as you stand there pumping gas. This is changing, as gas stations and local and national advertisers are beginning to recognize this “down time” at the pump as a way to entertain and engage consumers that are on the path to purchase.
The ability to accept EMV at the pump will be equally as important as being able to accept it at the counter. However, the reality for gas stations and c-stores is that they’ll be stuck with whatever technology upgrades they make to accept EMV in the petroleum forecourt for a decade or more—unless they want the added expense of having to, yet again, install new payment technology before then.
Today, gas stations are increasingly working with nationally recognized content partners to entertain, inform and engage consumers while they fill their tanks. The key is to capture consumers’ attention during idle time they find themselves with while pumping gas. This can be accomplished with new digital media solutions that deliver national and local news updates and entertaining content through multimedia touchscreens that are integrated with the fuel dispenser. Mixing this content with loyalty and promotional incentives for in-store products enables c-stores to leverage the pump in ways that help entice customers to enter the store. Certain solutions even continue engaging customers after they enter the store.
Therefore, it’s critical for gas stations and c-stores to think beyond EMV while evaluating EMV solutions for the petroleum forecourt. Consumer preference—like innovation—is ever changing. Don’t rollout a solution that will meet the needs of today, only to become obsolete tomorrow. Make sure your solution will simplify and expedite your move to EMV, while at the same time offering you a flexible, standardized payment system that is easy to use and can grow with future business needs. n
For instance, while customers are purchasing merchandise at the counter, digital customer-facing touchscreens present them with targeted promotions, discounts and other money saving incentives, which are targeted specifically according to what they’re purchasing at that moment. The potential for this type of solution to drive sales is being noticed by c-stores of all sizes. A large, well-known petro/c-store chain recently announced plans to deploy an integrated at-thepump and in-store digital advertising solution across the majority of its locations. And, a small regional petro/c-store chain reported that its locations that deployed the solution immediately saw a 6% jump in in-store sales compared to its locations that weren’t using the solution.
Dan Yienger Dan Yienger is Senior Vice President and General Manager of Petroleum for San Jose, California-based Verifone, and works with gas stations and convenience stores throughout the U.S. to solve their biggest payment challenges and enhance operations.
The ability to engage consumers in such a way is clearly beneficial for store owners and brand advertisers alike, however, it’s particularly valuable in the petro space, especially if the increased revenues can help offset some of the expenses related to EMV migration in the petroleum forecourt. FMNMagazine
READ MORE at fuelmarketernews.com 38
by Joe O’Brien
Charting a Path for a Successful Phase 2 EMV Conversion As the saying goes, most things worth doing in life are hard. Such is the case with the U.S. conversion to the global EMV (EuroPay MasterCard VISA) credit and debit payment standard. As with any major migration to new
technology, there has been some
thorny feedback about the rollout of
EMV in the United States. Many fuel retailers are grappling with the
upgrade requirements—from both a
logistics and financial perspective—
while not reaping the full benefits of
EMV’s PIN security, which has been
delayed by most banks to help ease
That notwithstanding, with the liability for fraudulent point-of-sale (POS) charges shifting from banks to retailers earlier this year, and liability for automated fuel dispensers set to shift to retailers in October of 2017, fuel retailers have much to gain from the EMV conversion. While it may seem as though retailers are being strongarmed into completing data security upgrades, the migration represents an opportunity for fuel sites to become more competitive over the long term. By deploying additional strategic forecourt updates in conjunction with the EMV conversion, retailers can leverage branding enhancements, modern marketing strategies and efficient pump technology to significantly enhance the customer experience and, ultimately, increase both their sales volumes and margins.
consumers into the technology
through signature authentication first.
The ABCs of EMV EMV leverages a computer chip on the front of payment cards to provide a more secure form of authentication than traditional magnetic stripe cards. It is projected that, over the long term, the chip cards should substantially reduce credit card fraud in the United States. During the “Are You Prepared for EMV?” program presented at this year’s NACS Show, industry experts estimated that if the U.S. does not adopt stronger card data security measures, the U.S. could expect card fraud to increase by over 75% by 2020—equating to billions of dollars in fraudulent charges.
Almost one million pieces of forecourt equipment will be upgraded or replaced by the time the EMV conversion is complete. This includes 326,000 POS systems and 721,000 dispensers. In addition, the industry is expected to perform an estimated 127,500 updates to data and connectivity infrastructure to accommodate the additional bandwidth needed for processing EMV transactions. Factoring in the installation costs, overhead and equipment downtime that are part of these updates, it’s easy to see how the costs to fuel retailers can quickly add up. These costs have been a source of contention for independent fuel retailers in particular. The U.S. House of Representatives Committee on Small Business recently heard testimony from frustrated retailers about the cost of converting POS systems and dispenser card readers, which is averaged at $26,000 per site, compared to the average annual store profit of $47,000 per year.
Although EMV conversion is not legally required, banks and card-issuing financial institutions have taken a unified stance that they will no longer hold themselves liable for fraudulent card activity that takes place by nonEMV compliant systems. Retailers who don’t institute EMV technology put themselves at risk for costly chargebacks—and that risk will grow. Here’s why: card-skimming operations are expected to target non-EMV fuel sites aggressively in the coming months. As more EMV cards begin to circulate, experts overwhelmingly agree that criminals will turn their attention to the cards that present the path of least resistance (magnetic stripe cards). During the NACS program, the speakers projected that non-EMV sites could face an estimated $40,000 in losses due to fraud in the next five years. FMNMagazine
While it may seem as though retailers are being strong-armed into completing data security upgrades, the migration represents an opportunity for fuel sites to become more competitive over the long term.
Charting a Path for a Successful Phase 2 EMV Conversion
Lessons from Phase1 for Phase 2
Reasons to Make the Leap to EMV
When it comes to the migration, fuel retailers, c-store operators and card issuers across the country are in various stages of completion. According to CreditCards.com approximately 60% of U.S. credit cards and 25% of U.S. debit cards will be issued as EMV cards by the end of 2015. Although the deadline for Phase 1 of EMV conversion for in-store POS systems passed on October 1, many sites still have POS upgrades to complete. As the petroleum industry begins to shift its attention toward Phase 2 of EMV—upgrading dispenser card readers and possibly, the dispensers themselves, by October 1, 2017, — there are several things fuel retailers can do to experience a smooth EMV transition:
Although EMV may seem like a tough pill to swallow, retailers who migrate early will realize benefits beyond liability protection. First and foremost, card security is essential to retaining customer loyalty. In the bigger picture though, the equipment upgrades represent an opportunity for an image refresh, especially when implemented as part of a larger, strategic business initiative. Retailers who install mobile payment technology or media-rich dispenser advertising systems (which are shown to increase c-store sales) in conjunction with their EMV upgrades not only position their forecourt for the future, they could optimize installation costs and leverage supplier discounts. Petroleum equipment consultants can help fuel marketers— ranging from small independent operations to large retail networks—navigate the challenges of EMV. Trusted fuel equipment advisers will identify not only the strategic investment opportunities available on the forecourt, they will offer leads on special pricing programs, cost savings through dispenser advertising programs and financing opportunities from lenders. Fuel sites that take advantage of these services will position themselves to realize a quicker return on their EMV investments.
Audit your communications infrastructure. Most of the public EMVconversation thus far has centered around POS and automated fuel dispenser upgrades. However, it is critical for retailers to understand that having a capable communications infrastructure is also necessary. EMV data transfers are significantly larger than static magnetic stripe data transfers and, as a result, dial-up Internet access will not support the EMV upgrades. At minimum, business-grade broadband is required.
Prepare for a complex certification process.
More information from the NACS program: “Are You Prepared for EMV?” is available in in the Quick Links menu (click Educational Session Presentations) at http://www.nacsonline.com/nacsshow. n
At present, obtaining the necessary certifications from fuel brands or networks has been cumbersome at best. Due to the number of potential combinations of EMV certifications that are currently required for POS systems, pin pads, memory protection devices and payment processors, the retail petroleum industry could be completing testing and certification for years to come. While petroleum industry advocates are looking for ways to reduce certification redundancies moving forward, fuel retailers and c-store operators should expect a lengthy certification process in the short term.
Order your equipment early. Kara Gunderson, who is the POS Manager for Citgo Petroleum Corp. and one of the speakers at the NACS EMV program, reported that there are only 3,000 technicians who can perform inside and outside upgrades. Retailers who wait until the last minute to order equipment could find themselves facing significant installation delays or paying a high premium for the service. Consult with an experienced petroleum equipment distributor to develop comprehensive site plans that address the individual needs of c-stores and fuel sites to ensure your equipment and installation needs can be met in a timely and cost-effective manner. FMNMagazine
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 email@example.com.
READ MORE at fuelmarketernews.com 42
Gulf Sees the Light A change in ownership launches a notable change in focus
by Keith Reid
SPECIAL SUPPLEMENT: GULF OIL
A potential Gulf Oil, LP acquisition has been a topic of conversation throughout the industry since news began to leak out over the summer. Now, that acquisition has become a reality. It was announced on December 29 that ArcLight Capital Partners, LLC, through its affiliate Chelsea Petroleum Products Holdings, LLC, completed the purchase of Gulf Oil, LP from Cumberland Farms, Inc. ArcLight is a leading private equity firm focused on energy infrastructure investments. Gulf will maintain its headquarters in Massachusetts and retain its name and limited partnership structure. According to ArcLight: “The new Gulf is well positioned to be a premier fuel logistic platform, delivering exceptional customer experience and hiring and developing the best people. With this foundation, the company’s strategy will focus on building volumes across fuel types and adding new, complementary assets to the platform over time.”
Fuel Marketer News was able to interview Gulf’s corporate leadership for their perspectives on driving the company forward—a process that will be building on a historic past.
“Gulf is on the cusp of a resurgence of Gulf brand value in transportation fuels. It is not based on market development for petroleum products and posted supply price, but on an exceptional national network of terminals and distribution, hedging, billing and information technology development as well as multi-fuel capability. Gulf now has a complete set of assets and professionals, and is well positioned to be the best branded supplier in North America.”
Gulf Board Member and Former CEO Joe Petrowski
SPECIAL SUPPLEMENT: GULF OIL
Gulf Sees the Light reasons. He has played a consulting role in the current acquisition and will be a board member for the new Gulf. So now, a new era has begun.
“Gulf is on the cusp of a resurgence of Gulf brand value in transportation fuels,” said Petrowski, commenting to FMN about the acquisition. “It is not based on market development for petroleum products and posted supply price, but on an exceptional national network of terminals and distribution, hedging, billing and information technology development as well as multi-fuel capability. Gulf now has a complete set of assets and professionals, and is well positioned to be the best branded supplier in North America.”
And Gulf Oil truly is a historic brand, with an iconic logo. Founded in 1901, Gulf was one of the “Seven Sisters” whose influence and market presence as an integrated oil company spanned the globe. However, by the 1980s the brand was considered troubled, and in the face of pressure from that era’s corporate raiding, Gulf merged with Standard Oil of California to create Chevron. The process saw the divesture of the upstream operations and a division of the downstream supply and retail assets among a range of entities. As Gulf details in its history timeline: In 1986 Cumberland Farms acquired the naming rights to the Gulf Oil brand from Chevron to be used in eleven northeast states. But it wasn’t until 1993 that Gulf Oil Limited Partnership was formed after Cumberland Farms entered a joint venture with Catamount Petroleum LP. In 2005, Cumberland acquired the company in full and brought in CEO Joe Petrowski, who charged the company with “reinventing” the brand. [Disclaimer: Petrowski is a regular FMN columnist.] Petrowski took that challenge seriously. Brand standards were raised and enforced and the brand expanded significantly in its existing market. In 2007 The Gulf Sunrise reimaging was introduced with a full rollout and push launched in 2008. That included a refreshed logo (the first since 1969) and a range of enhancements for its Gulf Express c-store platform. In 2010 Gulf acquired the rights from Chevron to expand the brand nationwide. By 2011, with this opportunity building on the previous efforts, Gulf had rebranded more than 400 sites in over 30 states. As it stands today, Gulf distributes heating oil, diesel fuel and gasoline and markets over three billion gallons of products. There are over 1,750 Gulf-branded outlets and approximately 1,000 private label retail outlets are supplied. Petrowski, after overseeing significant growth in gallons distributed and branded operations added to the Gulf network, stepped down from Gulf management in 2013 for undisclosed
A Laser Focus on Supply When Gulf was under Cumberland Farms ownership, the focus (quite naturally) ultimately came back to the retail side. Under ArcLight the shift is, to say the very least, significant.
“The landscape is changing out there for the market and for us; we want to be that premier logistics platform in providing exceptional customer service,” said new Gulf President and CEO Jerry Ashcroft. “Basically, with the changing landscape, that means that we’ve got to be a very good supplier. The current Gulf team has done a fantastic job of bringing Gulf back to the forefront, and we’re lucky to have that history and brand recognition.” Ashcroft previously held executive leadership roles at Buckeye (2009 – 2014), Colonial Pipeline (2000 – 2006, 2008 – 2009) and JP Energy Partners (2014 –
SPECIAL SUPPLEMENT: GULF OIL
Gulf Sees the Light That point was expanded by Mike Campbell, Gulf’s new Chief Financial Officer, who previously held the role of CFO at Crestwood Midstream Partners and Crestwood Equity Partners, the general partner of CMLP (2012 – 2015) and Inergy Midstream, LP (2003 – 2012).
“From the standpoint of these assets, the beauty of putting them together is scale,” Campbell said. “We have a geographic position in the Northeast that is obviously very attractive and I think we’d be attractive to investors down the road offering another downstream logistics and terminalingbased MLP.”
2015). He is a decorated Major in the United States Marine Corps and holds a Bachelor of Science from the United States Naval Academy and MBA from Goizueta Business School, Emory University.
The key consideration with the Gulf acquisition is to look at it as part of a whole.
A Message to Existing Customers
The first related opportunity ArcLight acted upon, noted Ashcroft, was the April 2015 acquisition of Pyramid LLC, (formerly, Petroleum Products Corporation) by ArcLight. The Obviously, any change of this scope raises questions through portfolio company within ArcLight that made the acquisition is an industry, and most specifically among those with existing Penn Product Terminals. This acquisition will be referenced as relationships. What does this acquisition mean for existing PPT throughout the article. That involved nine active refined customers? products storage terminal facilities in Pennsylvania totaling with over 8.7 million barrels of storage capacity. The PPT assets store “I think that the nutshell message is that [the customer is] gasoline, diesel fuel, heating oil, kerosene, ethanol and going to see this as seamless,” Ashcroft said. “The people biodiesel and are a leading distributor of these products to that they’ve been calling are still customers in Pennsylvania going to be the people that they’re and five surrounding states. calling. The systems that they’ve All terminals are connected “We’ve got a unique situation where we have been working with are still going to via pipeline, barge or rail both branded and unbranded marketing to drive be the same systems. For them, it and supplied from a barrels and gallons through those assets. From really should be a seamless geographically diverse set transition. of refined product sources our standpoint, we’re a logistics provider to our including New York, customers versus a competitor to our customers.” “We feel like we have a lot of really Philadelphia the Midwest good people at both companies, and Gulf Coast. Gulf President and CEO Jerry Ashcroft but from the Gulf standpoint, those will be the same faces and voices The Gulf acquisition that they’ve dealt with. What we want to improve on is our brought 12 owned and operated proprietary refined product customer experience. We want to be able to bring them the storage terminals to the logistics infrastructure. This network lowest cost of supply and do so in a safe and reliable way.” has connectivity via the Buckeye and Laurel pipelines as well as barge access that allows Gulf to source product from Canada, Gulf’s largest customer, unsurprisingly, is the company’s Europe, the Caribbean, and all of the major United States previous owner, the Cumberland Farms chain, with more than refining markets. Meeting antitrust requirements resulted in the 500 stores. “There is a long term agreement for Cumberland sale of four terminals. The total count is 17 active refined to transition from an ownership tradition to our largest product terminals after the acquisition. customer,” said Ron Sabia, former President of Gulf under Cumberland management and now the company’s Chief “The Gulf opportunity came right behind PPT and it was a good Strategy Officer. “In the long term, we hope to maintain that connection with those assets,” Ashcroft continued. “They really relationship, because obviously it’s an important one to us as complemented each other well, some in the same regions, but a company. We value Cumberland, and we want to continue we basically gained a footprint from Maine all the way to that relationship for as long as we can.” Pittsburgh.”
SPECIAL SUPPLEMENT: GULF OIL
Gulf Sees the Light
Branded Market Growth As previously noted, Gulf had been undergoing a significant expansion since 2005, both in existing and new markets. What are the anticipated growth dynamics moving forward under the new ownership? “What does growth look like for us? I think we want to double down in the Northeast and make sure that we really do well in our own backyard, especially after picking up these Pennsylvania terminals,” said Ashcroft. “Then, we want to go where the growth is in the nation. We’re currently looking at even more opportunities in the Southeast, and we currently have a market there. Is it the Midwest? Is it the Southwest? Those are things that we have good debates on how do we best grow. But right now, our focus of effort is transitioning Gulf out of Cumberland, integrating Gulf and PPT, and growing our business in our own backyard.” Both branded and unbranded supply will feature strongly in Gulf’s future expansion efforts. “We’re going to continue to try to build the business across the platform,” said Sabia. “The brand is still very important to us, and obviously the very name of our company. We expect it to remain at the same level of importance going forward. We want consistent, ratable volumes through our terminals and obviously the long term commitments the brand brings are appreciable to that.” Rick Dery, who managed branded sales and marketing under Cumberland leadership is still managing that operation under the new ownership.
Sabia noted that it is too early in the process to discuss any specific branded programs or promotions relative to future brand growth. That was also echoed by both Ashcroft and Campbell. “We look to be extremely prudent with our dollars in order to deliver the best value to our customers,” said Ashcroft. “We want to spend those dollars as if they were our own. That’s our obligation to our shareholders and our fiduciary responsibility. I think that you are going to see us be very diligent with our decisions. We are going to be bringing a disciplined approach in all of our dealings.” Where retail is concerned, the new Gulf operation will set itself apart from the common retail acquisition MLPs that have been seen in the space. “There are a few MLPs out there that play in the cstore suite, but I think, from our perspective, focusing on a particular area of the value chain and being good at what we do is really going to be our focus,” said Campbell. “And that’s remaining in the midstream area and being very, very good at what we do.” While a significant amount of information and commentary was supplied on Gulf’s future branded fuel supply operations, no specifics were offered at this time related to future developments with Gulf’s retail platform, Gulf Express. It was announced that in a related transaction Blue Hills Fuels, LLC, another
ArcLight affiliate, purchased Gulf’s Assured Dealers business. The Assured Dealers business collects rent from over 200 owned or leased, but nonoperated, independently franchised sites under the Gulf or Mobil brand that also purchase branded product under contract from Gulf.
Unbranded Market Growth The unbranded supply opportunity was hardly neglected after Gulf began its earlier revitalization efforts, but there were challenges. If anything, that aspect of the business will be seeing more attention moving forward.
“The unbranded story for Gulf the last 10 years has been positive and uplifting,” said Walter Brickowski, Gulf’s Senior Vice President, Unbranded Marketing. “Going forward with the new company we’re going to continue to expand geographically, and the possibilities are, I’m not going to say unlimited but, very, very good. I mean we have a very large presence in PADD 1. Annually, we sell over 1.3 billion gallons of fuel.”
SPECIAL SUPPLEMENT: GULF OIL
Gulf Sees the Light
Just what type of partner is Gulf looking to add as it expands its customer base? While some aspects are consistent, the specifics will vary regionally between branded and unbranded opportunities.
Brickowski noted that Gulf approaches the unbranded market in a fairly unique manner. “We built in some things a tad different than most people. I mean we do post a price every night, but we also market index-related contracts and NYMEX basis contracts,” he said. “The index could be Platts, Argus, OPIS—all over the markets we cover. We try to sell the majority of our product on a NYMEX related basis contract or an index contract. Only a small portion of our sales are from a posted price. That’s really not our cup of tea.” Maximizing opportunities with the market volatility is the key to our business growth, according to Brickowski, and it also forms the bedrock of Gulf’s pricing on the unbranded side. “What we really try to do collectively is take advantage of the daily volatility in the markets,” he said. “What I mean by that is that we primarily try to structure deals that have some pricing options for our customer. We utilize those tools to bring the value to our customer. Today’s a perfect example: the futures markets are down over three cents on gas. This gives us the opportunity to deliver a lower cost per gallon of product. Our customers should expect a call from us.” From an unbranded market standpoint, Brickowski noted the company currently markets in approximately 21 states, and that product is sold in about 80 OPIS cities. “We started 10 years ago, probably selling in nine states and in maybe 15 – 17 cities,” he said. “We’ve made a pretty big march from Maine all the way to Miami.” While it can be challenging entering new markets in the face of existing competition and both customer and terminal operator expectations, Brickowski feels Gulf has some notable advantages. “One thing we do have is national retailers,” said Brickowski. “We have some national big-box companies and some national supermarkets that we’ve been in dialogue with. They’ve said, ‘if you go into this market or you go into that market, we would like you to supply us.’ We have the customer base to grow this fairly quickly, and I think volume-wise we’ll be pretty decent also.” The majority of Gulf’s unbranded business, as is the case today, is expected to be gasoline.
“From what we’re seeing each geographic market is different,” said Ashcroft. “In the Northeast, brand is important. People like to move toward a brand when they’re filling up their tank. What we’ve seen in the Southeast is that an oil brand is less important, and it’s more the RaceTrak and the larger unbranded dealers on I-95 and I-85 that are doing a lot of traffic.
“We are looking for strong business partners, good business people. And as they say, you have a good franchise business if you have good franchisees. So, obviously, strong businesspeople in the local markets who know the market and have the ability to grow the brand at a sustained and fast pace—those are the guys we’d be glad to do business with.”
Gulf Chief Strategy Officer Ron Sabia
“We want to have the ability—because we’ve got this great platform behind us with both the back office and the marketing and trading—to basically give to those regions or those customers what they need. If they need the brand and the branded gallon to drive business, we want to provide that. If it’s more of a region where unbranded is the focus, we want to provide that wet barrel because we’re a logistics platform. We’re going to be very good at supplying barrels, supplying renewables and having big terminals to drive those barrels through. Our intent is to provide the customer service that people need, based on regional tastes.”
SPECIAL SUPPLEMENT: GULF OIL
Gulf Sees the Light
By and large, the branded partners being sought are quality marketers with some scale. “We are looking for strong business partners, good business people,” said Sabia. “And as they say, you have a good franchise business if you have good franchisees. So, obviously, strong businesspeople in the local markets who know the market and have the ability to grow the brand at a sustained and fast pace—those are the guys we’d be glad to do business with.” Scale is also a major consideration on the unbranded side. “Our customer base is the major, national big boxes, the huge unbranded regional folks and to a lesser extent truck stops,” said Brickowski. “We sell to the three largest heating oil companies in the United States. We sell to the biggest supermarket in the United States plus some smaller regional supermarkets. That’s kind of our growth model. We’ll be, as we expand, looking to add more volume with that sort of account. That’s not to say we don’t go down to solid, long-standing firms who might own 50 or 100 gas stations, but going down to somebody who has one or two stations—we just don’t have the manpower for that.”
on both the branded and unbranded sides. We are always available, and you have access to top management with minimal delay, which you can’t say with every major brand out there.” More globally, Sabia believes that the lower bureaucratic overhead helps the entire company at all levels as it meets the opportunities and challenges in the marketplace. “I think it allows us the ability to be nimble, and move quickly to take advantage of opportunities in the supply space that groups that are tied to a refinery or their company source may not be able to avail themselves of, so it does give us some opportunity to take advantage of some costs and savings,” he said.
Gulf’s Value Proposition Gulf finds itself going up against a variety of competitors with varying scale and operational structures. These range from the integrated oil companies, to refiner-marketers, to similar large wholesalers down to smaller, local distributors. What sets Gulf apart, and what does the company feel are its major competitive advantages? The first cited was the enhanced logistical infrastructure. “I think our advantage is the hard assets themselves,” said Ashcroft. “We’re going to now have 17 active refined product terminals that go from Pittsburgh to Maine, and they’re great assets. We’re going to invest in those assets and improve those assets, and then we’ve got a unique situation where we
have both branded and unbranded marketing to drive barrels and gallons through those assets. From our standpoint, we’re a logistics provider to our customers versus a competitor to our customers.”
Brickowski expanded on the service aspect with unbranded sales, noting that a number of the larger, less-traditional operations such as the big-box operators or supermarkets do not have significant staffing for the amount of fuel purchased. The Gulf approach is to minimize their headaches while having fair, competitive pricing and supply. “It’s very old fashioned probably by today’s standards, but we try to give service,” said Brickowski. “What I mean by giving service, we don’t let the phone ring more than a few times. We always have someone there to answer a question, a live person. We do use instant message and we do use texts and emails like the rest of the world. But if there’s a problem in the evening or on the weekends, you can’t get your truck loaded for whatever the reason, we always have somebody available to take the burden off the buyer or the dispatcher.” He also cited contract integrity as a core internal value at the company. “It’s very important that if we say something, we do it,” Brickowski said. “If we make supply mistakes, we have to pay for our mistakes and we expect the same from the customer. That relationship, knowing how we’re doing business and how they’re conducting business, is very important.” n
On the branded side, price and service were cited. “First, given the rack to retail spread, we generally provide a good value for folks who buy wholesale from us,” said Sabia. “We’ve seen actual jumps in volume of near double digits in many sites merely from the switch to Gulf. Second, it’s service. We tend to focus on this
SPECIAL SUPPLEMENT: GULF OIL
Gulf Sees the Light
ArcLight Capital Partners, LLC
The company was founded by Daniel R. Revers and Robb E. Turner
Founded in 2001, ArcLight is one of the leading private equity firms focused on North American and Western European energy assets. Since its establishment in 2001, ArcLight has invested over $13.9 billion across multiple energy cycles in more than 90 investments. Headquartered in Boston, with an additional office in Luxembourg, the firm’s investment team brings extensive energy expertise, industry relationships, and specialized value creation capabilities to its portfolio.
From the ArcLight perspective, Revers had the following to say about the Gulf acquisition: “Gulf is well-established among consumers as a top tier brand and in recent years has experienced significant growth of marketed volumes. The ownership of a major petroleum wholesaler and terminal operator represents a significant opportunity in today’s energy industry and is a key component of our investment strategy.”
The company focuses on the following areas: Midstream: pipelines, storage and terminals, gathering and processing, transportation, and offshore Power: conventional power (natural gas, coal, oil), renewable power (wind, hydro, solar, biomass), and electric transmission and distribution Production: onshore oil, natural gas and natural gas liquids
Although the new era at Gulf is in its infancy (and the disclaimer always states “actual results may vary”), the old hands at Gulf who were interviewed for this article feel the future looks bright after the acquisition. “I think people are excited to get going and expanding the Gulf flag and distinguishing ourselves as a new company,” said Walter Brickowski, Gulf’s Senior Vice President, Unbranded Marketing. “I think as long as we bring value to the customer, our expansion possibilities and certainty of success will be very good. Most of the income for Cumberland Farms/Gulf went, and I believe rightfully so under Cumberland ownership, for raising rebuilds for the Cumberland Farms stores, for new trucks, new equipment. For me being in an unbranded world, I always like to have terminals. You can control your destiny a little bit more as opposed to going to a public terminal or having to exchange at some major oil company’s terminal.” “To me, the most exciting part about it is that the range of options has really increased tremendously,” said Ron Sabia, former Gulf President and the company’s current Chief Strategy Officer. “There’s probably never been more opportunity in the twenty plus years I’ve been in this space. We see lots of opportunities for our company to pursue.” “But I think to me the most important thing is to acknowledge the tremendous group of professionals that we have working for us at Gulf, and now the ability to work with a company like PPT (ArcLight’s other recent terminal venture), who in its own right has built a great company based on service as well. Our employees have grown both companies to this point, and they’re going to be the key to our success going forward, so I want to make sure we acknowledge and thank them for all they’ve done.”
WHOLESALE & FLEET OPERATIONS
by Maura Keller
Meeting Customers’ Needs For many fleet owners and operators, fueling their fleets is one of the biggest expenses and challenges they face. But thanks to mobile, or onsite fueling, more and more companies are experiencing reduced fueling time, improved efficiencies, less equipment downtime and significant cost savings—making businesses more competitive.
Tim Johnson, senior vice president and general manager at Diesel Direct, said that mobile fueling enables greater productivity of today’s labor force and greater leverage of the assets Diesel Direct fuels. “Our customers tell us our service actually saves the expense of one driver for every 10 drivers they employ and one truck for every 10 trucks they own,” Johnson said. In addition to the monetary benefits, other benefits of mobile fueling include helping reduce the fear of fuel leaking from tanks onto the ground. “We are also proud of the fact that our service results in a measurable reduction in the carbon footprint created by chasing fuel at truck stops and even idling at on-site tanks,” Johnson said. “And there is certainly a security value in the fact that you know you are
getting every gallon you pay for, without the fear of disappearing gallons, which is a significant problem in this industry.” Steven Leavitt, director of commercial sales and operations at Atlas Oil, agreed that the largest value of mobile fueling is the labor savings provided to any fleet. “One of our expertly trained fleet fueling drivers can fuel an entire fleet faster and safer than having each driver refuel themselves at a retail or card-lock facility,” Leavitt said. “The cost of labor, when looked at on a per gallon basis, can be staggering. The price you see posted at the corner station may be the same for cash or credit but never includes the cost of labor or the down time associated with that truck. Also, this service saves the investment cost of an onsite fuel storage solution and the regulatory headaches that go along with it.”
WHOLESALE & FLEET OPERATIONS
On-Site Fueling: Meeting Customers’ Needs
And mobile fueling is right for just about any fleet operation that returns to its yard on regularly scheduled intervals. “These are the fleet operations most likely to see value from this service,” Leavitt said. “Traditionally these are your local or regional trucking companies, but many over-the-road companies utilize the service as well.” Indeed, as Johnson explained, any fleet of assets, which are situated in one location or across several locations on a scheduled basis, would likely be a candidate for on-site mobile fueling.
“We have found as little as one asset can benefit from our service given the right urgency for that asset to be ready to work,” Johnson said. “However, our typical client has five or more assets.”
“One of our expertly trained fleet fueling drivers can fuel an entire fleet faster and safer than having each driver refuel themselves at a retail or card-lock facility. The cost of labor, when looked at on a per gallon basis, can be staggering. The price you see posted at the corner station may be the same for cash or credit but never includes the cost of labor or the down time associated with that truck.”
Director of commercial sales and operations at Atlas Oil
Outside of the obvious needs for a safety-conscious driver and a tank wagon truck, “truck to office” technology is a minimum requirement for today’s mobile fueling process.
To communicate their mobile fueling services, Diesel Direct employs many modern marketing techniques including web-based and target search-based direct marketing. But in the end, Diesel Direct has found that having dedicated sales and partner teams strategically placed all over the country, with focus on local, regional and national fleet relationships, is the best way for the company to work with the market.
As Johnson explained, you need the proper truck, fueling equipment, inventory management technology, tax reconciliation capabilities, fuel authentication software, geo-fencing software, billing software, data warehousing software and much more.
WHOLESALE & FLEET OPERATIONS
On-Site Fueling: Meeting Customers’ Needs
So what are some of the more unique vehicles serviced today? As the nation’s largest on-site fleet refueler, there are very few fleets or assets Diesel Direct has not come to know. Certainly the hybrid electric light duty trucks Diesel Direct fuels often meet with interesting comments, especially when the company fuels them with their hybrid electric diesel onsite mobile refueling truck. However, leading-edge technology is also a key requirement to make the process efficient for everyone involved. For example, an on-board truck computer directs Atlas Oil’s entire fleet fueling process. “The truck computer validates the customer as well as which allowed trucks are to be fueled in their respective yards and the type of fuel product each asset requires,” Leavitt said. “Our drivers only have to operate safely and efficiently; we don’t write down gallons delivered per asset, as that is time consuming and inaccurate. The truck and driver are essentially paperless, unless our fleet customer requires a printed-paper receipt left behind after fueling their fleet. Most customers opt for a fueling detail report waiting in their inbox in the morning since most of our fueling activity occurs after hours.” Johnson said that managing the hundreds of tax codes alone is a daunting task for many of Diesel Direct’s customers. “Our customers gain a real market advantage at the right rate with proper taxation, knowing—through our specialized technology—they are getting the proper fuel into the proper assets one gallon at a time,” Johnson said. “This service should not be provided by a hobbyist; a properly equipped mobile fueling truck with the necessary inventory management controls can easily cost over two hundred fifty thousand dollars. And that is the easy part.” Diesel Direct also allows its customers to leverage their investment in the talent and digital resources necessary to interface with just about every cardlock and fleet program in the country. “We even have the ability to tie our invoices to your existing card provider so that there is a seamless transition on credit and data management,” Johnson said. “The program, which combines on-site mobile refueling with over the road cardlocks and fleet card programs, is the right solution for some of our larger clients. We’ve invested in the infrastructure required to give them a one-stop shop for invoicing and auditability as well as integrated data in our cloud based business data warehouse.” FMNMagazine
“Airport fleet fueling also is certainly not without its exotic requirements given today’s security standards,” Johnson said. “The same can be said about fleets at nuclear power plants. Fueling emergency vehicles during storms or post storms supporting the electric, gas, cable and other public services personnel always presents an interesting challenge as they are deployed into the heart of an emergency zone to restore public services. We chase after them to assure their ability to do so. In the end, perhaps all of the fleets we fuel are exotic because we believe our customers view each asset we touch as important.”
Customer Service is Key When it comes to mobile fueling and the accompanying customer service expectations, fleet operators today are very savvy and require customer service that is prompt, accurate and readily available. “Many fleets require daily billing and want this information relayed in a digital format,” Leavitt said. “Gone are the days of weekly created paper invoices sent via the USPS.” While some of Atlas Oil’s fleet fueling customers are very large wholesale fuel consumers, other large fleet operators buy fixed fuel contracts from Atlas Oil directly to hedge the market and others have their own access to fuel supply. “So other than managing inventory, the process we deploy in the field is the same whether we are selling our competitively priced products or using their owned fuel supply,” Leavitt said. “Additionally, we integrate our fleet fueling data and invoicing with many of the largest fuel card providers in the U.S. By doing this, our customers can still have their nationwide fuel programs invoiced monthly from a single provider rather than multiple vendors’ separate invoicing. It’s another added value to this type of service.” Johnson stresses that customers should have an extremely high expectation for a dependable and reliable service supported by the most modern business warehouse and knowledgeable fuel experts. fuelmarketernews.com
WHOLESALE & FLEET OPERATIONS “In the end, our happiest customers spend most of their time interacting with us through our cloud based customer experience portal and our direct relationship managers,” Johnson said. “The service is meant to ‘set it and forget it.’ We strive to be more reliable than the power company. Customers know we will be there during each expected service interval and that their assets have been topped off with the fuel needed to complete their day. Our customers can also expect automated and validated transaction data supported by an electronic invoice down to each asset.” Of course to make the mobile fueling process as streamlined as possible, proper upfront set-up of the needs of the client is crucial. This involves learning the client’s travel habits related to miles per route, miles per gallon, types of assets, tanks sizes and times of dispatching routes. “With these data-driven fueling solutions, we can set a recommended service interval that is not only driven towards getting the client the best rate, but maximizing our efficiencies as well so that both parties have a comfortable long term fueling arrangement,” Johnson said.
What the Future Holds In a slow economy or fast-paced economy, mobile fueling helps to enable different value propositions including better controls, total cost of ownership savings and maximizing capacity of the existing customers’ investments in people and assets. “We believe today’s buyer is smarter,” Johnson said. “They are expected to enable the needs of their business organization, to do more with less and cope with restrictions plaguing them from Sarbanes-Oxley (SOX) compliance to Department of Transportation (DOT) regulations. We are working hard to make the decision to have the supply, delivery and management of fueling each asset be cost effective, labor saving and scalable.” For Atlas Oil, the slowing economy has not hindered the company’s pace of this still expanding service line. “Even with fuel prices lower this year, the cost of labor has not gone down nor are the DOT ‘hours of service’ regulations any easier to comply with,” Leavitt said. “Fleets still need fuel in a down economy. Services like this help drive down the overall cost of operating a fleet—a very important factor today.” n
MOBILE FUELING ROUNDUP
Dennis K. Burke
Ace Tank/Source North America Mobile Fueling Solution Ace Tank & Fueling Equipment’s Ace FuelSafe® Trailer Systems, available through Source North America Corporation, enable the safe storage and mobile supply of up to 1,500 gallons of fuel via custom manufactured tank-andtrailer systems. Ace’s portable boiler and generator supply and return systems provide a reliable and durable solution for companies that need to supply fuel to stationary or mobile emergency power generation systems. Ace FuelSafe® also offers portable dispensing systems that enable cost-effective and convenient onsite refueling of jobsite vehicles, mobile aviation fuel delivery and bulk refueling in remote locations with limited access. Ace Tank’s FuelSafe® custom trailer systems are engineered to be as “turnkey” as possible with fill components, vents, gauges, etc., mounted and plumbed during fabrication. The towable fuel tanks are developed in close consultation with the client to ensure that the mobile fuel solution works for the exact needs of their application.
KleerBlue DEF Replenishment Are your customers requesting DEF fueling alongside diesel deliveries? KleerBlue offers a wide selection of onsite DEF fueling equipment solutions that are weights and measures approved. From compact handcarts to portable delivery skids, KleerBlue has everything you need to meet customer demands. KleerBlue’s 4x4 Portable Delivery Skids can be loaded in a box truck or trailer with totes or a tank. They are gasoline or electric powered and offer flow rates of up to 72 GPM. KleerBlue’s 2-Wheeled Portable Carts are available in a wide variety of configurations. These durable carts are designed to pull DEF from totes or tanks to fill customers’ containers at flow rates up to 28 GPM and/or fill vehicle or equipment DEF tanks directly.
Dennis K. Burke— www.burkeoil.com
KleerBlue Solutions— www.KleerBlueSolutions.com
Ace Tank & Fueling Equipment— www.acetank.com
Dennis K. Burke can provide mobile fueling at your location on a schedule that works for you. Our fleet is dispatched and operated with GPS monitored units, and we run 24/7 so we can accommodate any scheduling or emergency fueling needs for your units or generators. Our touch fueling program is asset based with a barcode system so you can receive asset reporting nightly, and your invoices are broken out in a detailed and easy to read format. Additionally, you will receive nightly pricing alerts for greater transparency and cost management. Our generator mobile fueling can be done on a contractual basis, or a remote monitoring basis, depending on your company’s specific needs.
READ MORE at fuelmarketernews.com
MOBILE FUELING ROUNDUP
INNOVAT IO N SIN CE 1999 SMARTLOGIX Created by marketers for marketers, SMARTLOGIX brings decades of industry experience and a wealth of knowledge from over 600+ customers to provide the safest, most intuitive and versatile dispatch software and mobile delivery solutions. Grow your margin and highgrade your operations with one full integrated platform. The SMARTANK digital monitors measure tank levels and integrate with the SMARTLYNX forecasting module. SMARTLYNX digital dispatch auto generates routes, scheduled, forecasted, degree day and tank monitored orders. Dispatchers can map, plan, and generate the most efficient routes, review the real time status of BOLs and deliveries for true inventory reconciliation. SMARTLYNX can easily integrate with any back office system, further reducing days-sales outstanding. SMARTRUCK mobile delivery solutions can interface with registers to digitally capture gallons, totalizers, GPS and signature for true proof of delivery and can digitally capture BOL images and load data, all in real time.
hopes that this video will educate and protect truck pump buyers on the problems associated with knockoff pumps that claim to be “equal to, or as good as Blackmer.” Lab test show that knockoff pumps cannot match the quality and performance of Blackmer’s Americanmade TX Series pumps. For more than 100 years, Blackmer has been building pumps in Michigan, USA, that work flawlessly in even the toughest conditions. Blackmer TX Series pumps offer reliability, durability and efficiency that inferior knockoff pumps simply cannot provide. Blackmer backs its TX Series pumps with a five-year Standard Warranty and a twoyear Performance Assurance. Blackmer TX Series pumps are available in 1.5-, 2-, 2.5-, 3- and 4-inch port sizes with flow rates from 10 to 500 gpm and pressures up to 125 psi.
Scully Introduces Next Generation of Onboard Overfill Prevention Control Unit
Blackmer® recently evaluated its TX Series sliding vane pumps against imitation or “knockoff” versions in a variety of lab tests. The results of these lab tests can be viewed at www.blackmer.com/txstrong. Blackmer
Scully Signal Company— www.scully.com
Blackmer® TX Series Pumps
IntelliCheck®3 reduces troubleshooting downtime by pinpointing specific fault conditions. This new system is the only onboard overfill prevention control unit designed to work with either two-wire or five-wire sensors. This allows companies carriers who currently use the old Scully Load Anywhere ® System to upgrade to the latest technology without re-wiring their tank trailer. For more information, please contact:
The new IntelliCheck®3 Onboard Control Unit from Scully Signal Company is designed for the safe loading of petroleum and chemical tank vehicles. When combined with Scully overfill prevention sensors, it will indicate the status of the tank’s overfill prevention system and send a signal to shut down the loading operation when there is a potential for a spill. When connected to retained product sensors, it also indicates when there is product left in a tank to prevent mixing of products. The FMNMagazine
Diesel Direct is the transportation industry’s largest dedicated national mobile fueling company, servicing tens of thousands of trucks each day from a fleet of customized fueling trucks. Specializing in mobile fueling and bulk deliveries, Diesel Direct provides fuel services and solutions for local, regional and national truck and equipment fleets. By focusing on using technology and innovation, Diesel Direct has developed a state of the art proprietary on-site fuel management process and system that gives customers accurate and meaningful data to both assist the management of their fuel consumption and meets the needs of continuously evolving business requirements. In addition to offering 24/7 on-site diesel fueling services of on-road and off-road fuel, Diesel Direct also offers a suite of products and services including generator
MOBILE FUELING ROUNDUP
fueling, Business Continuity Protection Plans, Diesel Exhaust Fluid, commercial heating oil and BARLOC® fuel management technology. Diesel Direct currently operates directly and through partners to provide on-site mobile fueling services in 43 states from the East Coast to the West Coast.
Diesel Direct— www.dieseldirect.com
permissive probe readings, technicians spend less time in the garage and drivers spend more time on the road, keeping deliveries on schedule and customers happy. CivaStar is available in a 2-wire format for use with onboard monitors, and 5-wire format specifically designed for straight optic loading racks. Backed by a 5-year warranty, CivaStar is part of Civacon’s long-term plans to revolutionize overfill prevention and looks to expand CivaStar to its entire line of overfill systems.
for handling volatile liquids and a unique Tankleenor® system for use in removing contaminants and water from underground fuel storage tanks without the need or hassle of draining the product from the tank.
Gorman-Rupp Company— www.GRpumps.com Civacon (part of OPW)— www.civacon.com/civastar
Aviation Refueling Pumps
Civacon’s CivaStar Optimizes Probe Reliability CivaStar is the next evolution of advanced overfill prevention from Civacon, part of OPW. CivaStar’s unique design, construction and LED visual verification feature are light years ahead of today’s conventional probes. Unlike current probes, CivaStar goes beyond safeguarding against costly overfills. By including an LED-lit tip at the end of each probe, technicians can quickly verify the active status of the probes and the connecting wires. In addition to its excellent reliability, CivaStar’s optic sensor head is easy to install and incredibly accurate. With no need to reset probe heights and pinpoint diagnostics of non-
Gorman-Rupp has met the challenge of accelerated aircraft fueling and defueling requirements for over 50 years. In this ever-changing world of faster and more agile aircraft, Gorman-Rupp has kept pace with technology with new designs in both pumps and valves. Gorman-Rupp’s original designs featuring compactness, minimum weight, high efficiency, and rugged component construction have set the standard around the world with thousands of units operating in the field for virtually all major airline and fuel suppliers. We offer a complete line of ground service pumps and related equipment, consisting of several standard centrifugal and self-priming pump models, directional valves, eductors and a host of other piping accessories. In addition, Gorman-Rupp also manufactures bulk transfer pumps, Shield-A-Spark™ engine-driven pumps FMNMagazine
DM2 Delivery Link DM2’s new DeliveryLink in-truck dispatch/driver communications system provides dispatchers, drivers and common carriers with an integrated paperless system for scheduling fuel pick-ups and deliveries using a secure cloud connection hosted by DM2 Software and any Apple, Android or Microsoft tablets or smartphones. DeliveryLink is made up of a web application that works with any HTML5 supported browser and a server side connector that interfaces with DM2’s Petroleum Insights system, making it quick and easy to deploy. Unique driver profiles give you the ability to track multiple drivers whether they are your own employees or common carriers. DeliveryLink also includes built-in Truck Inspection Checklists to help ensure driver safety and identify maintenance issues. Drivers can also work off-line in the event they lose their Internet connection; DeliveryLink will automatically sync pickup and delivery data once the Internet connection is reestablished.
DM2 Software, Inc— www.wp.dm2.com
7 BUSINESS OPERATIONS
by Shawn Switzer and Greg Cushard
Seven Ways Employers Can Reduce the Number of Workers’ Compensation Claims Involving an Attorney
Attorney involvement in workers’ compensation claims drives up
the cost for the employer and can reduce the value payout of the claim for the employee. Across the U.S., 44 percent of all lost-time claims had attorney involvement. The median cost of a lost-time claim including attorney involvement is 4.25 times higher than a lost-time claim without attorney involvement.
What drives injured employees to hire an attorney? Simply stated—fear. The vast majority of individuals depend on their jobs for survival and ability to care for their familes. When an injury disrupts their ability to work, it can be scary. Fears may include: • Loss of job or current position • Denial of the claim • Ability to work in the future • Fear of not recovering to pre-injury health status • Benefits from the injury (disability benefits and/or medical treatment) will not be received in a timely manner • Embarrassment from having an injury or having worked unsafely
What cost factor is associated with your company’s location?
What can employers do to reduce the number of workers’ compensation claims that involve an attorney?
While each case is unique, some state jurisdictions generally have more attorney involvement. The U.S. Chamber Institute for Legal Reform ranks states’ tort liability systems. Lockton’s InfoLock® Database provides the frequency of attorney involvement and associated costs for Lockton clients’ workers’ compensation programs. The table at right groups states by their 2012 U.S. Chamber Institute for Legal Reform Lawsuit Climate Report (www.instituteforlegalreform.com/states) overall rankings (1=best; 50=worst) and shows average settlement costs with and without litigation. It also includes a cost factor to be applied to claims within these jurisdictions. FMNMagazine
Return-to-Work/ Transitional Duty Programs.
The fewer days the employee is away from work, the lower the cost of the claim. Employees will also benefit from not allowing their health insurance or other benefits to lapse. Employees should know that the company policy is to provide transitional duty in most situations.
While not all injuries can be avoided, having a safety program in place can reduce the overall number of injuries and workersâ€™ compensation claims at your company.
Ensure that the employee is receiving the care he or she needs, both from the treating physician and your insurer/claims administrator. Unpaid medical bills and delays in treatment are known to lead to litigation. By advocating for the employee, he or she will not need to hire an attorney to act on his or her behalf.
Caring Company Culture.
Trained Supervisors and Managers.. Train supervisors and managers how to talk to injured workers, coordinate with other leave programs and provide appropriate transitional duty.
When you are a company that cares about employees, people want to work for you and injured employees will want to return to work after an injury.
Clear Policies and Procedures.
All employees and managers should know how to report claims, what to do if an injury occurs, where to seek medical treatment, and that the company treats employees kindly when they get hurt. Knowing what to expect prevents fear of the unknown.
Reach out to injured employees to let them know that they are missed and that the company is there to help.
There will always be some cases, particularly those involving severe injuries, where an attorney will be involved. With the proper procedures in place that number can be reduced, helping both the employer and employee. Your Lockton team can help you improve your business by building a strong workersâ€™ compensation claims program. n
Greg Cushard is Vice President /Producer at Lockton. His practice expertise is in high risk energy companies, focusing on corporate insurance brokerage, enterprise risk management, captive insurance consulting and employee benefits. Contact: firstname.lastname@example.org or www.lockton.com
Shawn Switzer is a Vice President and Claims Consultant at Lockton Companies, a leading, privately owned international insurance brokerage firm. Contact: 213.689.0595, email@example.com
by Keith Reid
8th Integer Emissions Summit & DEF Forum
The 8th Integer Emissions Summit & DEF
Forum USA 2015 was held October 27–29 at McCormick Place in Chicago, Illinois. Attendance was over 350 delegates who spanned the full spectrum of interested parties—from supply and distribution to automotive engineers to end users. There were a range of session tracks presented including: Heavy-Duty Commercial Vehicles; Marine Vessel; Off-Highway; Light-Duty Vehicles and Passenger Cars; and the DEF Forum that spanned the final two days of the conference. FMN was in attendance and here is an overview of what was discussed, primarily from the DEF Forum. Diesel exhaust fluid (DEF) is used with the dominant diesel emission reduction technology, selective catalytic reduction or SCR. With SCR a urea-based solution (32.5% high-purity synthetic urea and 67.5% deionized water) is injected into a catalytic system (2 – 6% of diesel consumption) to create a chemical reaction that converts some of the NOx emissions into pure nitrogen and water vapor. A diesel particulate filter can be added to the system for even greater emission reductions. Because of early European branding, the word “blue” typically features into the brand names of many solutions. SCR technology does not reduce power like such alternatives as exhaust gas recirculation (EGR), or create heat issues, and it is said to deliver a 3% to 5% improvement in mileage as the engine can be fully optimized for performance.
Recap: 8th Integer Emissions Summit & DEF Forum
Trends and Challenges In The DEF Market
Tim Cheyne Tim Cheyne, Integer’s director— emissions, launched the DEF forum with an overview of Integer’s perspective on the future of SCR/DEF as a primary emissions reduction technology in an environment of the California Air Resources Board’s (CARB) and the Obama Administration’s ever tightening emission standards. He noted that there should be nothing surprising through 2020 and CARB’s Phase 1 requirements. The market should be robust during that time frame with some newer engines using twice as much DEF to meet environmental standards. Improvements in truck aerodynamics have, in fact, already provided tremendous gains in efficiency, lessening the requirements on engine emission technologies. He expects the industry to break one billion gallons of DEF in the next three to four years. Currently, the adoption rate among Class 7 and Class 8 trucks is about 30% as the U.S. truck fleet continues a gradual turnover to the new engines. Beyond 2020, there will still be a place for SCR, but he noted the question mark will be the intensity of that solution. More technological advances have to take place to further cleanup the technology for Phase 2 requirements. This is particularly the case with an engine cold start where you see the most NOx emissions. Adam Panayi, Integer research manager, followed up with a discussion on upstream issues impacting the DEF industry. He noted that prices are generally on a downward trend driven by Chinese competition and lower energy costs throughout the logistical chain. However, prices will reach a point where production will be shut out, putting a price floor in place.
Beyond 2020, there will still be a place for SCR, but Integer’s Tim Cheyne noted the question mark will be the intensity of that solution. More technological advances have to take place to further cleanup the technology for Phase 2 requirements. This is particularly the case with an engine cold start where you see the most NOx emissions.
An interesting panel discussion covered “Trends and Challenges in the DEF Market.” It featured Charles Culverhouse, global DEF business manager, Old World Industries; Ed Wells, vice president, Yara Environmental Solutions; Gerry Kroon, manager, industrial sales, Agrium Inc.; and David Crouch, North American sales, Victory Blue. In the discussion it was noted that there was predictable U.S. demand with Class 8 trucks based on lifecycle metrics and the economy. The rest of the market throughout the world was less predictable. The need was seen to increase domestic production to balance out imports and provide more stability on FMNMagazine
the supply side. Logistics is still considered to be a challenge, with low-volume customers in low-density rural areas being difficult to affordably supply with the same level pricing and customer service that might be expected elsewhere. The need to explore a DEF-specific index versus the NOLA Future (fertilizer) Index was brought up as was involving API in a more stringent product quality control program.
Rebecca Hayward Pricing in North American DEF market received a specific focus in a presentation by Integer analyst Rebecca Hayward. She noted that pricing generally involves raw material costs, logistics throughout the supply chain, the location of blending facilities, the level of competition in different retail channels and the cost of oil relative to the role it plays (as refined fuels) supporting the entire
Recap: 8th Integer Emissions Summit & DEF Forum
logistical process. She noted that the primary market driver was urea cost and that DEF generally does generally follow the NOLA Index with one to two month lag time. However, local markets have their own issues that can dramatically impact pricing. Jason Lower, executive vice president at DEF supplier Victory Blue, talked about developing the optimum DEF distribution model. He noted that both liquid and dry product (prills for later water blending) can be successful models and that urea quality control is good domestically versus imports. Increased regulatory oversight would be useful to assure quality control across the board. Logistical challenges as he discussed them centered mainly on truck transport. They include accessing efficient and costeffective freight service providers, the anticipated future increase in freight volumes in all sectors, driver shortages and growing highway congestion.
Developing Logistics to Meet Evolving DEF Distribution
The focus on logistics continued with a panel discussion featuring: Geoff Bohlender, executive director PPC DEF solutions & marketing, PPC Lubricants; Alan Smith, DEF business director, Brenntag North America, Inc.; Eric Johnson, market managerâ€”ammonia, nitrogens, & potash, CSX Transportation; Jason Lower, executive vice president, Victory Blue; and Matt Coe, contract manufacturing & quality control manager, DEF, Mansfield Oil Company. Transporting DEF can be accomplished with finished DEF that adds cost because of the full water content; transporting dry prills that are blended with high quality water after transport; or through a 50% concentrate. Concentrate is easier to blend than the prills, but still has some extra transport costs due to the water content. It was discussed whether a 70% concentration would be workable, reducing water content but increasing some of the handling challenges. Feedback from the audience suggested that might be too challenging, particularly as related to colder climates. Low-volume/low-density customer areas were seen to represent a primary distribution problem, with potential solutions involving such approaches as using multiple totes FMNMagazine
BUSINESS OPERATIONS manifolded together or larger bulk solutions to reduce the frequency of refills and increase the volumes when a refill occurs. Telemetry solutions to facilitate customer tank autofill are also beginning to emerge.
James Burwell Filling out the Wednesday DEF Forum lineup was a presentation by James Burwell, Gilbarco Veeder-Root’s global product manager, dispensers, who provided a look at the company’s solutions at the retail end of the spectrum. In addition to showcasing the product lineup overview, he asked attendees for feedback as to how Gilbarco could improve its products to meet end-user requirements. He also asked DEF suppliers to explore ways to lower the freeze point, which would make dispensing a less complicated issue in colder climates. The Thursday forum got off to a belated start due to a missing speaker. However, that allowed an opportunity to sit in on the concurrent presentation: Advanced Powertrain Solutions in Light Duty Applications” by Nick Tamborra, emissions regulatory senior manager, engineering and environmental office, Volkswagen Group. Volkswagen’s recent scandal, where it manipulated diesel engine management technology to cheat on emission tests, was the elephant in the room. To Tamborra’s credit he showed up, took the stage and followed through with the core presentation discussing low
Recap: 8th Integer Emissions Summit & DEF Forum
High horsepower (>751) is an exciting application area for DEF distributors where volumes can be exceptional.
emission/high mileage powertrain solutions in general and Volkswagen’s anticipated future solutions. The presentation seemed to provide a deemphasis on diesel technology, but he noted he was unable to elaborate on the company’s diesel focus moving forward. He also declined several similarly Volkswagen-specific questions.
High horsepower (>751) is an exciting application area for DEF distributors where volumes can be exceptional. Carlos Sustaita, high-horse power account executive, Cummins Inc., discussed the ramifications of the Tier 4 emission requirements in a range of nonroad applications. These applications include stationary, such as power generation; mobile, where the equipment moves from one site to another as required; circuit runs, that include mining haul trucks and commuter locomotives; and long distance, which would include barges and freight locomotives. In the mobile realm, a fracking operation typically has 15 to 20 pressure pumps that run 18 hours per day at a site with DEF being approximately 4% of the diesel consumed. That could require 2,400 to 5,500 total DEF gallons per week. In circuit run applications, a small site might use 2,200 gallons per week, a medium operation might require 7,900 gallons per week, and a large operation might require 21,000 gallons per week. Filling contamination is more of a concern in these rougher environments.
Nick Tamborra Quality control was again a topic, actually the topic, with the presentation from Antonio De Bruijn, CEO, AMB International Ltd. He began with a call to test all supplier product—and even beyond that to the occasional retail test at the nozzle—as fundamental for DEF quality control. He noted it not only protects a company’s reputation, but the liability concerns can be tremendous. Knowing specifically where a problem arose can be the key to a company’s survival if contamination occurs. He cited several cases where faulty product resulted in vehicle damage and downtime to the tune of $3 – $4 million in damages. FMNMagazine
The panel discussion: “Development of DEF in the Non-Road Sector” continued the high horsepower discussion more broadly. As Integer noted, DEF supply to the non-road sector is experiencing the biggest growth, as more end-users adopt SCR equipment complying with Tier 4 final standards. Until now the sector has relied on drums and totes for DEF supply but, like the commercial vehicle sector, trends show that the move to bulk supply is increasing. This panel featured moderator Fabricio Cardoso, Integer senior analyst; Norm Winkler, national sales director, Titan Chemical Transfer Solutions; Stig Uhlen, national sales manager—West, Blue Sky DEF; Luke Van Wyk, general manager, Thunder Creek Equipment; and Carlos Sustaita, high-horse power account executive, Cummins Inc.
Developing Logistics to Meet Evolving DEF Distribution
As previously noted, the non-road applications typically come with enhanced contamination concerns (though one panelist noted truck stops are not necessarily the most pristine of environments). The utility of adopting closed systems was discussed. As the panelists noted, agricultural cooperatives and agriculture in general have begun to develop an infrastructure for DEF but the market has been slowed by lower revenues and extended equipment lifecycles in that sector. Education was cited as a must as panelists were starting to see some issues from poorly handled product. The importance of planning was noted as it’s not good to either have too much storage on hand for the supply required or too little. It was debated how long DEF could stand in storage from a shelf life perspective. Some panelists stated successful product storage long past recommendations, while others noted that following specifications was important to make sure systems functioned appropriately and without potential damage. Off-highway systems can have more frequent fill requests than highway systems because DEF tank sizing can often be more closely matched to the fuel filling cycle leading to more nozzle interactions and greater contamination concerns. It was noted that the different offhighway verticals—mining, agriculture, oil and exploration and rail have different needs and many complexities. Solutions have to be specifically developed to meet each application in each vertical.
Recap: 8th Integer Emissions Summit & DEF Forum One potential challenge noted was the possibility of some environmental backlash relative to the landfill disposal of 1 to 2.5 gallon jugs for those using that solution. Revisions to Petroleum Equipment Institutes’ recommended practice for DEF storage and dispensing—RP1100—were discussed by J. Stephen Hieber, chairman, PEI DEF committee and president, PWI, Incorporated. The changes discussed were primarily in the “tweak” category in areas such as the labeling of retail dispensers, the applicability of refractometers to test quality and the addition of a new safety section. Bob Renkes, PEI executive vice president and general counsel made the session introduction and also acted as the day’s overall forum moderator.
Optimum DEF Equipment Solutions
The final forum presentation was a panel discussion on optimum DEF equipment solutions. The panelists were moderator Integer senior analyst Fabricio Cardoso; Joshua Wirgau, sales manager, Piusi USA, Inc.; Steve Cox, national sales manager, Separation by Design/KleerBlue; Don Bradley, national sales manager, Flowserve; and Jeff Smigiel, business development & marketing manager, Micro Matic USA. The panelists noted that five to six years ago equipment compatibility with DEF (at the individual component level) was an issue as manufacturers got up to speed with the product. Today, DEF compatibility is largely not an issue in a FMNMagazine
mature equipment manufacturer marketplace. Now, the main issue is properly spec’d equipment for the specific application. Systems are sometimes over engineered or under the engineered, so it’s important to work with suppliers that have the appropriate knowledge and experience. The need for more training and education for the end user was also noted. In many cases this was seen as general education within each sector. For example, some end users will buy a range of components off of the Internet that are not specifically compatible with DEF and build their own system, not knowing about potential contamination and failure concerns. In agriculture, for example, there can be the mindset that DEF can be handled in the same more casual way as fertilizer and crop protection dispensing. Panelists noted that there are no cookiecutter solutions once you move beyond a simple island set up. Downtime is very expensive in these offroad applications. For example, in agriculture the planting season might run 10 days, so one day out of commission is a critical loss. n
The 9th Integer Emissions Summit & DEF Forum USA 2016 will be held 25 – 27 October 2016, Chicago, USA. Integer Research is an independent provider of specialist market research and analysis, conferences and events and tailored consultancy services across three core industries: Environment & Emissions; Fertilizers & Chemicals and Wire & Cable. Headquartered in London, UK, and with offices around the world, Integer offers a variety of information services to meet any client need. From bespoke research projects to in-depth publications and subscription services or attendance at one of our leading industry events, Integer Research is the ideal partner for any company looking to better understand the latest market developments, the major players and future industry challenges and opportunities. www.integer-research.com
Keystone: The Canadian Perspective: In October, Canadaâ€™s Conservative government was thrown out of power by the opposition Liberal Party, led by the charismatic Justin Trudeau. In the race to get votes, the Liberal Party promised that they would oppose the construction of the Northern Gateway pipeline that would feed oil from the Canadian tar sands into the Keystone XL pipeline. It seemed like a great way for the Liberal Party to attract many of the far-left voters they had lost to the National Democratic Party in the previous election. At the end of the day, Canadaâ€™s environment took precedence over its economy. With the threat of the Northern Gateway pipeline annulled, it was just a matter of days before the Obama Administration decided to put the Keystone pipeline out of its misery. Reference: Cyrus Sanati commentary, Fortune, Nov. 8, 2015
Bottom Line: In this case, two wrongs by two liberal governments do not make one economic right.
The Only Energy That Matters After spending three days at the
Ernst & Young Strategic Growth Forum, the educational confab built around EY’s Entrepreneur of the Year Awards, I walked away with one overpowering conclusion. Yes, after hours of listening to great CEO’s like Meg Whitman of HP, David Novak of Yum Brands, Fisk Johnson of SC Johnson and chatting with many of the 250 regional entrepreneur of the year award winners it was just one thing. Just one unifying consistent theme running through every presentation, every discussion, every motivational session and nearly every acceptance speech at the awards podium. It’s all about your people and how you motivate them, recognize them, harness their passions to a common mission and how as a leader you can make their lives better.
The message was packaged differently by each speaker. Almost every speaker has written an entire book to convey their point, and I have a list at the bottom of the ones I would check out. I plan on reading several of these for more context and color than you can get out of a 45minute talk, but we already know the ending—people, people, people.
David Novak has taken recognition to a place that on the surface seems almost absurd until you hear how meaningful the program has become to thousands of managers across so many different cultures, countries and brands. Think that Colonel Sander’s secret recipe was behind KFC’s global success? Nope, it is all about a silly rubber chicken award whose recipients treat like an Oscar.
by Doug Haugh After taking this nutty form of recognition to insane heights David employed the same approach at Pizza Hut, but used a cheese head you could wear as the medium for recognition. He now uses a giant set of teeth at Yum brands. David’s point is that the medium doesn’t matter but the message is the most important one you can deliver to your team—they matter, you appreciate them, you recognize their great work— and that you do it in a way that everyone can see and celebrate. Moving on from David and his rubber chickens and cheese heads we had a chance to hear from bestselling authors Adrian Gostick and Chester Elton of The Culture Works. Adrian and Chester had some crazy props of their own, throwing stuffed carrots into the audience. These carrots—a not so subtle reference to the carrot and stick comparison of motivational methods—made the
The Only Energy That Matters possible by evolving and changing the energy infrastructure and industry we have today. Attracting and motivating the passions of the people we need to accomplish that change must be a primary mission of current leaders. It is harnessing that energy, and not just solar, wind, or nuclear that matters. n
session fun and interactive, but the message was very consistent with David Novak’s: recognition matters. The best part of the session was when Chester, the self-proclaimed “apostle of appreciation” brought a man on stage to talk about his relationship with his wife of 20-plus years. Asking the man how often he and his wife told each other they loved each other the man responded, “All the time, before I leave in the morning, before I hang up the phone, before we go to sleep.” “So do you think you can overdo appreciation?” Chester asked the audience. His point was clear. Show your people appreciation often and in verbal, visual and easily recognized ways. Charles Koch has a new book out, Good Profit, and took the stage with Maria Bartiromo to talk about the book, but of course could not avoid some politics. Maria started out by asking Koch about the business philosophy spelled out in the book and Koch summarized his philosophy down to one question, “How do I maximize the value I create for customers, employees, suppliers and communities?” In other words, take care of the people involved and they will drive your success. I won’t cover the political questions here, but suffice it to say this is a guy who is taking all those “evil Koch brothers” statements in stride and is confident in his company’s focus and employees. There was a lot of wisdom to absorb in just a few short days at this event but given how often we have to experience death by power point I think Meg Whitman summed it up best by reminding us that leadership “is not a left brained exercise on spreadsheets with lots of math and financial statistics, it is about the stories you tell and how you communicate.” It was also interesting that in spite of Whitman’s incredible business experience she mentioned that she did not fully understand this until running for public office, and losing. Applying these perspectives works in any business, but we must recognize that in our industry today we have some very specific challenges. We are all in the energy business, which for the 25,000 delegates gathered in Paris this past
Taking People With You by David Novak
All In: Creating a Culture of Buy-In and Belief by Adrian Gostick and Chester Elton
The Carrot Principle by Adrian Gostick and Chester Elton month to come up with some solution to climate change means we are in the CO2 business. We are “the problem” that needs solving. We are the “polluters” and the “climate destroyers” to be burned at the stake in the town square, presumably with non-polluting solar power as the fuel. So when our people are assaulted from all sides by an overwhelming and increasingly harsh tone about what we do for a living, how do we motivate our people and drive engagement around our mission as an industry? I think Charles Koch is right to trust his employees and to sharpen the focus on creating value for customers, employees and communities, but I don’t think that is going to be enough to attract the best and brightest to our industry. Once people are in the business and see the mission critical work we perform each day, then that philosophy is a great way to help us focus on the right things, but it is not enough to get them here in the first place. We have to find ways to use the current climate to our advantage (yes, pun intended). We have to demonstrate to people, and most of them are much younger than us, that if they want to do something about the environment and climate change then they should work in an industry that can actually do something about it. The energy technology of tomorrow will only be FMNMagazine
Good Profit by Charles G. Koch
Douglas H. Haugh 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.
FUEL MARKETER NEWS
INDUSTRY NEWS PDI Unveils Enterprise 8 PDI, a leading provider of enterpriseclass automation software systems to the convenience retail, petroleum marketing and foodservice industries, announced the general release of its newest software offering, PDI/Enterprise 8. PDI/Enterprise 8 offers a totally new “bigdata” merchandise ordering system. The system is complete with forecasting tools to anticipate inventory adjustments based on long-term historical trends, seasonal demand, holidays, events and promotions. A new dashboard also gives retailers increased store-level visibility, allowing them to proactively address inventory issues.
PDI/Enterprise 8 introduces a new POS trickle feed journal collector that facilitates real-time inventory, accurate ordering, optimal staffing levels, transaction-level promotional reporting for suppliers and enhanced market basket reporting. Support for delivery notes enhances real-time inventory accuracy by allowing retailers to update inventory in advance of receiving electronic supplier invoices with advanced back-end reconciliation. PDI/Enterprise 8 delivers a fresh approach to customer relationship management with a new customer portal for petroleum marketers. In addition to its modern, responsive design, the website adds plenty of new functionality, including forecasting tools for more accurate ordering, fleet card maintenance and reporting, and warehouse price notices
Unified Platform: The launch of PDI/Enterprise 8 consolidates several PDI products into a single browser-based software system, allowing retailers and petroleum marketers alike to manage critical parts of their operations— particularly inventory—from a single place. The new platform also significantly reduces the software deployment requirements for current customers. n
Dover Completes Acquisition of Tokheim Dispenser and Systems Businesses OPW, a Dover Company and a global leader in fluid-handling solutions,
INDUSTRY NEWS announced on Jan. 7 that Dover Corporation has completed the acquisition of Tokheim Group S.A.S.’s dispenser and systems businesses and they are now part of OPW.
advanced line of dispensers and automation systems, the combined business will be able to offer our customers an unparalleled end-to-end fueling solution.”
Tokheim is a leading manufacturer of fuel dispensers, retail automation systems and payment solutions. With a presence in Europe, Middle East, Africa, South America and Asia-Pacific, Tokheim is one of the most recognized brands in the retail fueling industry.
Tokheim is the fifth major acquisition for OPW in the past two-and-a-half years, and matches previous acquisitions (Fibrelite, KPS, Jump, Liquip) of category-leading brands outside the North American market.
“Both Tokheim and OPW have been leaders in the retail fueling industry for more than a century,” said David Crouse, OPW President. “By integrating Tokheim’s
“OPW’s goal is to bring the very best solutions to our customers in all regions of the world,” said Keith Moye, OPW VP of Global Marketing. “Our combined product portfolio now comprises the
industry’s broadest product offering, enabling us to bring a more complete solution to our customers.” n
Tour de Force Announces New Partnership with AIMS, Inc. to Deliver Integrated Solutions to Petroleum and Fuel Distributors Tour de Force has announced the addition of AIMS, Inc. as a strategic addition to the Tour de Force Channel Partner Program. Through this partnership, AIMS and Tour de Force deliver an end-to-end, integrated enterprise resource planning, customer relationship management, business intelligence and business process optimization solution targeted at petroleum and fuel distributors. Ken Ledyard, Director of Channel Sales at Tour de Force said, “The team at AIMS has a great product suite targeted for the wholesale petroleum industry, especially bulk oil and lubricant distributors, and we are excited to partner with them to expand the Tour de Force brand into this new market. We already have mutual clients who are benefiting from the power of our combined solutions, and together we have a great opportunity to expand upon that success and provide value to other companies in the industry.” “AIMS is excited about our partnership with Tour de Force and their ability to pull data directly from our accounting software, COMPAS Commander. This partnership will provide AIMS’ clients with a whole new level of data mining and data management,” said David Dorries, Director of Sales and Marketing at AIMS. The announcement of the Tour de Force and AIMS partnership is also being welcomed by mutual clients. Kathryn Reppond, CFO of Central Oil & Supply, said, “Commander and Tour de Force are both business critical applications for us. The interface between Commander and Tour de Force has allowed us to better manage our sales data, create
INDUSTRY NEWS sales and inventory alerts, and streamline our workflow processes. We anticipate this partnership will continue to extend the value we leverage.”n
P97 Networks to Integrate Its Mobile Commerce Solution with SAP® Vehicles Network P97 Networks announced at TechEd in Las Vegas a technology agreement with SAP, in which P97 will integrate the P97 PetroZone® Mobile Commerce Platform with SAP® Vehicles Network running on SAP HANA® Cloud Platform for the Internet of Things. When used together with SAP Vehicles Network, the P97 solution will help enable mobile payments and the delivery of locationbased offers including fuel, parking, food, and consumer packaged goods to consumers’ automobile telematics systems or mobile devices.
merchants with a 360° mobile marketing and commerce platform to enable mobile payments, digital offers, customer rewards and integration with loyalty hosts. With P97’s mobile payment processing application based on the Conexxus industry standards for mobile payments, oil companies and retail merchants can deploy “branded” mobile apps in the app stores so consumers can take advantage of loyalty programs, discounts and frequent shopper reward programs. n
READ MORE at fuelmarketernews.com
P97 will leverage its extensive convenience retail and fuels marketing site system integration and cloud based mobile commerce capabilities to enable mobile payments and the delivery of location-based offers to consumers’ automobile telematics systems or mobile devices. When used with SAP Vehicles Network, the P97’s PetroZone® Mobile Commerce Platform will help enable customers to integrate with retail site systems including mobile payment capabilities, digital marketing, loyalty programs, and customer reward systems. In working with SAP to help enable a connected world for oil companies and ecosystem partners, P97 is charting new territory by connecting with the Internet of Things (IoT), telematics and mobile commerce. While mobile payments and digital offers are already part of P97’s mobile commerce user-experience, it now provides merchants and suppliers with access to the SAP Vehicle Network. Based on SAP HANA Cloud Platform, SAP Vehicles Network is helping crossindustry businesses to accelerate their product delivery and establish new business models and revenue streams. P97’s PetroZone solution provides retail FMNMagazine
Diesel Direct Strengthens its Footprint in the Mid-Atlantic Diesel Direct announced that it has made a strategic purchase consisting of the acquisition of primary assets and the onboarding of the majority of employees from BTU Energy, a Baltimore, MD, based company. BTU Energy provides a diverse portfolio of on-site fueling through a specialized fleet of trucks, which deliver more than 10 million gallons of diesel and gasoline
INDUSTRY NEWS each year. The purchase consists of customers located in the Maryland, Virginia and Washington D.C. area. “We are pleased to announce this recent acquisition. This purchase will strengthen our presence in the region and will enable us to better offer clients in these markets enhanced benefits and services, particularly in the area of bulk fuel deliveries” explains Diesel Direct CEO and President William McNamara. Diesel Direct’s flagship service, on-site mobile fueling, consists of Diesel Direct’s trucks transporting fuel and fuel products to company sites, then directly fueling their trucks, boats, generators, tanks and all other equipment requiring fuel. Since its founding in 1998, the mobile fueling company has grown to become the transportation industry’s largest national mobile fueling company. The company provides services for total supply management, on-site fueling of diesel fuel and Diesel Exhaust Fluid (DEF), tank monitoring, generator services, business continuity programs, specialized additive packages, marine fuel and gasoline delivery. Diesel Direct’s footprint extends across the U.S., operating directly and through partners in 45 states from the East Coast to the West Coast and all the way to Hawaii. n
Intellifuel Hires Former FuelQuest and TelaPoint Veterans to Round Out Sales Team Intellifuel Systems, Inc., a provider of fuel management and logistics solutions for downstream and midstream participants in the fuel supply chain, is pleased to announce the addition of Angela Wisdom and Joel Davies to its expanding sales team. Wisdom, who joined Intellifuel in February, brings over 15 years of expertise in the downstream petroleum industry with strengths in managing key client relationships, executing strategy and technology solutions across the customers’ entire supply chain. Prior to joining Intellifuel, Wisdom served as Director of Fuel Center Sales at FuelQuest and Account Executive at SolArc, Inc.
Davies, who joined the team in April, brings extensive experience in the fuel industry with specialties in supply and logistics, process improvement, and return on investment analysis. Before joining Intellifuel, Davies served as Sales Director for WEX Fuel Management (TelaPoint) and Director of Supply and Logistics at Fleet Card Fuels in Bakersfield, CA. Davies is a fourth generation “oil man” and deeply values the legacy and relationships that make this industry great. n
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Matrix Announces the Successful Sale of CrossAmerica Partners LP’s Fuels Transportation, Heating Oil and Tank Wagon Commercial Fuels Businesses Matrix Capital Markets Group, Inc. announces the successful closing on the sale of the fuels transportation, residential heating oil and tank wagon commercial fuels businesses owned by CrossAmerica Partners LP that were formerly operated by wholly owned subsidiary, Petroleum Marketers, Inc. to multiple buyers. Reliable Tank Line, LLC, a division of Quality Oil Company, LLC, purchased the fuels transportation business. The heating oil and tank wagon commercial fuels business was sold by terminal branch to multiple buyers: Quarles Petroleum, Inc., Davenport Energy, Inc., and Woodfin Heating, Inc. In May of 2014, Lehigh Gas Partners LP, the predecessor of CrossAmerica, purchased PMI, which at the time operated two primary lines of business: convenience stores and petroleum FMNMagazine
products distribution. CrossAmerica subsequently decided to divest the fuels transportation, residential heating oil and tank wagon commercial fuels businesses, which consisted of customers, bulk storage plants, operational facilities and fleet assets that served customers throughout the Commonwealth of Virginia. PMI was incorporated in 1949, and has been supplying and delivering a variety of petroleum products to commercial, dealer, governmental and residential customers for over 60 years. Matrix provided merger and acquisition advisory services to CrossAmerica on the above divestitures, which included valuation advisory, marketing of the assets through a customized, confidential, structured sale process, and negotiation of the transaction. The transaction was co-managed by Spencer Cavalier, Managing Director, and Cedric Fortemps, Managing Director. Andrew LoPresti, Associate, also advised on the transaction. n
Tanknology Names Industry Veteran Ted Abeyta as Vice President, Western Division Tanknology Inc. announced that retail petroleum industry veteran Ted Abeyta has joined the company’s operations leadership team as Vice President, Western Division. In this role, Abeyta will oversee operations and business development for the western portion of the U.S., including the states of Washington, Oregon, Idaho, California, Nevada, New Mexico, Colorado, Wyoming, Montana, Alaska and Hawaii. A retail petroleum veteran, Abeyta started his career with UNOCAL 76, served as National Director of Facilities for Tosco (Circle K, Conoco Phillips and BP), was Operations Manager for Bovis/BP (AM/PM) and TotalProjex and most recently VPSI on the West Coast. Allen Porter, President and Chief Executive Officer of Tanknology, said the addition of Abeyta to the Tanknology team will bring strong retail industry knowledge and proven leadership to the company’s Western Division. n
Wayne Fueling Systems Expands Fuel Management Services by Reaching Agreement to Acquire Simmons Sirvey 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 reached an agreement to acquire Simmons Sirvey, one of the largest providers of real-time Fuel Management Services and traditional Statistical Inventory Reconciliation (SIR) in the retail fueling industry. Through this agreement, Wayne will acquire all of Simmons’ products and technology solutions including the ClearView™ software which provides realtime fuel monitoring and analytics for fueling station owners; Simmons SIR, an established SIR that meets the U.S.
Environmental Protection Agency requirements for fuel reconciliation; an Underwriters Laboratory certified wet-stock measurement probe; and other hardware components that are used in the tank monitoring and FMS process. “We are excited to reach this agreement with Simmons,” noted Wayne Chief Executive Officer, Neil Thomas. “Coupled with our recently announced Vianet Fuel Solutions acquisition which also provides fuel management services, Simmons will help complete Wayne’s vision of providing a comprehensive fuel management solution to our customers around the world.” “We’re pleased to divest our products and services to a company with such a robust history of retail fuel innovation,” noted Myra Canterbury, Simmons President. “We’re confident that the technologies developed by Simmons will fit well into Wayne’s portfolio and will have a very strong future.” The closure of the acquisition is anticipated to occur in first quarter of 2016. n
F.S. Holdings, Inc. Acquires Johnson Oil Company Johnson Oil Company has announced that F.S. Holdings, Inc., parent company of Texas Enterprises, Inc., has acquired its commercial fuel, transport and branded lubricants businesses. JOC will be a fully integrated and wholly owned subsidiary of F.S. Holdings, Inc. The current management team of JOC will remain in place and F.S. Holdings will operate this business segment under the name of Johnson Oil Company for the foreseeable future. The combination will fully integrate these companies, providing a more extensive and successful distribution network throughout the state of Texas through a single-source operation. Founded in 1958 by Fletcher Johnson, Johnson Oil Company was headquartered in Gonzales, Texas, operating throughout Texas including
INDUSTRY NEWS the Eagle Ford Shale and Permian Basins, and Central and South Texas. JOC featured ExxonMobil lubricants as well as other quality brands, offering customers a wide variety of best in class lubricants, greases and specialty products for a wide range of applications and markets, in addition to transportation and commercial fueling services. Johnson Oil Company and its Board of Directors, assisted by Corner Capital Advisors, LLC, embarked on a scenario analysis of its strategic options for the Company, subsequent to the passing of its founder, Fletcher Johnson in 2013. After reviewing potential options, the Johnson family decided a sale of its commercial fuel, transportation and lubricant assets was the appropriate path. Andy Weber commented, “Exiting a family business founded in 1958 requires thoughtful consideration. We are extremely pleased that the family and the Board trusted Corner Capital and its team to assist and guide the Company through the entire process. It has been a pleasure to work with the Johnson family and the Board.” This transaction represents the conclusion of the sale process and the final transition
of the Johnson family businesses embarked upon by the Johnson Oil Company Board of Directors. In June 2015, the Company sold its convenience retail and dealer fuel supply businesses to the Southwest Division of Circle K. n
Warren Rogers Launches New Website and Introduces “Five Ways Every Fuel Retailer Can Boost Profitability” Video Warren Rogers Associates, a leader in continuous and precision fuel management for the retail fuel industry, has launched a new website and a video featuring five ways convenience store owners and other fuel marketers can improve operational efficiency and boost profitability at their fuel sites. The website, www.warrenrogers.com, includes valuable information regarding
the company’s “All Points Monitoring System,” which takes a comprehensive and precise look at fuel operations—from every underground tank and fuel line, and dispenser, right to the vehicle. The site is easy to navigate and customers can learn about Warren Rogers’ real-time technology and reporting and other services such as continual reconciliation analysis, advanced flow diagnostics, audit technology, statistical inventory reconciliation analysis and more. In addition, the website features a new video which highlights five of the key ways Warren Rogers can help highvolume fuel site owners enhance operation efficiency and increase profits. William Jones, president and CEO of Warren Rogers Associates said, “With our comprehensive fuel management system, there are many ways we help fuel profitability. For the video, we selected five of the most common issues customers are concerned about and the specific actions we can take to address them—to ultimately make a real difference in their fuel business.” n
READ MORE at fuelmarketernews.com
Matrix Announces the Successful Sale of Alta East, Inc. Matrix Capital Markets Group, Inc. announces the successful closing on the sale of Alta East, Inc. and certain related entities’ fuels distribution businesses to a wholly owned subsidiary of Sunoco LP. The Company, headquartered in Middletown, N.Y., owns or leases 30 convenience stores that it leases to dealers and supplies fuels to, and also supplies fuels to additional dealer owned and operated stores primarily in New York from the greater New York City metropolitan area to just north of Lake George. The Company distributes approximately 55 million gallons of Sunoco, Mobil, Valero and unbranded motor fuels annually. The Company’s two non-operating surplus properties were also included as part of the transaction. Alta East, Inc. is 100% owned by D.W. Porto. After taking the reins of the Company in 1990, Mr. Porto grew the business, through both acquisitions and organic growth, into an established, large distribution business with longstanding dealer relationships. Over just the last five years, the Company added twenty-three dealer sites to its portfolio, including five stores in upstate New York from a Nice N Easy franchisee in 2013.
Wayne Fueling Systems Reaches Agreement to Acquire Vianet Fuel Solutions, a Subsidiary of Vianet Group plc 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 reached an agreement with Vianet Group plc, a leading provider of real-time monitoring systems, data management services, and actionable data for the leisure and vending sectors, to acquire their fuel management subsidiary. The UK based Vianet Fuel Solutions Limited includes two main product lines as part of the Wayne acquisition: Fuel Management Solutions and Construction and Forecourt Services. FMS is comprised of real-time wet-stock management, asset management and compliance monitoring services. CFS aligns with Wayne’s current
Matrix provided merger and acquisition advisory services to the Company, which included valuation advisory, marketing of the Company through a customized, confidential, structured sale process and negotiation of the transaction. The transaction was co-managed by Cedric Fortemps, Managing Director and Thomas Kelso, Managing Director and Head of the Downstream Energy & Retail Team. Stephen Lynch, Senior Associate also advised on the transaction. Al Alfano and Doug Mitchell of Bassman, Mitchell & Alfano, Chtd. served as legal counsel for the Company. n
READ MORE at fuelmarketernews.com FMNMagazine
UK services business, although it provides additional services including forecourt construction electrical compliance services and tank lining. “The decision to acquire Vianet Fuel Solutions is a natural fit for the Wayne business as it helps further our goal to offer fuel management capabilities to our customers,” said Neil Thomas, Wayne Chief Executive Officer. “The Vianet business already has existing customers in the UK, has a knowledgeable team, and has competitive and comprehensive Fuel Management solutions which complements our product and services offerings.” The closure of the acquisition is anticipated to occur in first quarter of 2016. n
OPW Introduces New Cloud-based Fuel Management OPW, a Dover Company and a global leader in fluid handling solutions, has introduced OPW CloudCentral®, a
INDUSTRY NEWS comprehensive, cloud-based fuel and environmental management software platform that centralizes fuel level monitoring and compliance tracking in one streamlined, user-friendly dashboard.
PIUSI USA Launches the Self Service MC DEF Dispenser
OPW CloudCentral, powered by Titan Cloud Software, provides “anytime, anywhere” visibility of critical fuel site data in real time. Compatible with all major brands of automatic tank gauges, OPW CloudCentral’s software features include inventory and delivery management, compliance tracking and alarm monitoring, inventory reconciliation, and flow rate monitoring and reporting. The platform’s remote management capabilities allow operators instant access to critical alarm data, as well as other site data from any web-enabled device.
Piusi USA, the global leader in Diesel Exhaust Fluid equipment manufacturing, announces the launch of their newest solution for mini-bulk DEF dispensing and management.
The software’s unlimited user capacity enables fuel sites to efficiently scale for network expansion, while OPW CloudCentral’s real-time visibility of fuel inventory levels, alarms and equipment issues minimize service calls and site downtime. n
The Self Service MC DEF Dispenser comes equipped with the top selling DEF pump worldwide, the SuzzaraBlue, as well as the MC Box, SB 325 DEF nozzle, 3D filter and K24 meter. By utilizing the Self Service management software, this equipment can easily calculate the consumption of up to 80 users through PIN codes or i-button keys. The entire unit is lockable for added security, with a hinged front panel for easy access to internals. With its IP55 protection owners are guaranteed the enclosed equipment is protected from rain and debris.
By controlling the distribution of DEF, customers will see an enormous return on their investment from saving money on spills, leaks and even theft. The entire system is designed to optimize the dispensing of DEF in a mini-bulk application. The Self Service MC DEF Dispenser is the perfect solution to your 2016 DEF mini-bulk dispensing needs. n
Scully Announces a New Rack Control Systems Tester Scully Signal Company is offering a new tester for its terminal loading safety control systems. It is the first portable, overfill prevention, grounding and vehicle identification rack control tester designed and approved for use in hazardous locations. The new Scully Rack Tester allows Scully customers and field personnel to quickly
assess any Scully rack controller for proper equipment operation. In the event of a malfunction, it facilitates problem isolation and resolution, thereby reducing downtime and increasing safety. The Scully Universal Rack Tester Simulates: • Optic and Thermistor Overfill Sensors • Scully Ground Bolts & Ground Balls • Scully T.I.M.™ Truck Identification Modules n
Gilbarco Passport® Receives First U.S. EMV Certification for Credit and Debit Transactions in Petroleum Retail Gilbarco Veeder-Root has been certified by First Data to accept EMV® transactions on their Passport® POS. As the first petroleum retail POS solution to execute live transactions on both debit and credit EMV chip cards, Passport will provide retailers with a seamless upgrade as more and more consumers adopt the
new cards. First Data has been producing EMV-enabled cards and processing EMV transactions for years. The announcement of a certified POS solution signals that EMV technology adoption continues to accelerate. Petroleum retail customers who have already deployed Passport as their POS solution will benefit from a simplified transition process for customers and employees when the EMV software is released to production in early 2016. With Gilbarco’s large install base, many retailers will be uniquely positioned to accelerate EMV certifications with networks and card brands, both inside the store and at the forecourt. EMV support for the First Data network of customers will allow brands like ExxonMobil, Sunoco, Valero, Clark and Gulf to be among the first petroleum clients to accept EMV transactions. n
READ MORE at fuelmarketernews.com FMNMagazine
ValvTect Petroleum Acquires Energy Additives ValvTect Petroleum Products of Northbrook, Illinois, announced it has acquired Energy Additives, Inc. of Battle Creek, Michigan, the industry’s leading supplier of LPG/propane fuel additives and exclusive distributor of Blue Moon propane filtration systems. “We are excited to acquire Energy Additives and its high quality product line. We look forward to servicing their existing domestic and international customers as well as expanding the line to our distributors,” said ValvTect President Marvin Griffin. “Although there are other propane additives on the market, Energy Additives’ patented products are formulated specifically for LPG/propane. Blue Moon filters extract up to 97% impurities from LPG that can damage precision components of LPG/propane systems. These products provide unique and proven performance, thus they are similar in quality and performance to ValvTect’s line of diesel, gasoline and biocide additives.” n
The mechanical principles of fracking have not
changed since the first brave shooter dropped an explosive charge down a well in the 1860s. Then as now, the task is to deliver a powerful force to a designated depth underground, rubblizing the hard rock formations around the well to stimulate the release of oil or gas trapped within. Modern methods use highpressure jets of water, chemicals and sand to break up formations. Acting as a proppant, the sand seeps into the resulting cracks and keeps them open. Oil and gas permeate the sand en route to the well casing. Reference: Fracking: A Look Back by Michael MacRae, ASME.org
Diagram of Lt. Col. Edward A. Robertâ€™s â€œexploding torpedo."
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American Coalition for Ethanol
American Council for an EnergyEfficient Economy
Federal Trade Commission
Alaska North Slope Crude
American Petroleum Institute
Gallons per Minute
Biotechnology Industry Organization
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California Air Resource Board
Hours of Service
Combined Heat and Power
Internet of Things
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Diesel Exhaust Fluid
Laborersâ€™ International Union of North America
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Light Tight Oil
Energy Information Administration/DOE
Master Limited Partnership
Million Barrels per Day
Federal Motor Carrier Safety Association
EuroPay MasterCard VISA
Environmental Protection Agency
Exhaust Gas Recirculation
National Association of Convenience Stores
National Biodiesel Board
Near Field Communication
National Resources Defense Council
Organization of Petroleum Exporting Countries
Over The Road
Petroleum Administration for Defense District
Petroleum Marketers Association of America
Point of Sale
Renewable Fuels Association
Renewable Fuel Standards
Renewable Volume Obligations
Selective Catalytic Reduction
Trans-Alaska Pipeline System
United States Department of Energy
Underground Storage Tank
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Dennis K. Burke, Inc.
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62 – 63
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