Energy International Quarterly: Issue 9

july/august 2010 Raymond James & AssociateS Lessons from America’s top energy analysts

Infinite Energy

energy international quarterly

Products for clean, green, renewable power

SolarCity Public utility, private equity, and the future of solar leasing

Let Us Bring Power To Your Neighborhood.

While maintaining focus on safety, cost and the importance of continuously delivering on schedule, Fisher Powerline Construction Ltd. offers construction and maintenance services on overhead and underground transmission and distribution systems utilizing both cold and hot line methods.

Bay #8 - 122 Millennium Drive Fort McMurray, Alberta T9K 2S8 Tel: (780) 713-3474 • Fax: (780) 791-1905 www.fisherPLC.ca

contents

SOLARCITY

SolarCity is helping to knock down long-standing barriers between consumers and affordable renewable energy to provide easy access to solar-energy systems. p. 50

Raymond James & Associates, Inc., a financial-services firm with a focus on energy stocks, suggests a conservative approach: bullish on oil, bearish on gas, and squeamish on renewables. p. 42

energy international quarterly july/august 2010

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contents

True to its name, Excel Engineering integrated a global view to remain profitable throughout the recession.

p. 24 Transitioning to Renewables 12

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mar oil & gas corp. has remained resilient despite the down economy by exploring and expanding energy-efficient initiatives beyond traditional fuels. pettigrew & associates, p.a., positioned in New Mexico’s economically booming EnergyPlex, is serving the renewable-energy sector with civil-engineering, surveying, materials-testing, and consulting services.

Exploration & Development 16

amr process inc. is a process-engineering company that has begun expanding its services into the international marketplace.

19

gunn oil company is a privately held, Texas-based oil-and-gas-production company that credits its success to an expert staff and independent spirit.

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minard run oil company, which has drilled into its own land for more than a century, is eyeing a serious entry into natural-gas exploration, drilling, and production.

Engineering 24

excel engineering, inc. is a fullservice engineering-consulting company that makes teamwork, effective communication, and dedication to customers central to its success.

27

comco petroleum management inc., which began as a one-man gasoline-pump repair shop, now offers full-service petroleum-engineering and environmental services throughout the region.

29

bastion technologies, inc. is an engineering and scientific-services company that provides structural and mechanical analysis and engineering/ design for the aerospace and subsea oiland-gas markets.

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energy international quarterly july/august 2010

Barnhart Crane & Rigging Co. has developed special expertise in serving the energy sector, including the installation of wind turbines.

p. 63

66 pacs industries, inc., which

manufactures metalclad switchgear, has grown considerably in both size and service offerings.

68 fisher powerline construction ltd. is a husband-and-wife-owned powerline-construction company that emphasizes customer service, a commitment to safety, and to getting the job done.

70 microseismic, inc. has become the world’s leading service company providing acquisition and analysis of passive seismic data.

North American Wind 32 infinite energy manufacturing manufactures components for windturbine systems, helping create a cleaner, more responsible environment.

34 westwood professional services, inc. is a multi-disciplined consultant that provides site evaluation and construction-support services for many new wind-farm projects.

37 the michigan institute of aviation and technology has become a national powerhouse for those who want specialized training in power technology, aviation technology, or transportation dispatching.

40 carstensen consulting, inc., a construction company based in Minnesota, has expanded its business to include wind-energy development and site preparation.

Custom Products 56 s2w contracting llc commissions and maintains reciprocating natural-gas compressors for companies accross the United States.

58 map oil tools designs, manufactures, and distributes standard-service downhole tools and specialty tools for oil-and-gas developers and contractors all over the world.

60 gmg energy solutions inc. builds custom equipment, such as oil-andgas drilling rigs, to withstand the Canadian oilfields.

Specialty Services 63 barnhart crane & rigging co., which has grown from a single location to 24 offices nationwide, has developed specialized expertise in the energy sector.

Job-Site Safety 74 safety and supply company is a third-generation family-owned business offering multifaceted services, including safety products for all areas of the energy industry.

77 reliable environmental transport, inc. collects, transports, and disposes waste in order to keep resourcedevelopment sites clean and safe.

80 southwest disposal service inc. reclaims oil from oilfield waste, and has set the standard for disposal practices in the energy field.

Plus 6 editor’s note 8 news 82 last word

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editor’s note

SolarCity is reimagining small-scale solar energy.

T

he energy industry remains one of the most influential, profitable, and volatile markets in the global economy today. As ideologies, methods, and energy sources change daily, energy companies have to be at the top of their game to ensure their business will perform. This issue of EIQ explores the changing energy market, and attempts to give our readers a glimpse into the future of power generation.

SolarCity (page 50), which appears on our cover, is an innovative company that is attempting to change how the world approaches solar energy.

The firm has struck a deal with a California utility company that will finance the installation and maintenance of more than 1,000 small-scale solar-energy systems. According to Lyndon Rive, founder and president of SolarCity, “The PG&E deal sets an example that utilities can look at solar companies as a business opportunity, instead of being at odds with each other. If we want to see the industry expand, we need the solarpower providers and utility companies to work together, and [the PG&E deal] is one way.” Only time will tell if a strategic partnership between utility companies and solar providers will be the future of the renewableenergy industry.

While renewable power may be at the forefront of today’s energy dialogue, oil and natural gas remain the primary energy sources for more than 80 percent of the world’s power consumption. EIQ had the opportunity to discuss this fact, among others, with world-renowned financial advisors Raymond James & Associates (page 42). Cory Garcia, senior research associate with the firm, explores the future of the energy industry as it pertains to investments and stock trends. “Our fundamental thesis on the energy space has been a tale of two commodities: bullish on oil, bearish on natural gas,” Garcia says. He continues on this topic, saying, “Risks remain high in alternative energy, reflecting the often brutal competitive dynamics in young, rapidly evolving industries.”

We at Energy International Quarterly continue our coverage of the global energy market in an attempt to inform you, our readers, of current opportunities and trends that will influence your businesses in a positive way. As always, we hope the articles in this issue motivate and inspire your work. Enjoy.

Molly Soat Features Editor

2011 abq Building excellence Awards American Builders Quarterly is celebrating the best in American building and design with the 2011 Building Excellence Awards

The ABQ Building Excellence Awards recognize achievements in architecture, design, and community planning across the nation. Winning projects will receive featured coverage in the July/August 2011 issue of American Builders Quarterly, in addition to prize packages available exclusively to Building Excellence Award winners.

Project submissions must be received by mail no later than October 15, 2010.

Visit americanbuildersquarterly.com/awards for submission requirements, downloadable entry forms, and complete award details.

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energy bulletin

LEGISLATION: FUNDING

DOE Announces More Than $20.5 million for Community Renewable-Energy-Deployment Projects The US Department of Energy has selected five projects to receive more than $20.5 million from the American Recovery and Reinvestment Act. The funding supports deployment of community-based renewable-energy projects, such as biomass, wind, and solar installations. These projects will promote investment in clean energy infrastructure that will create jobs, help communities provide long-term renewable energy, and save consumers money. DOE estimates that these projects will provide enough clean, renewable energy to displace the emissions of approximately 10,700 homes. Projects selected for awards include:

ENERGY EDUCATION

Texas Electric Provider Awards Annual Teacher Grants In an effort to help stimulate and inspire young students across the state, First Choice Power—one of Texas’ largest retail electric providers—has awarded 22 grants totaling more than $50,000 to Texas teachers who submitted creative ideas to discuss energy and energy-efficiency in the classroom. “Energy efficiency is a growing issue, and today’s students are the key to its future,” said First Choice Power president Brian Hayduk. “The First Choice Power Classroom Energy Innovation Grants are one way we are doing our part to help support innovative learning.”

Highlighted projects include: • Alan Small of Northbrook Elementary School (Saginaw, TX): Third-graders will use laptop computers, stopmotion cameras, and video-editing software to create a series of short movies about energy and conservation of natural resources.

• Kori Acevedo’s of Helen Edwards Early Childhood Center (Kaufman, TX): Pre-kindergarten and kindergarten students will explore energy and light with a series of lessons that include UV bracelets and studying the sun’s energy.

• City of Montpelier (Montpelier, VT): installation of a 41-millionBritish-thermal-unit combined heat-and-power district energy system fueled with locally sourced, renewable, and sustainably harvested wood chips.

• Forest County Potawatomi Tribe (Forest County, WI): a 1.25megawatt biomass combined heat-and-power facility, a biogas digester and 150-kilowatt generation facility, three 100-kilowatt wind turbines, and solar PV panels.

DOE share: $2,500,000

• Phillips County (Holyoke, CO): a 30-megawatt wind-energy project, with an ultimate goal to build a 650-megawatt wind farm within Sedgwick, Phillips, and Logan counties in northeastern Colorado.

DOE share: $8,000,000

• Sacramento Municipal Utility District (Sacramento, CA): a “SoDOE share: lar Highway,” which will feature three PV-system installations $5,000,000 on two miles of highway right-of-ways, with total capacity of 1.5 megawatts; a full-scale co-digestion process of fats, oil, and grease; and two anaerobic digesters that will generate 600 kilowatts of electricity.

• University of California–Davis (Davis, CA): a waste-to-renewable-energy system that will generate power from a renewablebiogas-fed fuel cell.

DOE share: $2,500,000

Source: US DOE

DOE Invests $12 Million to Support Solar Technologies US Department of Energy Secretary Steven Chu has announced that the National Renewable Energy Laboratory (NREL) will invest up to $12 million in total funding—$10 million from the American Recovery and Reinvestment Act—in four companies to support the development of early-stage solar-energy technologies for a full commercial scale. The anticipated subcontracts, up to $3 million each, will be awarded as 18-month phased subcontracts, with payment made upon completion of project milestones. The partnership projects announced include:

• Lucy Vivian of Goodson Middle School (Cypress, TX): Students will explore various ways to produce alternative energy and will evaluate factors related to the various types of energy, such as costs, productivity, compatibility with needs and resources available, and potential risks to the environment.

• Alta Devices, Inc. (Santa Clara, CA): a highefficiency, low-cost compound-semiconductor photovoltaic module.

Source: First Choice Power

Source: US DOE

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DOE share: $8,000,000

energy international quarterly july/august 2010

• Solar Junction Corp.

(San Jose, CA): highefficiency multijunction cells.

• Tetra Sun (Saratoga, CA): a back-surface passivation for high-efficiency crystalline silicon solar cells.

China-based Company Named a Top 20 Energy Service Company

ASSOCIATION NEWS & AWARDS Ken Salizar, SEIA’s 2009 Energy Champion of theYear.

NF Energy Saving Corporation, a Chinese leader in providing integrated energy-conservation solutions, earned a 2009 Top 20 ESCO (Energy Service Company) award at the recent China ESCO Industry Annual Meeting & China Energy Forum held in Beijing. Hosted by the ESCO Committee of the China Energy Conservation Association, the summit meeting is the premier industry event in China. Mr. Li Gang, chairman and CEO of NF Energy, gave a speech at the conference, highlighting NF Energy’s achievements in the field of energy conservation and emission-reduction projects and services. “Energy services companies are facing unparalleled opportunities and challenges in China,” he said. “Being a Chinese leader in the ESCO industry, we believe that our company will benefit from new macro preferential policies, as well as internal technology innovation, allowing us to achieve more impressive results in the future.”

Source: NF Energy Saving Corporation

Retail Energy-Supply Association Welcomes New Member

US Department of the Interior Secretary Named 2009 National Solar Energy Champion of the Year Department of the Interior (DOI) Secretary Ken Salazar was recently named 2009 Energy Champion of the Year by the Solar Energy Industries Association (SEIA), which works with 1,000 member companies to make solar a mainstream energy source by expanding markets and removing barriers, strengthening the industry, and educating the public. Some of Salazar’s many contributions for advancing efforts in solar energy include: • signing an order to make the production, development, and delivery of renewable energy a top priority for the DOI; • setting aside 1,000 square miles of public lands in 24 “Solar Study Areas” that have the potential to generate nearly 100,000 megawatts of clean, reliable solar energy;

The Retail Energy Supply Association (RESA), a leading trade association of retail energy suppliers,has announced the addition of Constellation NewEnergy to its membership.

“Constellation NewEnergy looks forward to joining forces with RESA to advocate for the continued development of competitive retailenergy markets in the United States,” said David I. Fein, vice president and director of Retail Energy Policy for Constellation NewEnergy. “RESA’s continued advocacy on such issues will provide customers with a greater array of innovative energy choices and access to more services, including demand response, energy efficiency, and renewable energy.”

• a new fast-track review program of specific solar-energy projects in the Southwest, representing 6,521 megawatts of capacity (enough electricity to power 1.6 million homes), which is expected to create more than 20,000 jobs.

Constellation NewEnergy is a leading competitive supplier of electricity, natural gas, and energy-related services to commercial, industrial, and institutional customers throughout the United States.

Source: Solar Energy Industries Association

Source: Retail Energy Supply Association

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energy bulletin INDUSTRY: PRODUCTS

Eco-Friendly Engine Cover Developed for Award-Winning Hybrid Leading North American automotive manufacturer MPC Inc. (based in Walworth, Wisconsin) and PolyOne Corporation—a premier global provider of specialized polymer materials, services, and solutions— have created an eco-friendly engine cover for the award-winning 2010 Ford Fusion Hybrid, which was named the North American Car of the Year at the North American International Auto Show earlier this year.

The engine-cover product was co-designed by the companies, with MPC molding the engine cover from a metallic-effect PolyOne compound (Maxxam FX Metal). The eco-friendly process mimics the luster of painted polymer versions but eliminates the extra energy requirements, environmental challenges, and heavy carbon footprints of traditional manufacturing and painting processes, making less impact on the environment.

“This project underscores our focus on innovation and eco-friendly technologies,” said Doug Callahan, MPC’s vice president of engineering. “It also demonstrates the level of success that can be reached with these types of collaborative relationships.”

Source: PolyOne Corporation

eMeter Receives Highest Rating from Analyst Firm Gartner, Inc. eMeter, the global leader in Smart Grid Management software, has received the highest rating for its latest product, the EnergyIP, in analyst firm Gartner, Inc.’s report titled “MarketScope for Meter Data Management Products.” The EnergyIP—which offers essential software that enables electric, gas, and water utilities to realize the full benefits of smart grid—is the third installment of eMeter’s Smart Grid Management Suite, which also includes: • Energy Engage, a next-generation onlineconsumer-engagement solution that empowers utilities and consumers to work together to drive sustainable energy conservation and cost reduction; • Smart Grid Solutions, which provide extended AMI deployment, operations, and Smart Grid-management capabilities.

“With the distinct advantage of being designed for large-scale deployments, eMeter is well positioned to help utilities and consumers take full advantage of the benefits that the smart grid offers,” said eMeter CMO Sam Klepper.

Source: eMeter

World’s First Home-Scale Ethanol-From-Cellulose Processor Announced Allard Research and Development, the world leader in small-to-medium-scale ethanol-fuelproduction systems, has developed the world’s first small-scale machine system that converts ordinary waste into ethanol fuel, utilizing cellulose as the primary feedstock. The new system, designed as a front-end processor for Allard’s existing line of modular ethanol-distillation systems, can produce ethanol from products such as: • lawn clippings; • cardboard; • paper; • sawdust; • other cellulose-based material.

The product breaks down the materials into a sugar-water solution. Once turned into sugars, the solution is fermented and distilled into ethanol fuel, using Allard’s existing line of ethanoldistillation systems. In addition to the small, home-scale version of the machine, the company is also rolling out larger versions for the commercial marketplace that utilize the same technology.

Source: Allard Research and Development

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energy international quarterly may/june july/august 2010 2010

MERGERS & ACQUISITIONS

LEGISLATION: INTERNATIONAL

Covanta Completes the Acquisition of Energy-from-Waste Business

LandStar Inc. and Chinese Municipal Government Reduce Emissions

Covanta Holding Corporation, an internationally recognized owner and operator of large-scale energy-fromwaste (EFW) and renewable-energy projects, has successfully completed its acquisition of a 3,000-ton-perday operating contract in Miami-Dade County, Florida.

Completing this final stage of the acquisition of Veolia’s North American EFW business further enhances Covanta’s position as the world leader in the development, ownership, and operation of EFW facilities, which provide communities with an environmentally sound solution to their solidwaste-disposal needs by using that municipal solid waste to generate clean, renewable energy.

Annually, Covanta’s modern EFW facilities safely and securely convert approximately 20 million tons of waste into more than 9 million megawatt hours of clean, renewable electricity, and create 10 billion pounds of steam that are sold to a variety of industries. The businesses acquired from Veolia include: • the operating contracts associated with six EFW businesses;

• a transfer station, also located in Pennsylvania;

• ownership and operation of a seventh EFW facility located in Montgomery County, Pennsylvania;

• a long-term operating contract with the respective municipal client.

Source: Covanta Holding Corporation

China-based LandStar Inc.’s subsidiary Hubei Chuguan Industrial Co., Ltd. held a conference earlier this year with the municipal government and created multimillion-dollar opportunities for 2010. Hubei Chuguan held a working conference with local government representatives on comprehensive management of oil-and-gas recovery in Zuhai City. The conference reexamined the plans for Environmental Protection Model City Zhuhai, which stresses the country’s current energy-saving and emissions-reduction policies in the city.

The municipal government has since created an office to work on the initiative, which will manage the oil-and-gas recovery in the city’s existing gas stations, oil depots, and tankers. The program’s completion is expected by the end of September, with pollution inspection of all oil-storage facilities, gas stations, and oil-and-gas tankers completed by the end of the year.

Source: LandStar Inc.

M O&G

Mar Oil & Gas exploration & production

developers and operators of renewable energy projects.

P.O. Box 5155 Santa Fe, NM 87502 Tel: 505.999.1977 Fax: 505.999.1987

energy energy international international quarterly quarterly july may/june /august 2010

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transitioning to renewables

Mar’s specialized equipment, like this Carterpillar generator, is propelled by methane gas captured from landfills.

Mar Oil & Gas Corp.

New Mexico-based company finds success with alternative energy by ryan nave

when people are happy about the low price of fuel, the oil-and-gas industry, and the millions of people it employs, are hurting. Despite the state of an industry that has seen steadily depressed prices during the global recession, however, Santa Fe, New Mexico-based Mar Oil & Gas Corp. is finding success while adapting to the changing market landscape. “What’s unique about us is that we are involved in alternative energy besides oil and gas,” says company president Leon Romero. This expansion into renewable energy has been achieved through Four Peaks Energy Corp., a wholly owned subsidiary of Mar.

at a glance location: santa fe, nm founded: 1986 area of specialty: demolition, construction, excavation, hauling, remodeling, and equipment rental 2009 sales $25 million

Specifically, Mar is working on a number of renewableenergy projects to add to its traditional business of upstream oil and natural-gas exploration and production.

In 2007, the company built a 3.2-megawatt generator that is propelled by methane gas captured from a landfill.

Waste Connections Inc., headquartered in Sacramento,

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energy international quarterly july/august 2010

California, operates the generator out of its Sundland Park, New Mexico, site. The electricity generated at the facility is then sold to El Paso Electric Co. Mar has also become involved in a landfill-gas project, to help divert waste from landfills. Leftover food and other organic matter winds up in landfills, where the material decomposes and produces carbon dioxide and methane.

Because the latter of these gasses is explosive, landfill operators historically have simply burned, or flared, the methane. Romero believes that practice is unnecessarily wasteful. “I guess I’m of the belief that you have to exploit energy wherever there is energy,” he says. “What we’re doing is turning [methane] into an energy source instead of destroying it. So we’re making an economic resource out of what would have been nothing.”

Similar to the landfill gas project, Mar is also working with farmers to produce energy from the biogas gener-

transitioning mar oil & gas corp. to renewables

What we’re doing is turning [methane] into an energy source instead of destroying it. So we’re making an economic resource out of what would have been nothing.

—Leon Romero, President

Mar specializes in the exploration and production of upstream oil and natural gas.

ated by waste ponds on dairy and chicken farms. The project is planned for East Texas and is in the early financing stages.

From a business perspective, delving into alternative energy spreads Mar’s risk in a very volatile market for petroleum and natural gas, whereas the electricity market is typically more steady, Romero says. He explains that oil and gas have a decline curve, meaning that production from a given well decreases over time.

Landfills and other renewables, on the other hand, produce more methane over time, giving that product an incline curve.

The future effect of depressed oil-and-gas prices on Mar’s bottom line is unknown. Up until the recession began, however, sales had been brisk. From 2007 to 2008, revenues just about doubled, from $5.1 million to $10 million. Romero forecasts that Mar is “probably going to hold steady” through 2010.

Despite the alternative-energy ventures, Romero stresses that Mar is not abandoning its core businesses in oil-and-gas production. Romero’s father started Mar in the 1940s, drilling oil wells in Texas, Wyoming, and Brazil. In 1954, Mar incorporated in New Mexico as an oil-production and -leasing company.

When Romero joined the firm from the telecommunications industry in 1981, the oil business was experiencing many of the same difficulties it is currently undergoing.

Nevertheless, Mar continued to grow by developing wells in the gas-rich San Juan Basin in the southwestern United States. Today, the four-employee firm—whose largest customers are ConocoPhilips Co. and Plains Marketing LP, both headquartered in Houston, and

Birmingham, Alabama-based Energen Corp.—owns interest in more than 1,000 wells in the San Juan and Permian basins.

Mar has several explorations planned for 2010, including plans to waterflood some of its sites in order to boost production and concentrate on oil drilling and exploration in Texas and New Mexico. According to Romero, the company is also looking at the possibility of going public with an Alternative Public Offering. Of the bold move, Romero says, “We’re a pretty tiny company but looking to grow.” And with its success in the past despite the down economy, Mar Oil & Gas certainly looks poised for growth. EIQ

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transitioning to renewables

Pettigrew & Associates completed an ALTA survey of the Caprock Wind Ranch in Quay County, NM, which included an area of 31 sections across 4 townships, encompassing a transmission line route that covered an additional 12 miles of right of way.

Photo: Michael Bowers, NM State Land Office.

Pettigrew & Associates, P.A. New Mexico-based civil-engineering firm diversifies its offerings by erica archer

at a glance location: hobbs, nm employees: 35 area of specialty: civil engineering, surveying, materials testing, and consulting 2009 revenue: $5 million

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the economy of new mexico and civil-engineering firm Pettigrew & Associates, P.A. both share a success strategy amid tough economic times: strength in diversity. For the state- and local-government entities of New Mexico, that means looking to energy producers beyond oil and gas. For Debra Hicks, president of Pettigrew & Associates, it means staffing her civil-engineering firm with multiple specialties.

The firm has been increasingly active in its home state’s energy sector in recent years. New Mexico’s economy has long been focused on the oil-and-gas industry—the state is America’s fourth-largest producer of natural gas and sixth-largest producer of oil. “For about the past ten years, we’ve been working to diversify that economy with the addition of alternative energy, wind, and nuclear,” Hicks says.

Pettigrew & Associates has long been established in its Hobbs location. The firm was founded in 1965 by Hicks’ father, and she and her husband purchased it in 1990. The multidisciplinary firm provides surveying and materials testing, as well as planning, feasibility studies, and construction management. “We’re a one-stop shop that can support the whole project from start to finish, from the very idea on a napkin [to completion],” Hicks says.

One recent development is the construction of the URENCO USA National Enrichment Facility (NEF), which represents a coup for eastern New Mexico. Pettigrew & Associates provided consulting, engineering, project management, and design services for the facility’s water-supply line. Currently, it has an indefinite contract to serve as the NEF’s surveying department.

The uranium-enrichment nuclear facility, approved in

energy international quarterly july/august 2010

transitioning pettigrew & associates, p.a. to renewables

We’re uniquely positioned as a full-service engineering, geotechnical, surveying, and materials-testing firm, which allows us diversity as well as flexibility in changing market focus.

—Debra Hicks, President

2006, is currently under construction near Eunice, New Mexico—twenty miles south of the offices of Pettigrew & Associates. The construction budget currently weighs in at $3 billion, and the first commercial operations are launching this year. When completed, the URENCO USA NEF will produce one-fourth of the American uranium supply—enough fuel to fill 10 percent of the nation’s electricity needs.

Hicks, active in the Economic Development Corporation of Lea County, facilitated community hearings during the permitting process. She attended the Washington, DC, signing of the permits in 2006, and she briefly spoke at the project groundbreaking. “It was very exciting,” she says. “The project represented an enormous economic opportunity for southeastern New Mexico and, subsequently, Pettigrew & Associates.”

worked for the local electric utility; and in 2003, Southwestern Public Services completed a 354-mile transmission line crossing 11 counties and 4 states, for which the firm performed geotechnical investigations and surveying.

In the wind-energy arena, Pettigrew & Associates provides ongoing surveying services for the Caprock Wind Ranch in Quay County, which began operating in 2004.

Hicks adds that the eastern New Mexico EnergyPlex, known as the nation’s epicenter of energy commerce, hasn’t been hit as hard the rest of the nation during the economic downturn. Lea County’s unemployment rate has been well below the rest of the nation, from 2006 to 2009. The area has taken hits nonetheless: Hicks notes that in the sparsely populated region, the oil-and-gas industry lost more than 1,800 jobs, from 2008 to 2009, according to the New Mexico Department of Workforce Solutions (formerly the Department of Labor).

Like New Mexico’s economy, the firm finds its strength in its versatility. According to Hicks, the firm’s in-house “We’re just blessed,” Hicks says of the firm’s success. “I professionals can approach a project from multiple angles. won’t venture to say it was just expert leadership; our “Because we’re able to do surveying, engineering, materi- team of talented and dedicated employees are all responals engineering, geotechnical, and materials testing, we sible. We have a motto that the work that we do is of the can take care of the entire civil portion of a project,” she highest ethical and moral standards. And I think that has says. “We’re uniquely positioned as a full-service engibeen instrumental in helping us maintain a 90-percent neering firm, and that allows us diversity as well as flexrepeat-client base.” EIQ ibility in changing markets.”

Unlike many firms during the construction slump, Pettigrew & Associates has steadily grown over the past five years, growing at an average rate of 37 percent from 2005 to 2009. The firm also has gone from annual revenues of $500,000 in 1990, when Hicks purchased it, to just shy of $5 million in 2009. In addition, a move to a bigger office is planned for summer 2010.

Its growth comes from years of experience in a variety of industry sectors. Since 1965, Pettigrew & Associates has

Labor-Workforce Trends in New Mexico’s Energy Plex

2004 2005 2006 2007 2008 Civilian Labor Force 24,524 25,728 26,796 27,968 30,586 Employed 23,307 24,640 25,938 27,336 29,833 Unemployed 1,217 1,088 858 652 753 Rate 5.0% 4.2% 3.2% 2.3% 2.6% Source: NM Department of Labor

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amr process inc.

Two electrostatic treaters designed by AMR and built by a client inVenezuela.

AMR Process Inc. Canadian oil-and-gas technology expands in the global marketplace by david hudnall

From the beginning, AMR’s business plan was to focus located in alberta—the heart of canada’s on the top ten countries in the world in terms of oil-andoil-and-gas industry—AMR Process Inc. sells oilgas production and reserves. “So far, we’ve penetrated and-gas technology to an increasingly international marketplace. “We have a floating production in Nigeria; approximately 60 percent of those markets, which is a huge achievement for any company to accomplish,” Robwe currently have fabrication for Russia and Oman inbins says. As a way of streamlining those goals, AMR house; we have a joint-venture company in China and looking to set up a joint-venture company in the Middle Process started working with I. Matheson Company East,” says Ashley Robbins, president. Some of the com- (IMC) in 2007, and became a part owner of IMC in pany’s major international markets include Iraq, Tunisia, 2009. IMC is a Nova Scotia-based fabricator located on Indonesia, Brazil, and Europe. “We possess various tech- the Atlantic Ocean and Eastern Seaboard that has been nologies that are fairly limited among companies around in operation for more than 150 years—beginning in the the world,” Robbins continues. “Ninety-eight percent of 1860s as a ship builder. “They built the first steel schooner in Canada,” Robbins says. “Their business has been our business is exports.” around since Lincoln was president.” The two companies AMR provides licensed designs for international fabrica- were introduced in 2007, through an economic-development-agency conference, and quickly realized the postors. The firm—which has experienced an average of sibilities of their combined potential.

185-percent growth anually since its founding five years ago—also provides engineering functions like start-up “When I met Ashley, he identified a synergy,” says Jim and commissioning, troubleshooting of oil-and-gas MacDougall, general manager at IMC. “AMR had exprocess equipment, and training of operators. AMR’s perience and professional expertise in design of process project experience includes offshore, floating producpackages, and IMC had location and fabrication capabilition, and cold-weather design projects that have been ties that AMR was looking for. We both wanted to grow implimented accross the globe.

at a glance location: leduc, ab area of specialty: oil-andgas process engineering and water-treatment services

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energy international quarterly july/august 2010

exploration & amr process inc. development

We possess various technologies that are fairly limited among companies around the world. Ninety-eight percent of our business is exports.

—Ashley Robbins, President

our companies in the same market.” IMC manufactures U-stamp ASME products for the export market through AMR’s engineering. “The history of IMC is amazing,” says Robbins, “and they also have great current manufacturing technology. We’re working to where we can expand our products in oil and gas worldwide together: our export and design knowledge, their fabrication knowledge. It’s going to happen, and we’re very excited about it.” So far, the joint venture has sent oil-and-gas processing equipment to fields and clients in Nigeria, Iraq, Tunisia, and Italy, and is currently building oil-process packages for Russia and the Middle East.

Investing heavily in technology, especially software technology, is a major priority and growth strategy for AMR. It’s also a way of keeping employment costs down.

(Between IMC and AMR, there are roughly 50 employees.) Project-management capabilities afforded by new integrated technologies are also essential for an aspiring global company. “People can log in and see progress and supply from a quality point of view; they can see live progress on fabrication,” Robbins says. “Our clients love that, and they talk about stuff like that. Approximately 50 percent of our business is return clients, and those are the kinds of things that encourage retention.”

AMR PROCESS DEFINED Services • Oil & gas process equipment • Licensed equipment designs & guarantees • Methanol-recovery units • Process-engineering services

Numbers • 15: Number of countries AMR exports to • 185: Average percent growth per year over the past five years • 700: Percent that the staff has increased since its founding • 2008/2009: Years in which AMR won Top Company for the Alberta Export Awards for Professional Services • 2009: Year in which AMR was nominated as finalist for the Alberta Business Awards of Distinction (Export category) • 2009: Year in which AMR won Employee Internship Small Business of the Year

AMR specialized internals for oil/water separatoion being installed in vessels in China

Robbins says AMR hasn’t seen much in the way of a slowdown. 2009 was a record turnover for the company, and he attributes it to the company’s business plan of “customer service with technology.” Also, he adds, “The advantage of having a growing company is that you can look at things other firms are doing and have done and see what works and what doesn’t. We listen to our clients and figure out a more productive way of collaborating.”

Robbins continues, saying, “Essentially, we’re doing business on a model that both the Eastern and Western worlds are looking at. There’s a huge amount of potential here. We’ve had so much success in such a short period of time.” EIQ

energy international quarterly july/august 2010

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exploration & development

Gunn Oil Company’s rig, drilling in its primary gas field inWichita Falls,TX.

Gunn Oil Company Independent oil-and-gas-exploration company searches for new frontiers by cristina adams

at a glance location: wichita falls, tx founded: 1976 employees: 38 memberships: independent oil-and-gas exploration and production

there was a time when the state of texas was full of wildcatters; small oil companies or independent oilmen took their chances, followed their noses to the next big prospect, and drilled and drilled until they either came up dry or hit oil. The era of the wildcatter has been largely supplanted by the era of the oil behemoths, as many of the independents have been sold to the Exxons and BPs of the world. But even as the megasized companies continue to merge and grow, there are still a few successful, independent holdouts like Gunn Oil Company.

Robert D. Gunn founded the company in 1976, but he has been in the oil business since the late 1940s when he moved to Wichita Falls as an employee of Texaco. By 1953, the Texas wildcatting spirit had caught up with him, and Gunn went out on his own to develop independent prospects. His new venture enjoyed steady growth

until 1969, when he made his biggest oil discovery on a 100,000-acre lease at the 6666 Ranch. At its peak, the field, which is still producing, pumped out 35,000 barrels per day; since its discovery, it has produced primary and secondary oil of nearly 128 million barrels.

Seven years later, Gunn—who is a past president of the American Association of Petroleum Geologists, and who has received its highest honor, the Signey Powers Memorial Award—incorporated his business as Gunn Oil Company. He had three employees (a secretary, a geologist assistant, and a bookkeeper) and contracted out all other services. Today, the company has 38 employees, nearly one-third of whom have worked there for more than 20 years. Employees come, flourish, and stay for the long haul, asserts Don Hupp, Gunn Oil president and CEO. “We have considerable expertise in drilling, operations, and waterflood installation, all of which are

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exploration & development gunn oil company

Being a wildcatting company, we’re always looking for new frontiers to explore. —Don Hupp, President & CEO

enhanced by a sense of community and commitment to and from our staff,” says Hupp, who joined the company in 2004, and now runs the day-to-day business. “It’s a great place to work.”

It’s also a place where employees are allowed to invest in the company’s oil-and-gas prospects on a direct-cost basis. In addition, certain staff members have been able to buy stock in the company over the years, a perk you don’t always find at smaller independents. But Gunn Oil isn’t like most independents. For one thing, nearly all of its current oil-and-gas production is the result of its own wildcat discoveries. The company’s five on-staff geologists are constantly working on current developments and generating new prospects. It also helps that Gunn Oil owns both a workover rig and a drilling rig capable of drilling a 15,000foot well. “Being a wildcatting company, we’re always looking for new frontiers to explore,” Hupp says.

Despite owning a drilling rig and other well-service equipment, the company subcontracts most of its drilling services to Ringo Drilling Company, in which it has an equity ownership stake. Its main contractors feature some of the industry’s biggest names, such as Schlumberger and Halliburton. Despite Gunn Oil’s diverse and extensive offerings, the firm keeps only two consistent clients: Sunoco Inc., which buys most of its oil, and Enbridge Energy Partners, which buys its natural gas.

The majority of what Gunn Oil produces is discovered within its primary areas of operation in Texas; as Hupp admits, the geology of certain areas within the state has directed the company’s efforts and kept them focused there. Even so, it has participated in and continues to get involved in projects and discoveries in other oil-producing regions, such as the Texas Panhandle, and the Tucumcari Basin in New Mexico.

Gunn is also involved in joint exploration efforts in Equatorial Guinea and offshore Australia, and a more recent interest in a natural gas/carbon dioxide project in Colorado.

But Texas is—and likely will remain—home. “The state, its people, its political environment, its encouragement of risk-taking activities, and its dedicated and proud workforce have all played a significant role in the company’s decision to remain headquartered in the state,” Hupp says.

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Robert D. Gunn, founder.

Like many others in the oil business, the past couple of years were lean ones. As the price of both oil and gas dropped throughout 2009, drilling at Gunn Oil slowed dramatically; indeed, there was a six-month period in which the company drilled no wells at all. But because it had—and still has—no debt, Gunn Oil has come through the slow period in good shape. Now, with the price of oil on the upswing, Hupp says the company is embarking on an aggressive drilling campaign; it plans to drill up to 24 wells between February and December of 2010.

“We’re staying focused on growth and continued exploration success,” Hupp says. “We feel that reward is proportionate to risk, and we feel that we’re good enough to significantly reduce that risk.” EIQ

energy international quarterly july/august 2010

Express Energy Services (EES) is a diversified oilfield service company serving oil and natural gas exploration and production companies from the Gulf Coast to the Rocky Mountains. EES began operations in October 2000 as an offshore rental support business to the coil tubing market. Today, EES offers approximately 20 different wellsite services to support its customers’ drilling, completion, work-over, and wellbore abandonment operations. EES differentiates itself through superior service, new equipment, strong field relationships and its safety record, which qualify the company to serve the largest, most demanding oil and gas operators.

Headquartered in Houston, Texas, EES has more than 1,200 employees and more than 30 service locations in Arkansas, Colorado, Louisiana, Oklahoma, Pennsylvania, Texas and the Gulf of Mexico.

PRODUCTION SERVICES Wireline & Pipe Recovery Services Coil Tubing Units Cranes Downhole Motors H2S Safety Pressure Testing Pump Trucks Rental Equipment & Pit Cleaning Rig Based Snubbing Vacuum Trucks & Frac Tanks Well Testing

DRILLING SERVICES Casing Services Laydown Services Rathole Services Rental & Construction Services

3200 Southwest Freeway • Suite 2000 • Houston, TX 77027

Te l : ( 7 1 3 ) 6 2 5 - 7 4 0 0 • F a x : ( 7 1 3 ) 6 2 5 - 7 4 0 3 W W W. E E S L P. C O M

gunn oil company

Minard Run Oil Company Family-owned business expands into natural-gas production by cristina adams

fred fesenmyer never planned on going into the family business. In the 1960s, he left Pennsylvania to attend law school in Denver. In addition to practicing law, he also pursued real-estate development and even founded his own stock-brokerage firm. Fesenmyer had successfully established himself miles away from the family oil business.

Then, in 1976, his father died unexpectedly, so at the request of his family, Fesenmyer went home to run the company. He believed that this move would be temporary, just until the family was back on its feet. “I thought I’d be here for three years, get things straightened out, and then go back to Denver,” recalls Fesenmyer, who now serves as president and CEO. “Thirty-four years later, I’m still here, and I don’t regret it. You surround yourself with good people who really make a difference, and it’s tough to leave. After a while, you just don’t want to leave.”

at a glance location: bradford, pa founded: 1875 employees: 68 area of specialty: oil exploration, drilling, and production

That’s no surprise. It would likely be difficult for many people to walk away from a legacy like Minard Run Oil

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Company, which was founded in 1875 as Emery Manufacturing by Fesenmyer’s great-grandfather, Senator Lewis Emery, Jr. As Fesenmyer points out, it is the largest independent oil company in the United States still operating on the same properties and under the same family management since its founding. What’s more, three generations of family members still work at the company, including Fesenmyer’s three siblings (who sit on the board), two of his own children, and a grandson.

But being part of the family doesn’t guarantee anyone a cushy job. Fesenmyer insists on hard work and doing things by the book. “The single thing that has kept us in business for all these years is credibility,” he says. “We say what we do, and we do what we say. There are no shortcuts.”

And there are certainly no shortcuts in a business that is, at best, profitable but unpredictable. Drilling for and producing oil has always been an iffy business. If oil prices and production are both high, the industry flourishes. On the other hand, when oil prices drop and

exploration & minard run oil company development

Minard Run’s work involves the drilling and production of crude oil and natural gas, as well as oil exploration.

wells run dry, people can lose their jobs. Fortunately, Minard Run is in the enviable position of drilling on and producing from its own property (all 15,000 acres of it), which allows it the luxury of being more immune to the industry’s ups and downs. As Fesenmyer points out, Minard Run doesn’t have to lease land or fiddle with the complicated structure of royalties.

In the past, the company had its own stable of drilling rigs, but decided to contract out the drilling portion in 1986. It makes much more sense to work with a drilling company, Fesenmyer says, since there have been times in the past when Minard Run did not partake in newwell drilling at all. That’s not the case these days. While the company is expanding its horizons by getting more involved in the exploration of oil production, it is also sticking to its bread and butter—that is, the drilling and production of crude oil and natural gas.

The single thing that has kept us in business for all these years is credibility. We say what we do, and we do what we say. There are no shortcuts.

—Fred Fesenmyer, President & CEO

Once it has been drilled and pumped, the oil goes off to a nearby refinery, American Refinery Group. Interestingly, the refinery was founded in 1881, also by Lewis Emery, although it’s no longer owned by Fesenmyer’s family. Minard Run sells its oil to the refinery at a price named by the buyer. Considering the tight profit margin in place, Minard Run keeps American Refinery Group as its sole client.

Natural gas is a by-product of the oil-drilling process, so it is not a mainstay of the company. Nevertheless, Minard Run makes the gas pipeline quality by removing some of the hydrocarbons, and then sells the end result to regional utilities. The leftover distillates are sold much as a barrel of oil is sold.

With the discovery of the Marcellus Shale, a formation of natural gas reserves stretching from New York state to Virginia, Minard Run is looking at possibly expanding more seriously into natural-gas exploration and production; after all, the company has mineral rights to more than 15,000 acres in the Marcellus Shale itself. For now, Fesenmyer is considering all the possibilities, especially that of partnering with another company that can provide the right equipment and financing.

One thing that isn’t likely to change, however, is family ownership of Minard Run. Years ago, Fesenmyer had an opportunity to sell the company for a tidy sum, but his mother, whose grandfather was the original founder, refused. “She said, in no uncertain terms, ‘This is our legacy,’” Fesenmyer recalls. “‘We need to protect it and continue with it.’” eiq

A leading independent developer of oil and natural gas in North America CORPORATE OFFICE: 1000 Gamma Dr. Ste. 400 • Pittsburgh, PA 15238 412-963-6443 WEST VIRGINIA FIELD OFFICE: PO Box 4640 • Bridgeport, WV 26330 304-566-7252 KENTUCKY FIELD OFFICE: 24442 KY Rt. 32 • Martha, KY 41159 606-652-4600 KENTUCKY PROCESSING PLANT: 470 Lost Lick Branch Rd. • Martha, KY 41159 606-652-4722

www.abartaoilandgas.com

This oil-and-gas platform complex was designed by Excel Engineering and installed in the Gulf of Mexico.

excel engineering, inc.

Incorporating a global view and employing a new strategy by brigitte yuille

the idea of becoming an entrepreneur came to Mostafa Jamal when he was attending engineering school. Once he graduated, he developed his skill and knowledge at three consulting-engineer companies. By the time he was at the third company, he held a multidiscipline managerial role—a position that required the process/mechanical, electrical/instrumentation, civil/ structural, and design/drafting managers to reported to him, Jamal says. Then in 1992, he achieved the goal of owning his own business by starting Excel Engineering, Inc., in which three discipline managers from his previous position joined him as part owners of the company, while Jamal serves as president and CEO.

at a glance location: houston, tx founded: 1992 employees: 60–100 employee growth in past year: 15% average annual sales: $11.3 million

Excel Engineering is a full-service engineering-consulting company that provides solutions from the preliminary planning stages through final commissioning. Its services include engineering design, procurement, project management, construction management, start-up assistance, manuals, and studies. Its project experience is varied, and includes early production systems, production facilities, power plants, pipelines, and offshore platforms. Locations of these projects are also diverse,

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energy international quarterly july/august 2010

having taken place in the United States, South America, Africa, Europe, the Middle East, and Asia.

During the height of the recession, the company reinforced its competitive edge, remained profitable, and completed three major overseas projects in Tunisia, Iraq, and Indonesia, as well as one in the Gulf of Mexico.

The oil-and-gas industry had taken a hit, and shallowwater projects were scarce, so the fight to win projects intensified. Most of its competitors had been small- to medium-sized engineering companies in Texas and Louisiana that provide design services in upstream oiland-gas-related facilities. Excel determined that it was time to adopt a new strategy, so it widened its search for projects to overseas markets and to the shale-gas projects in the United States. “Shale-gas projects are important because many companies that invest in such projects do not have engineering capabilities, and Excel can help these companies execute the projects in a cost-effective manner,” Jamal explains.

Excel’s responsiveness and ability to execute fast-track projects has been a key factor that sets it apart from its

excel engineering, inc. engineering

Our commitment to excellence, responsive service, and personalized attention is shared by everyone in the company, and it reflects in every phase of every project we handle. —Mostafa Jamal, President & CEO

competition. “The company was built on a foundation of experience and integrity, and has enjoyed an international reputation for delivering high-quality, innovative, and complete engineering solutions,” Jamal says, adding that despite the company’s impressive growth, the owners still have direct involvement.

Jamal believes this involvement by management effectively conveys a commitment to the company’s values and to its employees. Its staff includes very experienced engineers and designers in all disciplines. They not only are encouraged to obtain their PE license, but Excel also pays employees’ annual license-renewal fees. Excel’s executives recognize employees who have made exceptional contributions to the success of the company’s progress. “Employees who show potential for leadership are given opportunities to manage projects and assume greater responsibilities,” Jamal says.

In addition, the company’s “customers first” attitude has fueled its repeat business. “Our commitment to excellence, responsive service, and personalized attention is shared by everyone in the company, and it reflects in every phase of every project we handle,” Jamal says. Excel has also enjoyed honors such as being on the Houston Business Journal’s list of the top 25 engineering firms, and it has also enjoyed an excellent credit rating from Dun & Bradstreet. However, Jamal says, rankings and awards are “secondary to the respect and confidence earned from its clients, which are the true measure of Excel’s success.”

The company has been focusing on its ongoing projects in the Gulf of Mexico, and providing services to some of its clients on the development planning of its overseas projects. Its future goals include implementing a qualitymanagement program and getting ISO 9001 certification. Jamal believes this certification will increase the company’s value and will make it more competitive for larger projects overseas. Another goal, he shares, is having the company penetrate the shale-gas-projects market in order to increase its presence to companies investing in these types of projects.

By building a successful multimillion-dollar engineering-consulting business, Jamal has achieved his dream.

He attributes his success to hard work, professional integrity, and placing customers first. “This is the age-old formula employed by all successful companies that have lasted the test of time,” he says. “Any new business that follows this formula is bound to succeed.” eiq

the venezuela offshore facility One of Excel’s many overseas projects is the Venezuela Offshore Facility for Maxus/YPF. The project required three phases: facilities and pipelines, compression expansion, and facility expansion. phase 1: Construction included onshore oil-and-gas-production facilities and associated pipelines; engineering services included mechanical, electrical, instrumentation, civil, structural, and pipeline.

Production rates: • 72 MMSCFD • 26,000 BPD condensate • 50,000 BPD water phase 2: Services included compression expansion, with multiple engineering services and high-pressure gas-injection equipment and flash-gas compression equipment. Production rates: • 7.5 MMSCFD gas • 8,000 BPD condensate • 500 BPD water • Production rates (compression): • 60 MMSCFD high-pressure gas compression (5,000 psig) • 18 MMSCFD flash-gas compression phase 3: Services included facility-expansion and engineering, and the design of foundations for seismic zone-4 conditions. Production rates: • 220 MMSCFD gas • 28,000 BPD condensate and water • 275 MMSCFD gas dehydration

energy international quarterly july/august 2010

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e

EXCEL Engineering excellence in Engineering

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Pipelines

Comco Petroleum Management Inc. is the leader in petroleum engineering and support in central Ontario.

Comco also provides environmental services, including site assessments, contaminant remediation and emergency spill response.

Environmental Assessments | Emergency Response Site Cleanup and Remediation | Excavation and Removal Bio-Remediation | Soil Vapour Extraction | Impact To Water Construction and Installations | Tank Removals On-Site Sewage Systems | Inspections, Testing and Calibration

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Comco’s removal of contaminated soil is just one of its many services.

Comco Petroleum Management Inc. Ontario-based company grows to include petroleum engineering and environmental services by cristina adams

back in 1964, maurice keogh was a one-man, one-truck gas-pump-repair business in Barrie, Ontario.

Retail gasoline stations would call him when a pump stalled or broke, and he would fix the problem. Then in 1989, Gord and Marg Thompson bought the company and, with a staff of eight, expanded its services to include maintenance and construction of retail stations and private fuel systems. “We implemented changes to move from service station work to environmental services for the downstream petroleum industry,” says Gord, president, whose professional background is in both chemical and environmental engineering.

Since then, Comco Petroleum Management Inc., which now boasts 23 employees and customers throughout Canada, has expanded to encompass a wide variety of services in petroleum engineering/support and environmental work. On the petroleum side, Comco designs and installs liquid-storage, handling, distribution-control, and monitoring systems for diesel generators, fueloil boilers, vehicle fueling, and solvents. No strangers to working with temperamental gases and liquids, company engineers and technologists also design and install safetymonitoring systems for toxic gases, such as carbon monoxide, oxides of nitrogen, and flammable mixtures.

When it comes to environmental services and assess-ment, Comco offers a long list of skills and services—all phases, as Gord puts it. Phase I involves an assessment of the site in question, in which an experienced engineer conducts site visits and examines the property for evidence of enat a glance vironmental issues, including anything from indications of stored chemicals to the possibility of buried fuel tankage. location: Following that assessment, Comco will embark on Phase II. Using its own equipment, the company drills at the site to retrieve soil and water samples and assess them to determine whether or not the property needs remediation. In Phase III, company experts drill further at the site, assess their findings from Phase II, define the impact of those findings, and then decide how to proceed. If an environmental hazard is found, Comco gets busy remediating and cleaning up the site, and follows up afterwards to ensure that everything has gone according to plan and the customer is satisfied. “Our success is driven first and foremost by our customer service,” Gord says. “We are always focused on the customer.”

Not surprisingly, Comco’s services have expanded beyond environmental assessment to include 24-hour emergency response to petroleum spills, as well as spill clean-

energy international quarterly july/august 2010

barrie and huntsville, on founded: 1964 employees: 23 area of specialty: petroleum engineering and support, site assessments, containment remediation, and emergency spill response average annual revenue: $2.5 million

27

engineering

comco petroleum management inc.

We stand out among the competition because we offer full-service investigation, design, and field work with little or no need for outside support. —Gord Thompson, President

up and remediation of sites that have been contaminated by liquid fuels. What’s interesting, though, is that none of Comco’s many services dominate the business. Indeed, Gord believes the company’s diversity of services and flexibility to deal skillfully in so many areas are its greatest strengths. “We stand out among the competition because we offer full-service investigation, design, and field work, with little or no need for outside support,” Gord says. “Those services—and our flexibility—have resulted in a steady volume of business and consistent growth over the years.”

That growth comes from a broad, primarily commercial customer base. Among the industries that Comco serves are transportation, municipal and provincial government, general contractors, consulting, insurance, and more. Indeed, its location in Ontario has been instrumental in shaping the company’s current business.

According to Gord, as regulations have changed—and continue to adapt to a shifting political environment and public opinion—many companies have been forced to modify or update their liquid-fuel systems to comply with the changes. That ongoing activity has led to steady work for Comco.

As for what lies ahead, it’s likely that Gord will sell the company to a group of younger managers and executives within Comco who are eager to drive future growth.

“We have worked hard and don’t want to continue to put in the long hours,” Gord says. “But with the new, dynamic team, the potential is there to grow the consulting part of the business, and to double or even triple revenue over the next five years.” eiq

a message from waleco Waleco is a leading supplier of petroleum-handling equipment in Ontario.The leading product lines we represent, combined with our experience, knowledge, and a high level of customer care are the foundation to providing our customers with the best service and quality products, to deliver the right goods at the right time.

One of the company’s most unique and challenging projects involves recent work at the University of Ontario Institute of Technology in Oshawa: designing and installing an indoor fueling system for vehicles being tested in a state-of-the-art, severe-climate wind tunnel. The system consists of four underground tanks, pressure fuel piping, and vapor recovery, as well as a dispensing and metering system inside the wind-tunnel structure itself. Installation featured full instrumentation, environmental protection, and monitoring systems, including hazardous gas detection. It was a huge project that, as Gord puts it, incorporated virtually all of the expertise and services that Comco has to offer.

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energy international quarterly july/august 2010

Comco performs a tank installation at a job site.

engineering

Bastion specializes in structural analysis for the energy and aerospace business sectors.

Its expert engineers use a number of multiphysics-analysis software and techniques.

bastion technologies, inc.

Applying aerospace innovations to the subsea oil-and-gas industry by christopher cussat

although many companies have the innate potential to adapt to changing industries, it is rare to find a company that can easily and effectively transition into a new industry altogether. Yet that is exactly what Bastion Technologies, Inc. has been able to do. In fact, this historically aerospace-industry service provider is now quickly becoming one of the leading companies specializing in the subsea oil-and-gas industry.

According to Bastion’s president, Jorge Hernandez, the company was established in 1998 predominantly as an aerospace company. “With a main focus of doing design and analysis for aerospace, probably about 95 percent of our core work and revenues are from this industry,” he says. Two of Bastion’s biggest clients are NASA and the US Department of Defense (DOD).

Bastion’s work with NASA mainly involves spaceflight hardware and structural-design analysis. Its DOD services include missile-systems work and missile-systems analysis, as well as missile-safety work and range-safety work. Bastion also specializes in the stability and modal analysis of the dynamic control of systems for remoteoperation vehicles.

The company has recently been able to take its knowledge and the services it provides to the aerospace community and directly apply them to the oil-and-gas arena—mainly in subsea design and analysis work. “We segued into this other industry when we started seeing

a lot of back-and-forth between aerospace and subsea oil and gas in our business community,” Hernandez explains.

There is a definite connection between working in outer space and doing work in the ocean depths, Hernandez continues. “You’re dealing with similar situations in oiland-gas subsea work, where you have very costly structures that are in remote and caustic locations,” he explains.

In addition, both of these extreme environments share common problems and concerns like oxygen impingement and radiation issues. “We work with large structures that are miles down on the subsea floor,” Hernandez says.

“They are very difficult to get to and maintain; they must work reliably and properly once they are placed down there, and they need to function in a very hazardous and stressful environment. So one of our specialties is doing mechanical and structural stress-dynamic analysis for these structures.”

Because Bastion comes from another industry (aerospace), the company is able to successfully take a different tact and approach to providing services and solutions to the subsea oil-and-gas sector. Dana Kelley, PE, is the director of advanced design and analysis of Bastion’s oil-and-gas division. He explains, “We have experience dealing with all of the specialties that go into a space environment. So we’ve taken our expertise there and found ways to apply it to the oil-and-gas industry— particularly to the subsea arena, which also has to deal with environmental extremes.”

at a glance location: houston, tx founded: 1998 employees: 700 area of specialty: mechanical and structural stress analysis for aerospace and subsea oil and gas average annual sales: $74 million sales growth in past year: 15%

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engineering

bastion technologies, inc.

We’ve taken our expertise [in the space environment] and found ways to apply it to the oil-and-gas industry, particularly to the sub-sea arena, which also has to deal with environmental extremes.

—Dana Kelley, Director of Advanced Design & Analysis, Oil & Gas Division

As a great benefit to its clients, Bastion can design, model, and support pretty much any type of system or structure that its sub-sea oil-and-gas customers need. “We’ll do a multiphysics analysis on the design and provide [clients with] feedback with which they can then make adjustments to the design before they move to the next step of the process,” Kelley explains. These can include structural, thermal, acoustical, and even optical analyses. “Anything that you could think of as being a physical quality of that system—we can provide an analysis of it and determine

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what it’s going to mean to the customer and to the operating environment they’re dealing with,” Kelley notes.

Another new area that Bastion is infiltrating in the oil-and-gas industry is subsea robotics. “In a deep-ocean environment, you must account for the stability of the systems somewhat more, and you also have to deal with latency operational problems like operator fatigue,” Kelley says. Bastion is utilizing its aerospace technologies to stabilize subsea robotics and operational systems, in order to make them run more effectively and efficiently in that environment.

Hernandez believes that Bastion’s competitive advantage is its ability to bring fresh applications and new technologies to its customers. He admits that this is rarely an easy process. “Where the challenge occurs is in the acceptance of those new technologies and showing the customer that there is a positive return on their investment in that technology,” he says. “But we have been successful doing this with the companies we’ve worked with.”

Both Hernandez and Kelley note that Bastion’s success is a result of its people, the company’s higher-end engineering analysis, and the quality research and development services that it brings to its customers. “What really has also set us apart,” Hernandez concludes, “is years of developing and establishing new technologies for aerospace and now incorporating them into the subsea oil-and-gas industry.” eiq

a message from das certification DAS Certification congratulates Bastion Technologies for its success and business growth, which it has achieved in a short time span.The company has been committed to its customers through continual improvement of its processes and system.The top management and the employees of the company deserve appreciation for bringing the company to this standing. DAS Certification is proud to have Bastion Technologies as one of its ISO 9001:2008certified clients. DAS Certification is a global registrar with more than ten thousand clients in multiple industries around the world.

DAS has been providing excellent certification services to its clients for quality, environmental, safety, and information-security management-system certifications.

infinite energy manufacturing, llc.

specialty services

Defining The Curve Renewable resources are all around us. The days of a fossil fueled economy are quickly giving way to the age of clean, renewable energy. As America unites to put these renewable natural resources to work for us, we’ll build a cleaner, more efficient economy...

A brighter future for our country and for our world. helps put the pieces together by providing manufactured products designed for clean, green, renewable energy, traditional power generation, and pollution control.

Contact us today to find out how we are Defining the Curve of the energy industry.

For more infomation, e-mail info@InfiniteEnergyMfg.com or call toll-free at 877-901-5111.

www.InfiniteEnergyMfg.com

renewable energy powerenergy generation pollution international quarterly may june 2010 31control /

north american wind

One of Infinite Engery’s most important areas of work is creating components for wind turbines.

infinite Energy Manufacturing Providing products for clean, green, renewable energy by daniel casciato

while cleveland-based thermafab alloy inc., says. “This gave us a great introduction to the renewableenergy market from a manufacturing perspective.” a 79-year-old sheet-metal shop, has been recognized for decades as a premier supplier of fabricated-alloy, steel, A second initiative of Infinite Energy was the recent acand stainless-steel products across the globe, it lacked quisition of Phoenix Airflow, which manufactures aira presence in the energy marketplace. In early 2009, it flow-monitoring elements and related control equipment. sought to change that and asked its chief operating officer, Gil Sherman, to launch a new firm to create a dedi- These elements are used on the front end of steam-powered boilers, to monitor air into the system to optimize cated energy presence to expand its manufacturing capabilities into that arena in a very broad and deep format. the burn. “If you look at those two initiatives, what they do is plant us firmly in the traditional-power-generation Today, that company, Infinite Energy Manufacturing, produces fabricated and machined components, systems, arena, as well as the renewable-power-generation arena, and feed into our overall strategy,” Sherman says. and assemblies for the traditional and renewable-energy industries. “We’re trying to create a resource for the The long-term strategy, according to Sherman, is to beenergy business,” Sherman says. come the 800-pound gorilla in energy-related manufacturing that supports the production and retrofit of plants, Its first initiative was securing a multimillion-dollar, regardless of what style of power they generate. “It’s an multiyear contract to produce wind-turbine parts for industry that is highly fragmented,” he says. “It’s made of Vestas, the world’s largest wind-turbine OEM, based in many small fabrication and machine shops. Our intent is Denmark. Late in 2009, Vestas built its first US-based assembly facility in Brighton, Colorado. “We have a rath- to establish a presence among major engineering firms, power producers, and OEMS, and to grow our manufacer sizable contract with them for five years,” Sherman

at a glance location: cleveland, oh founded: 2008 employees: 4 area of specialty: fabricated and machined components, systems, and assemblies for the traditional and renewable-energy industries

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infinite energy manufacturing

If you look at those two initiatives, what they do is plant us firmly in the traditional-power-generation arena, as well as the renewable-power-generation arena, and feed into our overall strategy.

—Gil Sherman, CEO

turing capacities according to their needs. As we approach major OEMs, we can custom create the capacity that they need to produce whatever parts they want us to produce.”

The only way that can happen is to be entirely focused on its customers, and Sherman says that is at the essence of what the company does. “We’re looking at the ability to add plants, equipment, and people, essentially as necessary to ramp up for our customers’ varietal needs, which will vary from year to year and project to project,” he says. “With the experience we have garnered serving major engineering firms, we certainly understand that there’ll be ebb and flow, but the reality is they need to be able to rely on their vendors for whatever, whenever.”

Going forward, the company’s greatest concern is the availability of funding for renewable-energy projects.

From a macro-economic point of view, the wind-turbine OEMs won’t be ordering parts if they can’t sell wind turbines. They can’t sell turbines if the wind-farm manufacturers can’t fund their wind farms. “A lot of the doldrums in the wind-energy/renewable business in 2009 centered on that specific issue,” Sherman says. “So if the banks don’t start opening up their wallets, solar farms aren’t getting built, and OEMs aren’t going to be building units, and we won’t be building parts.”

and gas and other fossil fuels will be with us through our lifetime and beyond. There’s too much invested in that infrastructure. The need to continue to clean it up is going to persist, and we are going to have a very healthy pollution-control basis.”

Even though it is a very tough market right now, Sher-man anticipates that 2010 and 2011 will be strong for Infinite Energy. “We’ll also be looking for new sources of revenue and new ways to serve our customer base,” he says. “We plan to acquire engineering firms so we can provide an engineering component, and also want to acquire a construction firm so we can provide field services.“ eiq

Infinite Energy’s work reaches into the solar-power industry.

Another concern for Sherman is that in the traditionalpower-generation industry, there are certain obstacles when the EPA or environmental groups get up in arms over coal-fired or gas-fired power plants. “You have a certain percentage of projects that don’t go forward because of too many obstacles in their way, and it’s too much of a hassle for some companies,” Sherman states.

“However, these same forces play to our benefit on the pollution-control side, because the reality is that coal

energy international quarterly july/august 2010

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north american wind

infinite energy manufacturing

We believe the energy projects that are anticipated to take place in Texas over the next decade will provide us the opportunity for additional growth in that state, as well as in other locations in the South. —Steve Windingland, Senior Project Manager

westwood’s recent projects: shebino: Shebino Mesa Phase 1 is a 150-mW windpower-generating facility located in Pecos County,TX. Westwood provided ALTA surveying, civil engineering, and construction staking for BP Alternative Energy and Mortenson Construction. (Completed fall of 2008.) penascal phase 2: Penascal is a multiphased windpower-generating facility located south of Corpus Christi, TX.Westwood provided ALTA surveying, civil engineering, and construction staking for Iberdrola and Mortenson Construction, for varying phases of this project. (Completed fall of 2009.) smoky hills (pictured): The project is a 250-mW wind-power-generating facility located in Lincoln County, KS.Westwood provided ALTA surveying, civil engineering, and construction staking for Tradewind Energy and Mortenson Construction for this project. (Completed fall of 2008.)

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energy international quarterly july/august 2010

north american wind

Westwood Professional Services, Inc. Providing full-service excellence for land and energy development by christopher cussat

westwood professional services, inc. began as a four-person engineering company in 1972 and has gradually grown into one of the premier land- and energy-development companies in the United States. With a full range of in-house services—including surveying, aerial mapping, civil engineering, siting and land rights, planning, landscape architecture, transportation engineering, and construction management, among others— the company has developed solutions that address the needs of projects, from concept to completion.

Westwood expanded throughout the late 1970s and early 1980s by bringing on strategic hires and diversifying the services it offered. The company also saw success and growth throughout the 1990s, as its client base continued to grow due to its new, cutting-edge technology, such as GPS equipment for surveying and computers with AutoCAD for the engineers.

It is no surprise that with recent federal incentives to promote and develop renewable energy, the future of wind-energy resources is considered a major growth market—and Westwood is ready for it. In fact, 2008 was considered a boom year for wind energy, and 2010 is projected to be similar. “Based on what our clients are telling us, and the incentives for wind construction in the stimulus bill tied to 2010 construction, we believe that this is going to be another busy year—closer to what we saw in 2008,” explains senior project manager Steve Windingland, who works closely with energy developers on a regular basis. “In addition, there is a lot of attention being paid to utility-scale solar projects recently—we think that 2010 could be a breakout year for solar-farm development, too.”

Westwood is able to keep up with the projects thanks to its focus on technological innovation, which has always been an important part of the company’s success, says president Paul Greenhagen. “Innovation in Today, Westwood serves a long, diverse list of clients. In survey data-collection technology, mobile computers, the land sector, the company supports land, retail, office, advanced handheld-GPS devices, and video technology and industrial developers, as well as architects, attorneys, have allowed us to be more efficient and effective colcontractors, real-estate companies, banks, and HOA manlecting data in the field,” he explains. In addition, office agement companies. For the energy sector, Westwood supadvancements such as state-of-the-art design techniques ports wind and solar developers, transmission developers, transmission and distribution designers, pipeline developers, and technologies, as well as utilizing the newest GIS and 3-D modeling applications, keep Westwood on the cutpipeline-design firms, energy contractors, utilities, attorneys, oil-and-gas companies, and environmental consultants. ting edge of industry demands and requirements.

at a glance location: eden prairie, mn founded: 1972 employees: 115–165 memberships: american wind energy association

energy international quarterly july/august 2010

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When asked how Westwood has remained competitive in the industry, Greenhagen sites three key factors: multiple office locations, a multidisciplined approach, and a focus on client satisfaction. With offices spread across the country, Westwood is able to better serve its clients by improving response time to its projects and having local knowledge of site characteristics, permitting, and technical challenges. The firm has in-house capabilities for almost all of the services that its energy clients require— ranging from siting and land rights, aerial mapping, permitting, surveying, civil engineering, and construction staking and support. Finally, Westwood’s number-one goal is achieving superior client service; in fact, most of the company’s work comes from repeat service, which is attained by always meeting or exceeding client expectations in service, quality, and schedule.

For the future, Westwood plans to continue serving its clients well and to look for opportunities to expand, both in services and geographic locations. This includes directing growth of its business in the southern “wind corridor” states, enhancing regional offices with multidisciplinary

staff, and continuing growth in market-share within the wind and transmission sectors.

To that end, Westwood is specifically making a concerted effort to expand its presence in Texas to better serve the numerous energy-industry projects taking place. For example, Westwood has clients involved in the CREZ transmission lines, wind farms, solar farms, and oiland-gas wells throughout Texas. “We believe the energy projects that are anticipated to take place in Texas over the next decade will provide us the opportunity for additional growth in that state, as well as in other locations in the South,” Windingland says.

Finally, Greenhagen attributes Westwood’s longevity to its people and broad base of services. “Our people are what make our company successful—the expertise, hard work, dedication, and attention paid to our clients’ needs separate us from the rest. In addition, by being a full-service consulting firm, we understand our clients and their projects better, because we have a full understanding of how specific tasks fit into the overall picture.” eiq

Smoky Hills, a 250-mW wind-power-generating facility located in Lincoln County, KS.

MIAT’s hands-on emphasis sets it apart from schools that only teach classroom theory.

the Michigan Institute of Aviation and Technology Professional trade school offers industry-driven training programs by cristina adams

every recession has a silver lining. in the case of the US economy’s decline, the upside has been an increase in enrollments at educational institutions across the country. Simply put: people who have either lost their jobs or are in imminent danger of being downsized are going back to school. And nowhere has that surge been more evident than at the Michigan Institute for Aviation and Technology (MIAT), where enrollment in 2009 was generously above average. “People who have been or might be laid off are pursuing development and re-careering options,” says MIAT president and owner Charles Hawes. “And 2010 looks like it’s going to be another busy year for us.”

Over the years, MIAT administrators noted that a growing number of graduates were being hired by companies in energy- and power-related industries. And those companies, in turn, found themselves increasingly in need of more qualified technicians, but there simply weren’t enough of them. Eventually, a group of companies asked MIAT to establish a program that would educate and train a pool of skilled, certified future employees, launching the concept for PTI.

Founded in 1969 as an aviation-technician school, MIAT has since grown both in size and reputation. At its two Michigan locations—the main campus in Belleville, and a satellite campus in New Boston—this privately owned professional trade school offers industry-driven training programs in power technology, aviation technology, and transportation dispatch to students who come from

“A group of employers said that if MIAT graduates could maintain aircraft, then they could maintain and repair energy and power equipment,” recalls Hawes, whose own professional experience ranges from a stint at Shell Oil Co. to more than 25 years’ involvement invarious higher-education positions. “This group asked us to create a program just for them, so with their support, we did.”

across the United States. The most recent of these programs is the Power Technology Institute (PTI), which opened its doors in 2006.

energy international quarterly july/august 2010

at a glance location: belleville, mi founded: 1969 employees: 150 area of specialty: power technology, transportation dispatch, and aviation technology

37

MIAT’s instruction includes print reading, drafting fundamentals, and many more careerfocused training courses.

So far, the program has been a big success. More than 1,000 students are enrolled at MIAT, and attend classes six hours a day, five days a week. While enrollment may be up across MIAT’s programs, PTI boasts the longest waiting list. Indeed, 40 percent of MIAT’s students are enrolled in the PTI program; it seems that training for careers in power generation, power-plant operations, or wind power is the hottest ticket in town—and that the place to pursue that training is PTI. PTI provides its students with what Hawes calls “the building blocks for basic technical knowledge,” which includes terminology, safety procedures, equipment, and tools. In PTI’s wind-power segment, for example, general training covers everything from OSHA regulations and procedures, tools and safety, and applied mathematics to electricity, precision measuring, and lifting and rigging. The more advanced training focuses on hydraulics, gear and lubrication systems, wind-turbine operation, climb and rescue, advanced electrical, and troubleshooting skills. In other words, it’s not a crash course in how to use a hammer, wrench, and screwdriver—this is high-level training for work in a cutting-edge field.

Once students have completed the program and find work, they also receive job- and company-specific training from their employers. The education continues even after the coursework is over.

Energy companies are the driving force behind the school’s success.

—Charles Hawes, President & Owner

The group of employers with whom MIAT has partnered represents a broad cross-section of industries—wind, solar, nuclear-energy, and fossil-fuel power. Companies include General Electric Energy, Siemens Wind Americas, Florida Light & Power, DTE Energy, and Clipper Wind, to name a few. “Energy companies are the driving force behind the school’s success,” Hawes adds.

Great training, financial aid (nearly 80 percent of the student body receives some), and big-name employers all help to set MIAT apart from competing training schools.

Hawes admits that while MIAT does have competition, rival schools are generally what he calls “new pop-up programs” that don’t always offer the breadth and depth of training that MIAT does.

Equally interesting about MIAT’s unique approach is its close partnerships with potential employers. The institute works with companies to identify their current and future needs, and to better understand the company cul- “We have a long-standing reputation for developing indepth, hands-on training programs driven by industry ture. Once a company profile is developed, MIAT staff can then pair employers and employees with the skill of a for technical careers,” Hawes says. “Many of the newer professional matchmaker. And that’s true across all of its programs [at other schools] are only introductory, with programs. “We take our partnerships very seriously and very little hands-on training.” For reasons like these, the Michigan Institute of Aviation and Technology has assist with any hiring needs they share with us,” Hawes become a premiere school for training the technical and says. “And we assist with matching the right graduate to energy leaders of tomorrow. eiq the right company.”

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energy international quarterly july/august 2010

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the michigan institute of aviation and technology The Elkhorn Ridge Wind Farm in Bloomfield, NE, which Carstensen Contracting erected and installed.

Carstensen Contracting, Inc. Minnesota-based company expands services to include wind energy by brigitte yuille

rural water services, and provides its expertise across ambition and old-fashioned hard work the United States. Over the past nine years, it has even have skyrocketed Carstensen Contracting, Inc. toward expanded its services to include wind energy, which has success. It began more than 30 years ago, when Rick become the majority of the business.

P. Carstensen started work in construction right out of high school. He soon found himself owning a portion of “We were asked to provide gravel on one project, and the company within two years. A couple of years later, he purchased the business, and by 1980, Carstensen had when they found out we also pour concrete, they asked, ‘Would you be interested in pouring turbine foundafive employees, a few concrete forms, and various contions?’” Carstensen recalls. “With our background workstruction supplies. “We mainly poured concrete along with building a few smaller structures,” Carstensen says. ing with cellular towers, we were able to apply our experience in adapting the design for turbine foundations.”

Six years later, the company started underground utility Next, Carstensen Consulting found itself accepting the opportunity to become an investor in its own wind farm, work, and by the end of the decade, it was doing public bringing the company additional success since 2004. “It bids. One day in 2003, Carstensen received a careerjust all seemed to fall into place, and everything seemed changing call from Keith Thorstad. After a decade of to fit,” Carstensen says. friendly competition, “He asked if I would be interested in doing something together, and I immediately said yes,” Carstensen says. “Ever since then, we’ve been in partner- The company sets itself apart from its competitors (such as heavy highway contractors and the general contractors ship together.” Thorstad brought valuable and extensive knowledge of the construction industry to the company, it bids against) by placing a high emphasis on customer satisfaction, quality control, safety, and relationships as well as a new way of thinking. with landowners involved with the projects. Says Carstensen, “We have worked with a wide variety of clients in The Pipestone, Minnesota-based business that started with five people in 1980 now has between 50 and 70 em- both the public and private sectors. Most of our clients ployees. Today, the company specializes in concrete pav- in the public bid are counties, states, cities, rural water districts, and the federal government. In the wind indusing, sewer and water services, municipal utilities, and

at a glance location: pipestone, mn employees: 50–70 area of specialty: wind energy, concrete paving, sewer and water, and municipal utilities

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energy international quarterly july/august 2010

themichiganinstituteofaviationandtechnology Carstensen Contracting’s installation of a wind turbine in Spanish Fork, UT.

I’m really proud of our employees. Our success is a direct result of their skills, hard work, dedication, and customer focus.

—Keith Thorstad, Vice President

try, we work primarily with developers and owners of the wind farms, which includes everything from smaller developers to larger power-producing entities.”

This past year, the company has focused on streamlining processes and additional employee training. “We take safety very seriously,” Thorstad says. “To that end, our safety program includes comprehensive training, prevention, maintenance, careful analysis, and the empowerment of individuals to provide a safe work environment for everyone, from employees and subcontractors to anyone on-site.” Carstensen adds, “In the 30-year company history, we have never had somebody seriously hurt or in a life-threatening situation.”

“We have the privilege of working with very knowledgeable and skilled employees who are able to quickly adapt and proactively anticipate and resolve potential challenges.” Carstensen says. “Their adaptability, attention to detail, and customer focus are key components that set Carstensen Contracting apart from the competitors.”

Thorstad describes the company environment as family oriented. “I’m really proud of our employees,” he says. “Our success is a direct result of their skills, hard work, dedication, and customer focus.”

Since the company’s start in concrete paving, general contracting, and underground and site preparation, the Thorstad also believes that “during a recessionary econo- size and scope of its projects have swelled, and its repumy, it is important to continue investing in training and tation for quality and integrity has been maintained. helping employees become more effective in their roles,” “Everybody has told me that I have had too much ambihe says. “It is also important to take the time to review tion all these years,” Carstensen says. “[They’re] wonand streamline processes. The more effective and efdering why I got up at 4:30 in the morning and don’t ficient we can make ourselves now, the better positioned quit until 10 p.m. Passion is the fuel that continues to we will be when the economy is back in full swing.” drive us forward.” Carstensen says. eiq

energy international quarterly july/august 2010

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the michigan institute of aviation and technology

Raymond James & Associates, Inc. +

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Top energy analysts suggests a conservative approach to stocks: bullish on oil, bearish on gas, and squeamish on renewables by annie fischer 42

energy international quarterly july/august 2010

themichiganinstituteofaviationandtechnology

energy international quarterly july/august 2010

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features

raymond james & associates, inc.

“Our fundamental thesis on the energy space has been a tale of two commodities: bullish on oil, bearish on natural gas.” — — Cory Garcia, Senior Research Associate

raymond james & associates, inc. (rj&a) fields one of the largest research organizations in the brokerage industry—among the top 15 of all US brokerage firms, according to Thomson Reuters. The company’s fundamental effort, backed by senior research analysts who possess, on average, 12 years of sell-side experience, is complemented by insight from well-known economic, strategic, and technical experts. Together, these specialists contribute to a wealth of deep and differentiated sector knowledge— one that hasn’t gone unnoticed. Last year alone, RJ&A’s equity-research analysts were recognized for their stockpicking abilities in three important national surveys: The Wall Street Journal’s “Best on the Street,” Forbes’ “Blue Chip Analyst,” and The Financial Times/Starmine’s S&P 500 and Russell 2000 survey. The Financial Times published Starmine’s survey of stock selection performance in 2008 for S&P 500 and Russell 2000 companies. RJ&A placed seventh among the 22 U.S. brokerage firms covering more than 125 S&P 500 companies and fourth among all brokerage firms covering the Russell 2000.

raymond james & associates at a glance headquarters: st. petersburg, fl founded: 1962 financial advisors: 5,300 area of specialty: financial adivising

The Energy Group is the largest in RJ&A’s equity-research department, with nearly 160 companies under coverage in six core areas: coal, exploration and production (E&P), integrated majors and refiners, midstream suppliers, oilfield services, and alternative energy. The analysts offer an array of instructive industry reports that examine both overall energy markets and critical variables affecting each sector—including weekly and monthly updates, an annual brief that offers a recap of the previous year’s numbers, and forecasts of price averages and index values for the upcoming year. Energy stocks are poised for gains in 2010, but investors are understandably gun-shy with regard to young and newly emerging companies.

Traditional energy stocks generally trend in the same direction, regardless of the energy source—no revelation there, according to Cory Garcia, senior research associate.

But RJ&A makes a careful distinction between two impor-

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energy international quarterly july/august 2010

tant subsectors. “Our fundamental thesis on the energy space has been a tale of two commodities: bullish on oil, bearish on natural gas,” Garcia says.

He points to three important elements regarding the company’s secular (long-term) bull-market position on oil: the erosion of the oil bubble, as measured by The Organization of the Petroleum Exporting Countries’ (OPEC) spare capacity; minimal prospects for non-OPEC production growth; and the continuous expansion of demand due to industrialization in emerging markets.

Similarly, RJ&A’s short-term position on oil prices is optimistic. The 2009 oil forecast was, according to the 2010 Energy Outlook, “unusually accurate”—at $60 per blue barrel, almost on the money with the actual average of $58 per blue barrel. The analysts forecast $80 per blue barrel for 2010 and $95 per blue barrel for 2011, based partly on the following considerations: First, that oil demand should continue its recovery, led by the emerging markets. Second, that non-OPEC production should decrease, due to accelerating decline rates and reduced capital spending by many companies—particularly given the depressed oil-price environment in the first half of 2009. And third, that the continuation of OPEC discipline should reduce bloated US inventories, even under the likely scenario of weakened quota compliance. “Obviously, these bullish factors must be weighed against the risk of a ‘double dip’ recession,” Garcia warns.

The company is more cautious when it comes to natural gas. Garcia cites the structural oversupply caused by the unlocking of the natural-gas shale plays as the primary driver behind RJ&A’s bear camp stance. And while the oversupply worsened considerably with the economic meltdown of 2009, the underlying causes of the glut go back years, according to the 2010 Energy Outlook brief.

The combination of an increased high-grading supply, falling service costs, and improved drilling efficiencies

raymond james & associates, inc. features

RAYMOND JAMES OILFIELD REVIEW 2009 Pricing Trends of crude oil stocks 2009 Pricing Trends of natural-gas stocks

2007 2008 2009

Analysts at Raymond James & Associates offer an array of instructive industry reports that examine both overall energy markets and critical variables affecting each sector—including weekly and monthly updates, an annual brief that offers a recap of the previous year’s numbers, and forecasts of price averages and index values for the upcoming year.

$150.00 $140.00 $130.00 $120.00 $110.00 $100.00 $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 2-Dec

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crude-oil stocks: RJ&A analysis based on the West Texas intermediate benchmark for futures contracts ------------------------------- stock change 2008 $55.57 -14% 2009 $95.81 +48.3%

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natural-gas stocks: RJ&A analysis based on powder river basin pricing ------------------------------- stock change

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features

raymond james & associates, inc.

RAYMOND JAMES coal REVIEW 2007 2009 Pricing Trends of coal 2008 based on america’s resources

2009

Raymond James & Associates tracks pricing trends of American coal based on two sources.

On the NYMEX futures market, coal contracts specify delivery at barge terminals on two limited sections of river located in Central Appalachia, near the confluence of the Big Sandy and the Ohio Rivers. The Powder River Basin is the single largest source of coal mined in the United States, and contains one of the largest deposits of coal in the world. Powder River Basin coal is sub-bituminous and contains an average of 8,500 btu/lb, with low SO2. $150.00

coal futures 1: RJ&A analysis based on central appalachian coal futures contracts

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coal futures 2: RJ&A analysis based on the prices for coal from the powder river basin

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raymond james & associates, inc. features

“Risks remain high in alternative energy, reflecting the often brutal competitive dynamics in young, rapidly evolving industries. — — Cory Garcia, Senior Research Associate

kets in years to come—but it’s also the broader market in the driver’s seat, more so even than commodity prices themselves. (In 2009, coal—the big winner—demonstrated a 90-percent gain; this was followed by MLP, oil service, E&P, and alternative-energy indices, which rose 62 percent, 61 percent, 44 percent, and 29 percent, respectively.) However, says Garcia, that split position on oil and gas eventually will underscore the “significance of selectivity” within those subsectors. For example, within E&P and oilservice, RJ&A favors the oil-weighted companies over their gas-weighted counterparts. Similarly, the company warms to the upstream-oriented offerings rather than refining-oriented. For investors playing it safest, Garcia suggests conservative investments in the majors—traditionally lower-risk, lower-beta names. “Let’s face it,” he says. “XOM will outperform a growthy E&P name when commodity prices collapse, as we saw in late 2008.”

has driven the marginal cost of gas production down sharply—from 30 to 50 percent over the past year, says Garcia—meaning we could be living in a gas-price environment of $5 per one thousand cubic feet. Furthermore, on top of core US supply, incremental liquefied-naturalgas (LNG) supply could hit shores this summer, while the modest up tick in industrial-gas demand is likely to be offset by increased gas-to-coal fuel switching. The message for anyone harboring hope that domestic gas prices will revert to a parity of 6:1, relative to oil at any time in the foreseeable future, according to the brief: “[A]ll we can say is, ‘fuhgeddaboutdit.’”

Bottom line: the company continues to reason that all energy subsectors are set to outperform the broader mar-

Chancier options, though—such as alternative energy sources—are among the most talked about these days.

Hydroelectric, wind, and solar power, along with alternative fuels, gain increasing amounts of attention each year, thanks in part to steadily improving economics, greater scalability, and high levels of governmental support. To reflect that, RJ&A projected gains of 15–25 percent for the ECO Index in 2010. Generally speaking, though, the company cautions against pie eyes when going green.

“Risks remain high, reflecting the often brutal, competitive dynamics in young, rapidly evolving industries,” Garcia says.

What are those risks specifically? Garcia explains that alternative energy competes directly with conventional energy sources (the most important of which are crude oil, natural gas, and coal), and one hears less grumbling from consumers when they’re paying less than $3 per gallon at the pump. “Declines in the price of conventional energy can make alternative energy less competitive, and in some cases make it economically unviable,” Garcia cautions.

“Furthermore, consumers are less likely to view alternative energy as a practical option if conventional energy is

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raymond james & associates, inc.

RAYMOND JAMES price estimates for oil and gas as of december 2009

bloomberg nymex futures raymond james

Raymond James & Associates’ short-term position on oil prices is optimistic, according to its 2010 Energy Outlook brief, based partly on the consideration that oil demand should continue its recovery. For anyone harboring hope that domestic gas prices will revert to a parity of 6:1 relative to oil at any time in the foreseeable future, according to the brief: “[A]ll we can say is, ‘fuhgeddaboutdit.’” $7.00

oil price estimates: RJ&A analysis

$6.00 $5.00 $4.00 $3.00

Q4

Q3

Q2

2011 Q1

Q4

Q3

Q2

2010 Q1

$2.00

$100.00

natural-gas price estimates: RJ&A analysis

$95.00 $90.00 $85.00 $80.00 $75.00 $70.00

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Q4

Q3

Q2

2011 Q1

Q4

Q3

Q2

2010 Q1

$65.00

raymond james & associates, inc. features

“Declines in the price of conventional energy can make alternative energy less competitive and, in some cases, make it economically unviable.”

—Cory Garcia, Senior Research Associate

relatively more attractive from an economic standpoint.

This holds true from an equities perspective, as well.”

Not all types of alternative energy will make it off the laboratory floor, so selectivity is even more crucial, and one can’t ignore the tightening of the funding environment since the market meltdown. “There is no guarantee that future technological developments will be favorable to alternative energy,” he says. “In fact, some developments could render some types of alternative energy unattractive or obsolete.”

There are also public policy and regulatory risks to consider. “Many types of alternative energy currently benefit from favorable government policies, including tax incentives for producers and/or consumers, direct and indirect subsidies, and mandatory use requirements,” Garcia says.

“These policies are subject to change and may become less favorable in the future. Government regulations, including environmental and land-use regulations, can impact the profitability of alternative energy.” Take, for example, the solar space, where demand trends have seen sharp volatility over the past year and a half, stemming in part from policy decisions out of two of the largest markets—Spain and Germany.

That said, it’s not all bad news. Within the alternativeenergy space, RJ&A tends to favor wind plays over solar manufacturers, according to Garcia—by virtue of the fact that wind is at grid parity today, and thus not necessarily a subsidy-driven market, providing a more sustainable growth curve for wind power. Favorite names include American Superconductor and A-Power Energy in wind; Clean Energy Fuels in natural-gas fuels; EnerNOC in demand response; and First Solar, Trina Solar, and GT Solar.

Buzz surrounding topical trends in the energy sector—like the renewables mentioned above—will almost certainly simmer if the math doesn’t add up. RJ&A tackles issues like these, among others, in a series of short analyst com-

mentary podcasts called “Professionally Speaking,” hosted

by Larry Pugliese. One of the recent installments came on the heels of two bills passed last year by the House of Representatives and one by the Senate, regarding vehicle research on natural gas—plentiful, cheap, and cleaner than gasoline and diesel, making it an attractive fuel option. When analyst Pavel Molchanov breaks down the numbers, he points out that at the moment, approximately 100,000 US vehicles out of a total of 200 million run on it—just one half of one percent. “Even if this market were to grow by 50 percent a year over the next decade, natural gas would be fueling only 3 percent of vehicles by 2020,” he says. That doesn’t mean we should ignore it—just that the individual consumer is probably the wrong focus. “It would be easier instead to sell to commercial and municipal fleets of buses and trucks that fuel up at a central station,” Molchanov explains.

Another edition, featuring an interview with RJ&A director of energy research Marshall Adkins, touches on the effects government mandates can have on supply and demand. While additional energy sources—wind, solar, and natural gas, for example—could displace a lot of the oil used in energy generation, freeing up more oil for transportation, market perception of a supply tightening will take prices higher. “Gasoline at six-to-eight dollars a gallon would be a crisis for many consumers,” Adkins says.

The message seems to be a largely conservative one, for the time being, anyway; RJ&A’s energy analysts look to 2010 to be a lucrative but tough trading year. If you want to leave the market-trend research to the professionals, and it’s just a name you’re after, the company also offers an annual list highlighting individual stocks expected to produce superior overall results in the year ahead. Of this year’s 13 “Best Picks,” 4 were energy companies: Alpha Natural Resources, Chevron Corp., Concho Resources, and National Oilwell Varco. As always, though, one important caveat: Past performance is not indicative of future results. There’s no such thing as a sure bet. EIQ

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raymond james & associates, inc.

solarcity A strategic partnership between utility companies and solar providers may be the future of the renewable-energy industry

by david hudnall

for years, larry stein felt a sense of guilt about the ways in which his lifestyle may have contributed to global warming. Stein works as a marketing consultant in Cupertino, California, and like many eco-conscious citizens, he hoped for a way to decrease his carbon footprint without making drastic changes to his everyday life. An increasing number of his fellow Californians seemed to be installing solar panels on their homes, and he eventually began researching the logistics of such an undertaking: How reliable is solar as an energy source? Who are the best solar providers in his region? What are the costs? What are the benefits? “I also had to mentally get used to the idea,” he says. “You know: ‘What does it mean to install this power-generating asset on my home?’ It’s a significant change.”

In October 2008, Stein signed a 15-year agreement with SolarCity, a Foster City-based solar provider. Instead of purchasing the solar panels, he leased them.

“I’d never leased anything in my life, and I generally lean against the concept of leases,” he says, “but SolarCity wrapped everything together. They designed and installed the panels, they maintain them, and they guarantee them. There was zero cash output up front, and I save money on my energy bills. Frankly, it was kind of a no-brainer.” Stein is not the only one who has come to this conclusion.

Based on its current books, SolarCity—with 4,500 customers and counting—is projecting that its revenue will grow 250 percent by the end of 2010.

SolarCity is in fact the third company founded by president Lyndon Rive. In his teens, Rive ran a cosmetics-distributing company in his native South Africa. In 2007, he sold Everdream, his software-service company, to Dell. In some ways, Rive fits the mold of the adventurous, risk-taking foreign capitalist making waves in the United States; and yet SolarCity’s business plan was, from its beginnings, remarkably straightforward. It was the consequence of forward-thinking entrepreneurial assessments of potential opportunity.

“My brother and I knew we wanted to get into the renewable space, that we wanted to start a business that could address environmental problems,” Rive says. They evaluated a variety of alternative-energy sources and saw potential on the service side of solar power. “We talked to so many people about their experiences trying to power their homes with solar, and across the board they were negative,” Rive explains. “What we saw was that there was an opportunity to make the process easier, to remove the barriers to adoption.”

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SolarCity offers both buying and leasing options for homeowners looking to utilize solar power. Photo: SolarCity.

solarcity features

The largest barrier for any consumer is, far and away, the initial cost of installing a solar-energy system, which is around $15,000 or more for a residential installation. Rive broke into the energy market with the innovative concept of a leasing program that would bypass that large initial investment. Homeowners pay SolarCity a monthly fee for both a 15-year lease on the installed solar system and the home’s electricity use. SolarCity owns, installs, and maintains the solar system on each customer’s home, making SolarCity eligible for any tax credits or financial incentives that would normally go to the consumer.

What we saw was that there was an opportunity to make the solar process easier, to remove the barriers to adoption.

— Lyndon Rive, Founder

As soon as this business plan took form, Rive quickly assembled a design and installation team experienced in solar applications, and SolarCity opened its doors in 2006. “Most solar companies will do design and installation, but not monitoring or financing. We don’t outsource anything,” Rive says. “With us, there is no middleman, and we take responsibility for everything.” To cover operating costs and compete with local utility companies, SolarCity’s lease rates must increase each year, but at a lower rate than competing energy providers. “We look at the historical average rates of the local energy providers and make sure ours are substantially lower than the historic rates,” Rive says. “In California, we increase 3.9 percent annually.

In Oregon, it’s 2 percent.”

To finance its SolarLeases in the past, SolarCity has cut deals with US Bankcorp and the National Bank of Arizona. US Bankcorp, for instance, essentially bought tax benefits from SolarCity, which didn’t have enough taxable income to use those credits on its own.

A home equipped with SolarCity’s solar panels. raymond james & associates, inc.

Photo: SolarCity.

US Bankcorp, acting as a tax-equity investor, was able to use those tax credits as part of a strategy to shelter otherwise taxable income.

SolarCity’s income from the bank’s original $100 million investment allowed it to install residential and commercial solar systems with little-to-no up-front cost to the consumer. Unfortunately, like the rest of the solar industry, SolarCity began to struggle when taxequity investors pulled back as banks changed their tax strategies to cope with the credit crisis.

Larry Stein In October 2008, Stein signed a 15-year lease agreement with SolarCity to install a system of solar panels on his California residence. “SolarCity wrapped everything together,” Stein says. “They designed and installed the panels, they maintain them, and they guarantee them. There was zero cash output up front, and I save money on my energy bills.

Frankly, it was kind of a no-brainer.” To date, Stein’s solar system has produced 1352 kWh more than the annual energy output of 4,989 kWh that was estimated by SolarCity for his solar-energy system.

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In its most recent strategic move, SolarCity reached an agreement with Pacific Gas & Electric (PG&E), a California utility that ranks among the largest in the United States. The deal, which is the first of its kind between a utility holding company and a solar-power provider, puts PG&E in a position ordinarily played by banks—as the actual source of the project’s financing. Pacific Venture Capital, a PG&E subsidiary, will provide $60 million to finance SolarCity’s installation of more than 1,000 small-scale solar-energy systems; it receives an undisclosed cut of the revenues from SolarCity’s leasing agreements, plus all federal-investment tax credits from the project.

(For competitive reasons, SolarCity declined to provide details about the structure of its financing deals.)

A notable by-product of the deal is that PG&E also gains an inside understanding of the solar-energy business. “It’s strategic for them; they’re not just a financing partner,” Rive says. “The PG&E deal sets an example that utilities can look at solar companies as a business opportunity, instead of being at odds with each other. If we want to see the industry expand, we need the solar-power providers and utility companies to work together, and [the PG&E deal] is one way.”

energy international quarterly july/august 2010

solarcity features

EIQ sat down with SolarCity customer Sally Carroll to find out more about the real-world application of SolarCity’s unique business model and the benefits of residential solar power.

EIQ: What are the terms of your lease?

Sally Carroll: Our system is rated to produce 3.5 kW at our orientation.

Nothing down, no startup fees. We paid $111.24 per month to start, and the second year it increased to $116.19. It will go up a few dollars each year to about $155 by the fifteenth year, and we can buy out at 6 years, 10 years or 15 years. At 15 years, we can re-up, buy out, or have the equipment removed. Buyout at 15 years is about $15,000.

EIQ: How large is your home?

SC: 2,029 square feet, single-story, plus a three-car garage. We selected our lot with solar in mind, so we have an unobstructed southern exposure.

EIQ: How much are you saving?

SC: Overall, I estimate our total utility costs will about break even for these first few years, but our savings will improve as PG&E rates go up. We are locked in to PG&E’s lowest rate at peak hours: about 12¢ in winter and 18¢ in summer. Our solar output in 2009 was 7219 kWh, and SolarCity has our hourly output on our own Web page.

EIQ: Is the system intrusive in any way?

SC: The panels are quite visible on our exposed street side, but we wear them with pride.

One challenge of growing the solar market comes from moving into new regions where solar power may be foreign to local utilities or municipalities. Getting tangled in local bureaucracies can quickly disrupt even the best-laid plans. “Our biggest issue tends to be with city building departments,” Rive says. “Lots of times, they won’t be familiar with solar, and they’ll struggle with issuing permits. There’s a large learning curve for this, because it’s new and very different than what people are used to.

Sally Carroll As soon as Sally Carroll signed a lease agreement with SolarCity in July 2008, she saw an immediate impact on her home energy costs. “Our PG&E bill for June 2008 was $228 for 1240 kWh, with an average utility bill from December 2007-June 2008 of $150,” Carroll says. After the solar panels were installed on her Fresno, California, residence, she says the cost savings were immediately evident. “My June 2009 energy charges for PG&E were $88 for 563 kWh billed, so even with the $111 lease, my energy costs were only $199 per month.” Last year, Carroll’s system produced 1089 kWh more than predicted by SolarCity at the time of installation.

“With the local utilities, some are very solar-friendly and encourage you to come, and they process your applications promptly,” he continues.

“Others can make your life difficult and delay applications. They view it as something they have to do but don’t want to do. But more and more that’s the aberration. People are warming to solar these past few years.”

Save $6,639 over 15 years

Save $204 (or more) annually

Savings grow as utility rates increase over time

SolarLease monthly payment of $111 saves $17 monthly $200 $150 $100

old electric bill

$50 2010

2015

2020

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solar lease payment new electric bill

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solarcity

The PG&E deal sets an example that utilities can look at solar companies as a business opportunity, instead of being at odds with each other. If we want to see the industry expand, we need the solar-power providers and utility companies to work together, and [the PG&E deal] is one way. —Lyndon Rive, Founder

A residence in Kensington, CA, takes advantage of SolarCity’s energy-conscious solutions. Photo: SolarCity.

Currently, SolarCity’s customers include thousands of homeowners, more than 75 schools and universities, government agencies, and corporate clients like Intel, eBay, and British Motors. With its commercial clients, it negotiates power-purchase agreements, where payments vary month to month (more in summer, less in winter). Commercial business is on the upswing. In the company’s earlier days, residential work comprised 80 percent of projects; today, Rive says commercial business is more than half of SolarCity’s work. “We like a healthy mix,” he says.

The argument against SolarCity’s lease methods is that as green awareness grows and price competition drives the solar market, it will become much cheaper to purchase solar panels. And with a 15-year lease, a customer is locked in for a significant period of time, during which SolarCity would be reaping the bulk of the financial rewards through tax incentives. Rive counters this argument by noting that SolarCity also offers solar systems for purchase. “It’s purely a decision for homeowners,” he says. “If you have the capital available, buy the system—it’s a great investment. But if you don’t, then lease it. We offer both, and we’re neutral about it. We’re not pushing customers one way or the other. We just don’t want them to wait around and do nothing.

Doing nothing doesn’t help the customer, and it doesn’t help the environment.”

Larry Stein—who owns a 2,400-square-foot, L-shaped ranch—remains satisfied with his decision to go with SolarCity; he says he saves roughly $110 a month. “They installed the panels on the side and back of my house,” he says. “I rarely think about the system, or notice it in any way. It’s a totally painless way of helping the environment, and you save money.” eiq

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S2W Contracting LLC

www.s2wcontracting.com

1700 FM 407 Justin, TX 76247 Tel: (940) 745-1421 Field: (817) 456 3973 mail@s2wcontracting.com

We offer the following services: • Millwright services • Alignment and leveling • Gas compressor inspection • Maintenance and repair services • Small construction and grout services • Specializing in large Ariel packages KBB and KBV frames.

We take care of your machinery needs with our experienced, knowledgeable and honest personnel.

We’re also a member of ISNetworld.

s2w contracting llc

S2W assembled an electric drive package and Ariel KBV compressors for this project in Decatur,TX.

s2w contracting llc Texas company finds specialization and success in the maintenance of natural-gas compressors by cristina adams

three years ago, emmery withee left the relative safety of a full-time job to go independent. The former compressor mechanic had worked in the field for several years, so finding work wasn’t too difficult. For the first year, some of his former customers hired him for roustabout jobs, and that was enough to pay the bills.

Then in 2008, a former employer, Toromont Energy Systems (now knows as Enerflex Energy Systems) contacted him about compressor mechanical work two projects for Enterprise Product Partners, both of which were located close to his home base of Justin, Texas. At that point, with steady work under his belt, Withee was in a financial position to really give his own business some direction and attention.

at a glance location: justin, tx founded: 2007 employees: 11 area of specialty: commissioning and maintenance of reciprocating natural-gas compressors 2009 revenue: $300,000

“I knew there were certain aspects that I wouldn’t be good at, like paperwork,” he recalls. “So I talked a friend of mine into taking care of the administrative side of things for the business in exchange for a partner-

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ship and 10 percent ownership.” And that’s how S2W Contracting LLC was launched—in the early stages of a recession in an uncertain market. But that didn’t stop Withee, and it certainly hasn’t stopped the company from achieving success, nearly doubling its annual revenues every year since opening for business. As Withee points out, there were a few slow months in 2009, as the recession hit high gear, but the company finished on a very strong note—and 2010 looks to be even busier and more profitable. “Our clients like us because we’re smaller and more flexible than other companies in our industry,” Withee says. “And they know that when they hire S2W Contracting, they’re dealing with the owner of the company. Most likely I’ll be running the crew in the field.”

S2W Contracting modestly bills itself as a “small, flexible millwright and mechanical field-service company,” but the company is much more than that. In addition to

s2w contracting llc custom products

Oftentimes, things go wrong on jobs, and people spend exhaustive amounts of time trying to fix the blame on something or someone. We have a ‘fix the problem’ mindset.

—Emmery Withee, Owner

offering millwright services, leveling, and alignment, it specializes in commissioning, assembling, and maintaining reciprocating natural-gas compressors. These unique compressors work in much the same way as a car engine, using pistons driven by a crankshaft to move gas. As the crankshaft spins, the piston moves back and forth in the cylinder—a motion that then draws gas in from the suction side and sends it out at a higher pressure, but lower volume, through the discharge side. S2W works not only on standard-issue compressors but also specifically on Ariel KBB and KBV compressors, which are generally paired with certain types of Caterpillar engines and other large electric engines.

It’s no surprise that Withee himself is a hands-on kind of guy. With only 11 full-time employees, he runs a lean, tight ship and encourages those who work for him to take on every job with a can-do attitude. Those who don’t can, as he puts it, look for alternative employment.

This kind of no-nonsense, straightforward approach works well in an industry that has seen many booms and busts over the decades. It has also proven to be a winning approach for his company, which already boasts a raft of projects across the southern and southeastern United States, and is expanding out to the West Coast and into the Mid-Atlantic to work in the vast Marcellus Shale natural-gas deposit.

its pipeline. The Midcontinent Express pipeline (MEP) is an extensive 500-mile natural-pipeline system that stretches from Oklahoma into Louisiana, and connects with other major pipeline systems along the way. Even more interesting for S2W is MEP’s four main compressor stations that have Caterpillar engines and Ariel KBB compressor packages. S2W Contracting has done all of the millwright and assembly work at these stations.

It was a big job, but Withee and his crew were up to the challenge. They had the necessary experience and skills, but they also do good work—plain, old-fashioned hard work, as Withee puts it. Moreover, if there’s a problem—and there are always problems on projects of this size—the S2W Contracting crew will find a way to solve it. “Oftentimes, when things go wrong on jobs, people spend exhaustive amounts of time trying to fix the blame on something or someone,” Withee says. “We have a ‘fix the problem’ mindset.” That’s just one of the aspects of S2W that makes it so attractive to potential clients—and has all but ensured its continued success. eiq S2W hangs KBB compressor cyclinders during assembly in Vicksburg, MS.

S2W has a very particular type of expertise, and it happened to be exactly what Midcontinent Express Pipeline LLC was looking for when it contracted S2W to work on

reciprocating natural-gas compressor services: • Millwright service, leveling, and alignment • Service and inspection • Routine maintenance • Commissioning • Ariel KBB and KBV compressors, as well as many smaller compressor units

energy international quarterly july/august 2010

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custom products

Standard-service downhole tools ready for shipment.

Map oil tools Producing the best-quality designs in the downhole-drilling industry by cristina adams

at a glance

protecting the environment—whether it’s the deepwater Gulf of Mexico, a mesquite-sprinkled West Texas landscape, or a patch of Louisiana marshland—from oil-well spills and leakage ranks high on the to-do lists of most companies in the energy industry.

Spills and leaks are bad for nature and for business. Map Oil Tools creates safeguards that are specifically designed to keep such scenarios from ever happening.

location: new iberia, la founded: 1989 employees: 49 area of specialty: manufacture and distribution of standard-service downhole tools for the sweet-oil and natural-gas industries

This New Iberia, Louisiana-based business manufactures and distributes standard-service downhole tools for the sweet-oil and natural-gas industries. The tools prevent annular communication within the surface; in other words, they stop oil from leaking or blowing out of the wellhead and into the environment. The company also makes specialty tools, namely the JS line of storm packers, that are used during emergency offshore evacuations that occur during violent storms or hurricanes. “Utilizing those tools allows the drillers to urgently shut in and abandon the drilling operation, and evacuate the rig without leaving a dangerous, unprotected well behind,” says company president Glen Holcomb. “That’s why quality drives everything we do.”

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Map Oil Tools works closely with its customers—most of which are well-service companies that design tool strings and operate the tools at the wellhead—to develop safe, reliable tools. The JS line, for example, sprang up from a series of tool-failure problems in perforating operations in the Gulf. A customer needed a particular kind of tool to prevent the recurring failures, so Map Oil Tools designed and built it. “Most of the tools we produce today have, in some form, come directly from customer needs and creative concepts,” Holcomb says.

It’s that commitment to quality that has propelled Map Oil Tools to a leadership position in the oil-and-gas industry. Founded in 1989 as the completion-products division of SERVAgroup, a global manufacturing and distribution network for oilfield equipment, the company quickly made a name for itself domestically and internationally. It invests in the research, development, and testing of new tool designs, and recently formed a unique joint venture with Chinese company SJS Ltd. In 2004, Holcomb, then president of Map Oil Tools under the SERVAgroup umbrella, purchased the company, took it independent, and transplanted operations from

map oil tools

custom products

This is the toughest market in the world. If our products can perform in this market, they can perform anywhere.

—Glen Holcomb, President

Wichita Falls, Texas, to its current headquarters in Louisiana, in order to be closer to its major customers in the Gulf of Mexico.

That relocation helped shape the company’s business in a variety of ways. The region is, for instance, the primary service point for Gulf of Mexico exploration and drilling; domestic and international well-service providers alike send their top people there to work and learn in some of the toughest conditions in the industry.

Moreover, Holcomb says, the Gulf of Mexico is known for being on the cutting edge of deepwater-tool and -equipment development, and for sophisticated completions operations. “This is the toughest market in the world,” he says. “If our products can perform in this market, they can perform anywhere.”

Since moving to Louisiana, Map Oil Tools has grown at a breakneck pace—about 40 percent annually—although Holcomb admits that things flattened a little in 2009 as the recession swung into high gear. Even so, Map Oil Tools has not been dramatically affected. It was, Holcomb says, fairly easy to see economic uncertainty looming on the horizon, and the company responded in 2007 and 2008 by expanding its sales and marketing efforts, and by adding new clients to its roster, in advance of the meltdown. “Since we are a small company with pretty tight controls of our day-to-day operations, we know our capacity to produce and simply must adjust our sales to match that capacity,” Holcomb says.

That ability to run tight and lean has given Map Oil Tools an advantage over its larger rivals—an advantage that has become absolutely clear this year, as growth has once again kicked in, albeit at a more controlled clip. As Holcomb points out, even management has been surprised by the company’s rapid increase in sales in 2010, for which he credits its previous efforts to expand its marketing and client base.

Looking beyond 2010, the company is already investing in new ideas and materials, and is testing and developing new products. Plastics and composites may soon replace metals and synthetic rubber to make its tools lighter, safer,

and more durable. Also on the board are potential new joint ventures and collaborations—efforts that Holcomb says makes the company so strong, nimble, and successful. “The industry wants to drill deeper and faster, with safety as the primary concern,” he says. “Whether it is in the deep waters of the Gulf of Mexico or a shale-gas well in Canada, zero failure is the demand of the industry.”

And zero failure is exactly what Map Oil Tools intends to deliver. “In our line of work, failure is unacceptable. The safety of the people, the environment, and the equipment on or near the site requires that we produce high-quality, zero-defect products.” eiq

SPRING CO. INC.

Manufacturer of springs, wire forms and metal stampings since 1971.

Springs and Things for Industry Specializing in compression, extension, and torsion springs as well as wire forms with wire sizes ranging from .003 through .500 and metal stampings with a thickness ranging from .004 through .375.

P.O. Box 50307 3003 East Apache Tulsa, OK 74150-0307 Phone: (918) 836-9000 Fax: (918) 836-9062 www.actionspringco.com

custom products

An 1000 HP Caterpillar engine mounted in a mud-pump building to drive the pump.

GMG Energy Solutions Inc. State-of-the-art equipment from the heart of Alberta’s oil-and-gas industry by daniel casciato

after several years of toiling in canada’s oil-and-gas industry, former coworkers Gary Cheaters and Mark Cathey saw that their homeland had a shortage of manufacturers who could build oil-field equipment. So in 2006, they quit their jobs, assembled a management team with more than 70 years’ experience in the oil-and-gas industry, and founded GMG Energy Solutions Inc. Headquartered in Nisku, Alberta, GMG fabricates oil-field equipment for service companies and offers drilling, process, trucking, and specialty equipment. The firm’s manufacturing shop is also based in Nisku, in the heart of manufacturing and fabrication for Alberta’s oil-and-gas industry.

at a glance location: nisku, ab founded: 2006 employees: 13 area of specialty: drilling, process, trucking, and specialty equipment for the oil-and-gas industry

As a privately owned company, GMG’s mission statement is to build the best equipment for customers who deserve the best. According to Cathey, who serves as president and COO for the company, the goal of GMG is to build custom equipment that meets its customers’

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high standards for quality workmanship, and to produce products that will withstand the Canadian oilfield. The company also offers comprehensive engineering services and planning, and engineered drawings are made available to clients who require their custom-built equipment be approved for the oil-and-gas industry. “We also recognize the commitment associated with operating oil-andgas equipment, by providing qualified and experienced engineers to support client needs,” Cathey says. “Industry codes and regulations demand quality, and GMG is dedicated to ensuring that all requirements are met.”

Additionally, the company can handle the transportation needs of its clients. GMG-affiliated companies are licensed for 3 western Canadian provinces and 13 western US states providing LTL shipments and direct loads. The company offers various trucking services, as well as a 24foot gooseneck trailer, for customer pickup and delivery of components.

gmg energy solutions inc. custom products

Industry codes and regulations demand quality, and GMG is dedicated to ensuring that all requirements are met.

—Mark Cathey, President & COO

GMG is also committed to the health and safety of its employees, whether they work in the shops or the field.

To date, GMG remains a member in good standing with the Manufacturers Health and Safety Association.

“Safety training is mandatory for all employees, in all positions, within the company,” Cathey says. “Additionally, GMG is committed to protecting and preserving the environment.”

Innovation is another commitment that the company has made. Based on their years of experience in the industry, Cathey and Cheaters know how important it is to maintain state-of-the-art tools and equipment. In fact, GMG’s corporate philosophy is to offer quality equipment as well as fabrication of equipment and commissioning services to its customers. The company even had the foresight to move to a larger shop to accommodate more sophisticated equipment. Within a year, GMG relocated to a new 23,000-square-foot shop from its original 7,500-square-foot shop. The new manufacturing facility contains two overhead cranes rated at 10-ton capacity and an 80-foot span. In addition, its new yard is four acres and capable of assembling drilling rigs and fitting equipment up for function testing. “We also have 16 welding stations with Miller welding machines,” Cathey adds. “So now we can weld carbon steel, stainless steel, and aluminum. We also have B-Pressure welders on-site.”

according to the British Columbia Energy Minister Richard Neufeld. In 2007, companies all over the world spent a total of $240 million in new leases for the Horn River Basin Rock Deposit Area.

“We’ve been doing engineering on fracturing sand-storage systems for the extreme large fracs that will be located there,” Catheys says. “There’s a future market for manufacturing hydraulic-fracturing equipment in Canada. And while we’ve been marketing ourselves pretty well, we also want to get into more technical services and offer customers engineering for custom-designed and -built equipment.

That’s an area we want to pursue down the line.” eiq

We Build The Best Equipment For Our Customers Who Deserve The Best

Like other firms, GMG has been concerned with the present economy and its negative effect on the worldwide energy industry. “2009 was a difficult year to get through,” Cathey admits. “So we focused on reducing our vendor/supplier list and getting our spending in line.

Purchasing is a big part of building a company—we need to have good control of our spending.”

Cathey does, however, remain optimistic about the future and expects the economy to pick up in the latter half of 2010. As he looks to plan ahead, he sees a potential market in the Horn River Shale Formation, a natural-gas shale field. Located in British Columbia, the Horn River Basin is the largest shale-gas field in Canada,

GMG is a privately owned company with a management team that has been involved in the industry for more than 70 years, building and operating equipment both in the field and fabrication shops.

GMG Energy Solutions Inc. ph: 780-979-6580 fx: 780-979-6581 1902-8th st Nisku, Alberta, T9E 7W3 www.gmgenergy.ca

CanElson Drilling Inc. (CDI) Rig #1

EIQ July/Aug 2010 GMG Energy Electric (underwrite) 1/4.indd 1

http://canelsondrilling.com/

2/16/10 8:52 PM

barnhart crane and rigging

energy international quarterly may/june 2010

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specialty services

Barnhart erects a wind turbine inWild Horse,TX.

barnhart crane & rigging co.

BARNHART crane & rigging co.

Multifaceted company offers innovative services to heavy-industry clients nationwide by laura williams-tracy

dominance in the field of crane services and engineered heavy rigging has required four decades of heavy lifting by Barnhart Crane & Rigging Co. Over that time, the company has grown from a hometown crane operator to a national organization with offices in 24 cities, and now has one of the strongest equipment inventories in the country. Barnhart Crane & Rigging can lift equipment and move it by water or over land with services in engineered heavy rigging, heavy-cargo logistics, modular-lift towers, and industrial-machinery moving.

The company began when founder Richard Barnhart moved to Memphis with his family in the 1960s, as he managed a project for Chicago Bridge & Iron. In 1969, he started his own craning and rigging company, mostly focusing on steel erection. Then in the mid-1980s, sons Alan and Eric took over operations. Today, the company has grown from a single branch in Memphis to more

than 1,000 employees nationwide. And over the past 10 years, the company has grown from $50 million in billings to $250 million a year.

What helps set Barnhart Crane & Rigging apart is its multifaceted professionalism. “There are a lot of crane companies that don’t [look] at the industry from the engineering perspective that we do,” says Brian Thomas, manager of business development for Barnhart’s wind group. Thomas, who holds a degree in chemical engineering, joined Barnhart 21 years ago. “Our mantra is ‘Minds over matter,’” he continues. “Our engineering focus allows us to think outside of the box and provide innovative solutions for heavy industry.”

For example, a Chicago-area refinery needed to move a heater that weighed 700 tons. The owner had considered taking the heater apart, moving it through the plant, and reassembling it at its new location on the other side of

energy international quarterly july/august 2010

at a glance location: memphis, tn founded: 1969 employees: 1,000+

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barnhart crane & rigging co.

Barnhart transports wind turbines and installs them on wind farms throughout the country.

Our mantra is ‘Minds over matter.’ Our engineering focus allows us to think outside of the box and provide innovative solutions for heavy industry. —Brian Thomas, Manager of Business Development, Wind Group

the plant, an approach that would take several weeks.

Barnhart designed a dolly for the job, installed girders, and used hydraulic jacks to raise the 170-foot-tall piece of equipment over the refinery and set it on new piers in two days.

The company also has experience in almost every industrial sector, including chemical and refining, heavy civil construction, industrial crane erection and relocation, industrial warehousing, nuclear energy, power distribution, power generation, and wind power. Eighty percent of business is within the energy sector, where cranes are often needed for service support.

In the late 1980s, the company grew its portfolio of industrial work, servicing clients such as DuPont and Nucor Steel, as well as chemical plants and refineries. The gas boom of late 1990 brought work on the construction of new gas-powered plants, and the company opened new offices throughout the Southern United States, as well as offices in Los Angeles and Portland, Oregon.

“We were continuing to gain a national reputation for really being a solutions provider to large refineries and large power plants and large contractors in the industry,” Thomas says. “We had some unique tools that we had developed and an energy market that was really booming.”

Since 2003, wind power has become a major source of work for Barnhart Crane & Rigging, which services the market by transporting wind turbines from a local railhead and installing the turbines on wind farms

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throughout the Northeast, Midwest, and Texas. In fact, the company installed the largest wind turbines in the country in Snyder, Texas, and to date, it has been responsible for as much as 20 percent of the wind megawatts installed nationally. “We have a reputation for erecting the best turbine in the market in terms of quality and efficiency,” Thomas says. Additionally, with a national reputation for lifting and installation tools, and its particular wind-turbine-experienced technicians, the company is now providing operating-maintenance services for wind-farm customers.

Barnhart Crane & Rigging’s tools, however, aren’t limited to just cranes; the company has a number of other lifting and rigging solutions, including hydraulic gantries and strand jacks—which are small, compact hoisting devices.

Many tools were developed by the company’s in-house engineering department to solve a particular problem for a client. “We build a lot of very specific tools for a project, or we will adapt tools,” Thomas says. “We have a lot of equipment and specialty tools we built for projects that we can reuse in a new way to help bring solutions to clients.”

Barnhart Crane & Rigging’s services have not gone unnoticed. The company has received the Specialized Carriers & Rigging Association’s Job of the Year award 18 times for such jobs as providing structural support to NASA’s launch pad. “We’re really an engineering-based company that provides solutions,” Thomas says. “We have a lot of tools that were created from years of experience and some very sharp engineers in our company.” eiq

energy international quarterly july/august 2010

POWER AND CONTROL SYSTEMS

Our Products

PACS Industries, Inc.

2.4 KV to 15 KV & 17.5 KV Metalclad Switchgear.

60 KV 95 KV & 110 KV.

One High or Two High construction. Meets IEEE & IEC standards.

Indoor or Outdoor construction.

Continuous current ratings: 600A through 4000A. Short Circuit ratings: 20 KA through 63 KA.

27 KV Metalclad Switchgear.

125 KV BIL.

One High or Two High construction. Meet IEEE & IEC standards.

Indoor or outdoor construction.

Continuous current ratings: 600A through 3000A. Short circuit ratings: 20 KA through 40 KA.

38 KV Metalclad Switchgear.

150 KV,170 KV, & 200 KV BIL.

One High construction. Meets IEEE & IEC standards.

Indoor or outdoor construction.

Continuous current ratings: 600A through 3000A. Short circuit ratings: 20 KA through 40 KA.

200 KV BIL

Generator Metalclad Switchgear.

From 1200 Amps to 6000 Amps, Drawout.

1200 to 3000A

4000 to 6000A

6000A Generator Swgr

One High construction. Meets IEEE & IEC standards.

Indoor or outdoor construction. Numerous units operating since 1999.

IEEE Standard C 37.013 available.

Short Circuit ratings: 20 KA through 63 KA.

Arc Resistant Metalclad Switchgear. PACSafe

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POWER & CONTROL CENTERS (PCC) PACS manufactures over 100 PCC’s per year to contain metalclad switchgear and other apparatus. Buildings may be thermally insulated, acclimatized and pressurized. Buildings in excess of 300’ x 40’ available.

Buildings for Arc Resistant Switchgear

Arc Resistant Switchgear available in 1 high or 2 high construction. Short circuit ratings from 40 KA to 63 KA, depending on voltage (4160V to 34.5KV). IEEEC37.20.7 tested for Types 1, 2, & Suffix C. PACS top Collector Plenum discharges dangerous Arc-Flash fire, smoke, gas, detritus, etc.,

PACSafe

The Type PDA Partial Discharge Analyzer continuously senses, 24/7 for Corona, the precursor of Arc-Flash explosions, which then will give you the opportunity to prevent an Arc-Flash explosion by maintaining Corona problem.

The Type AMS will mitigate the effects of an Arc-Flash explosion by continuously monitoring for a light flash, and escalating current, both of which occur during an Arc-Flash explosion. The AMS can trip source breakers in 47 to 80ms, resulting in greater safety and minimum damage. Existing switchgear can be retrofitted. Available for new switchgear.

13.8 KV & 34.5 KV Swgr in PCC

Available for Arc Resistant Switchgear

61 Steamboat Road, Great Neck, NY 11024, U.S.A. Tel: 516-829-9060 e-mail: sales@pacsindustries.com

barnhart crane & rigging co.

PACS Industries’ manufacturing facility in Mt.Vernon, OH.

PACS Industries, Inc. Father-and-son team find success in the switchgear marketplace by cristina adams

when mandell dalis started his own metalclad switchgear company, PACS Industries, in 1972, he would secure the client, engineer the specific project, and then farm out the manufacturing process to a local switchgear company. In 1980, however, all that changed.

By then, Dalis—whose son, Bruce, had joined the business—figured that the time had come to bring the manufacturing in-house, and that meant either building or buying a facility. So the company acquired a small plant in Mount Vernon, Ohio. “It was the size of a large 12-car garage,” recalls Bruce, who is now the company’s president and COO. Mandell remains active as chairman and CEO.

at a glance headquarters: great neck, ny founded: 1972 employees: 115 area of specialty: powerdistribution metalclad switchgear and related products 2008 sales: $20–30 million

PACS’s manufacturing plant is still located in the state of Ohio, but it now operates in a sprawling 240,000 square feet of space and employs more than 100 people; the remaining 15 staff members in the engineering, estimating, and project-management departments work out of the company’s corporate headquarters in Great Neck, New York.

It’s precisely those people (all 115 of them) who Bruce credits with being PACS Industries’ greatest asset.

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Indeed, employee turnover is low, with many averaging 15 years of service; numerous others have a longer tenure, some more than 25 years. And while it is still a family-owned and -run company, it’s not the most crucial element of PACS’ current and future legacy, Bruce says. “What’s important is that PACS remain a place that people can come to work and grow, while producing a high-quality product.”

That high-quality product is metalclad switchgear— basically an extra-large circuit breaker. In a residence, a standard circuit breaker operates at 120 volts. But PACS’ equipment is much more powerful, operating in a range of 2,400–38,000 volts. Last year, for example, PACS participated in a project that involved the manufacture and installation of the main 26,000-volt switchgear at the New York Mets’ Citi Field.

The switchgear is installed in large structures known as power-control-center (PCC) buildings, which are assembled and tested together with the switchgear at the plant in Ohio. Once the PCC is assembled with the switchgear inside, the whole package is installed in large outdoor metal houses, which PACS also manufactures. According

pacs industries, inc. specialty services

to Dalis, PACS is unique because it’s a vertically integrated company; the Ohio facility features a manufacturing engineering and design department, a sheet-metal shop, a powder-coat-finishing facility, manufacturing, and assembly facilities, and a test lab. The company also tests to all standards set by the American National Standards Institute, the National Electric Code and the Institute of Electrical and Electronics Engineers, which is no small feat. The test lab boasts all the regular test equipment, as well as a few bells and whistles: an impulse generator to 240 kilovolts, a partial-discharge analyzer, a heat-run facility to 7,000 amperes, and a circuit-breaker-timing recorder system.

But making superior metalclad switchgear isn’t all PACS does. About four years ago, the company developed a line of arc fault-resistant switchgear in response to mandates from the Occupational Health and Safety Administration. This product, which now accounts for 40 percent of the company’s annual revenue, protects operating personnel from an electrical explosion, or arc flash that can occur suddenly in high-voltage settings. Designed to channel the dangerous energy away from human operators, the fault-resistant switchgear essentially vents the heat, gases, and pressure upward through the roof. According to Bruce, PACS is still the only independently owned company to have developed this technology.

As for active markets, PACS currently works with clients in a range of industries, from electric utilities, transportation, and wind-power companies to large industrials and oil-and-gas refineries—basically any industry that needs a large amount of power to operate its facilities.

Domestic clients account for 70 percent of its reach, but the remaining 30 percent can be tracked to contractors, shipbuilders and utilities as far away as South Korea, Japan, and Saudi Arabia. And those markets are growing, not only because of demand for the products, but also because of the company’s unique ability to develop and manufacture its products.

Annual revenue has been averaging $20–30 million over the past three years. Management is projecting robust growth of 15–20 percent in its markets over the next three years. “We have competitors, but few with our research and product-development capabilities,” he points out. “We build the highest-quality equipment in the industry, and we complement that quality with firstrate customer service.” eiq

PACS Industries’ 38-kV arc fault-resistant switchgear.

energy international quarterly july/august 2010

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A helicopter conducts an aerial line patrol, one of Fischer Powerline’s many services. fisher powerline construction ltd.

FISHER POWERLINE CONSTRUCTION ltd.

Husband-and-wife team emphasizes customer service and a commitment to safety by cristina adams

at a glance location: fort mcmurray, ab founded: 2005 employees: 40 area of specialty: construction and maintenance of power-distribution and -transmission systems

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roger and shyerene fisher weren’t planning on starting a new company. But five years ago, when a business venture they were involved in went south, they had to do something to stay afloat. So they sold their house and, with the money from the sale, bought their first digger truck. It was a calculated gamble; Roger had more than 30 years’ experience in the powerline business, and Shyerene had worked 25 years for various engineering firms and operators in the oil-sand industry.

In theory, their combined professional experience and industry savvy should have ensured the success of their new venture, but there’s no such thing as a sure thing.

Nevertheless, with one truck and two employees, the Fishers opened their company, Fisher Powerline Construction, Ltd. Four years later, the compnay is a multimillion-dollar business with 40 employees and a fleet of 20 crew trucks and 20 larger vehicles (such as rubber-tire and track-equipment diggers/augers and cranes). “From day one, we made a commitment to our clients to get it right the first time,” says Shawn Woon,

energy international quarterly july/august 2010

Fisher Powerline’s project manager. “That has driven our growth and our success.”

Based in Fort McMurray, Alberta—in the region of the famed Athabasca Oil Sands—Fisher Powerline offers project-management, construction, and maintenance services on overhead and underground powerdistribution and -transmission systems and substations, using both cold- and hot-line work methods at various voltages. Its crews, for example, work on energized— or live—equipment up to 36 kilovolts, using insulated work platforms, Class 3 rubber gloves, and cover-up.

The company also provides dry-ice cleaning on energized equipment up to 27 kilovolts and corn-grit cleaning up to 260,000 volts. Interestingly, the latter form of cleaning involves using broken corn-cob bits as a soft abrasive to blast-clean parts without scratching the surface.

Given Fisher Powerline’s location near the largest reservoir of crude bitumen in the world, it’s not surprising that the company’s client list is heavily populated by oil-

fisher powerline construction ltd. specialty services

From day one, we made a commitment to our clients to get it right the first time. That has driven our growth and our success.

—Shawn Woon, Project Manager

sand developers and producers from the area, although electrical utilities also figure as important customers.

But other companies are also competing for that business, Woon points out—larger, better-established companies.

And that makes it even more critical for Fisher Powerline to emphasize its commitment to customer service and job safety. In fact, the company boasts a certified Environmental Health & Safety program and a certificate of recognition from the Alberta Construction Association.

More recently, the company received a total discount of 17.7 percent off its rate for 2010 from the Workers Compensation Board, further evidence of its sterling safety record.

“What sets us apart is our ongoing commitment to safety and our continuous striving for zero accidents or incidents,” Woon says. “Detailed planning and the incorporation of safety into our execution strategies have also contributed to this incredible rate adjustment.”

In addition to its strong safety record, Fisher Powerline uses state-of-the-art technology, such as project-portfolio-management software Primavera P6, to create a seamless management process all the way down the line, from maintenance, monitoring, and reporting of schedules, to manpower loading and progress tracking. Moreover, the company has recently upgraded its estimating software, which will allow it to stay current with the industry technology and to continue providing consistent and accurate estimates. “In addition to allowing us the opportunity to apply strategic measures as necessary, these efforts also allow us to identify opportunities early and advise our clients accordingly,” Woon says.

corrected, and vehicles get the maintenance they need to operate effectively.

Like many other businesses, Fisher Powerline has been affected by the economic downturn of the past two years. However, thanks to management’s decision to control growth, the company has weathered the bumpy ride better than many. As for what’s next, Woon says that they’ll be pursuing a larger share of the market in live-line work. As he points out, the public’s reliance on dependable power, underscored by the need to minimize outages, should guarantee growth in that market. But he emphasizes the company itself—the founders and their employees—is the rock-solid foundation on which to continue building future success. “We have a great core of employees that will help ensure we are well positioned to expand as opportunities present themselves,” Woon concludes. eiq Crews working to install the high-voltage connections on a 260-kV transformer.

Fisher Powerline isn’t committed just to safety and customer services; concern about its own environmental impact has led management to develop some environmental best practices, both inside and outside the office.

From not printing e-mails unnecessarily to using its highway vehicles efficiently, the company is clearly out to shrink its carbon footprint. It has, for example, installed devices on all of its equipment that monitor maintenance and driver habits, such as speed, location, and even vehicle idling. As a result, behavior and practices that don’t measure up to the company’s policies can be

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MicroSeismic’s equipment is staged at the wellhead for a hydraulic-fracturing job. fisher powerline construction ltd.

MicroSeismic, Inc. Optimizing the effectiveness of multi-well fracturing programs by daniel casciato

since its founding in 2003, microseismic, inc.

(MSI) has built a global reputation for innovation in the acquisition and analysis of passive seismic data, especially microseismic monitoring.

at a glance headquarters: houston, tx founded: 2003 employees: 50 area of specialty: microseismic monitoring 2009 sales: $17.3 million sales growth in past year: 35% frac treatments monitored in 2009: 500+

Microseismic monitoring is the practice of listening to the seismic noise emitted from a reservoir in order to detect patterns of fluid movement, fracture development, or compaction. The knowledge of these patterns enables improved reservoir management. Passive seismic imaging is 3-D structural imaging that uses existing, often naturally occurring sound sources rather than man-made sources such as dynamite or vibrators. This technology enables seismic exploration in places that are difficult to reach or environmentally sensitive.

MSI pioneered the use of surface and near-surface arrays for monitoring hydraulic-fracture stimulations. The Houston-based firm also established the first permanent nearsurface arrays for the same purpose and is leading the way in developing analysis tools to extract more information and value from microseismic data. “This methodology,

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which we trademarked under the name FracStar, eliminates the need for expensive monitoring wells to gather the needed data,” says Peter M. Duncan, the company’s president. “Recently, we have introduced a permanent, life-of-field buried-array version of the FracStar technique that significantly reduces the unit cost of monitoring and allows for a more complete attack on the monitoring issue by operators.”

MSI’s technology and expertise has been applied to a broad spectrum of oilfield problems, ranging from structural imaging in mountainous areas using earthquakes as its energy source, to steam-injection tracking for bitumen mobilization and carbon-dioxide injection mapping as a tertiary recovery tool. “Our business is to seismically monitor the hydraulic-fracturing well-stimulation process that operators are employing to complete wells in unconventional gas and oil plays,” Duncan says. “The monitoring tells them how well they stimulated the reservoir, where the fracs went and how big of a volume the well is draining. It can assist them in increasing production per well and reduce costs per completion.”

microseismic, inc. speciality services

This methodology, which we trademarked under the name FracStar, eliminates the need for expensive monitoring wells to gather the needed data. —Peter M. Duncan, President

MSI’s most active areas right now are the Haynesville play in Texas and Louisiana, the Marcellus Shale play in Pennsylvania, and the Barnett Shale play in Texas, as well as the Bakken Shale in the Williston Basin, covering parts of North Dakota, Saskatchewan, and parts of Wyoming.

Duncan, a long-time geophysicist and entrepreneur, was introduced to the technology’s originator, Professor Charles Archambeau of the University of Colorado, in the summer of 2002. His ideas on using microseismicmonitoring techniques in the resource industry caught Duncan’s attention, and he made a proposal to buy the technology from Archambeau a few months later. After raising $450,000 in seed capital in 2003, the company was officially incorporated and began to develop its services in 2004. “The rise in importance of the unconventional plays and the uniqueness of our technology has driven double-digit-percent growth every year since,” Duncan says.

nicate to people the utility of those in ways that they can understand and actually adopt it into the marketplace. I also enjoy hiring young people out of school and participating in their education.” For Duncan’s efforts and the company’s rapid revenue growth (from $1 million to $13 million since its founding), the Houston Business Journal has included MSI as part of its Houston Fast Tech 50 list in the last two years.

But Duncan won’t take all of the credit, acknowledging the work and commitment by his employees instead.

“We have a dedicated staff,” he says. “Everyone who works here has stock in the company and feels that it is theirs, and they work harder for that. The best advice I ever received was to hire the right people, put them in the right jobs, and focus, focus, focus.” eiq

The original business plan contemplated pursuing many facets of passive seismic imaging. Frac monitoring has evolved to be the most important for now, according to Duncan. “We have matured the technology significantly over the years and managed to patent key elements of our process,” he says.

Although MSI’s technology is unique, competition will arise, so the company has been investing heavily in the imaging science it practices to always stay ahead. The challenge of bringing a new technology to market and building a profitable enterprise around that technology has been one of the most rewarding aspects of Duncan’s job. It’s also a fun and rewarding place to work for his employees, he says.

This is the third business venture Duncan has been involved with. “I enjoy building a company,” he says. “I truly enjoy taking technologies that are new and might seem difficult to understand and finding ways to commu-

Perspective image of the microseismic events associated with the fracing of multiple stages in a series of five Marcellus horizontal wells drilled from a common pad.The toes of the wells are to the lower right. Events are colored by treatment well. Frac half-length is greater than 1,000 feet.The monitoring was done with a surface array. Image: Range Resources Corp. and MicroSeismic, Inc.

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job-site safety

S&S provided its services to LasVegas’ City Center Project.

Safety and Supply Co. Creating innovative safety concepts for the wind-energy industry and beyond by christopher cussat

many companies measure success by incremental profit margins, geographic expansion, and overall market growth. Although Safety and Supply Co. (S&S) can easily tote its achievements as reflected in these standard measurements, this particular firm defines its success in the most important tabulation of all—protecting and saving human lives.

at a glance location: seattle, wa employees: 75 area of specialty: full-spectrum safety equipment and services average annual sales: $15 million

Sam Murray purchased the small Seattle-based company in 1941. Over the years, Murray made S&S extremely successful in the Pacific Northwest and later passed it on to his son, John. Today, the company is proudly thirdgeneration owned and led by his grandson, Shawn Murray.

S&S is truly a full-spectrum safety company selling every kind of safety equipment imaginable. In addition, it has a manufacturing division that produces highvisibility apparel; a repair facility to service equipment

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such as winches, self-retracting lifelines, SCBAs, and safety instrumentation; and a huge rental department that serves as a contractor for chemical-plant shutdowns and turnarounds—cleaning and servicing equipment and, most importantly, managing assets for its clients through the chaos.

“In addition,” says Brent A. Knight, director of on-site services, “we provide training, support, consultation, safety, and health-staffing services—which is becoming the fastest growing part of our business.”

In order to stay on the industry’s cutting edge, S&S approaches innovation in a very practical and pragmatic manner. For example, the company recently helped one of the largest manufacturers of wind turbines in the world solve an internal safety issue. “The biggest issue in the wind-energy industry is having the proper

safety and supply co. job-site safety

Innovation comes from creativity, which comes from curiosity and caring. We value our customers very much, and we want to offer ideas that can help simplify their operations.

—Brent A. Knight, Director of On-site Services

fall-protection rescue equipment, because each turbine model has unique challenges,” Knight says. “So we began creating kits that included all of the equipment that a team of technicians would need to work on any particular turbine farm.”

By coming up with such groundbreaking ideas, S&S has been able to continue its tradition of innovation and success. “We are always asking ‘What else can we do?’

‘What can we do better?’ and ‘Why do our customers work with us?’” says Knight, who believes that this helps S&S come up with concepts that its customers need but might not be aware of. “Innovation comes from creativity, which comes from curiosity and caring. We value our customers very much, and we want to offer ideas that can help simplify their operations.”

Another unique aspect of S&S is its adaptability. “We bring a holistic approach to safety,” Knight says. “We can and will change the direction of our business or create new processes when necessary to meet market demand and customer expectation.” For example, the company is no longer solely an equipment distributor—it is now also a rental, training, and consulting company.

In the short term, S&S aspires to establish itself as a preferred vendor in the wind-energy market—just as it has successfully done in other markets. “Our long-term goal is to be recognized nationally as a leader in the safe-

industry trends on the horizon Industry experts at Safety and Supply Co. feel that economic recovery will be very slow in some industry segments and will boom in others, making 2010 both challenging and exciting.

“We are optimistic that the energy sectors, as well as oil and gas, will be seeing significant increases and growth in 2010, which will drive us forward,” Knight says. “On the other hand, one of our largest industries is the construction market, and we are forecasting all-time lows in commercial building volume through 2011.” He also believes other trends that the industry will see include consolidation of the vendor base and “right sizing”—which may give S&S more consulting and service opportunities. “On the safety side,” Knight adds, “we see more customers looking for targeted expertise for special situations, because their internal resources have been reduced by layoffs and increased work responsibilities.”

did you know?

Although S&S has always been a safety-equipment and -services company, it actually sold toys during World War II in order to make ends meet. The company also employed one of the first industrial hygienists in the Northwest for many years as a resource to its clients.

job-site safety

safety and supply co.

ty industry,” Knight adds. The company also continues to look for new markets and services that will not only bring profits but value to its customers as well.

Knight acknowledges that strong leadership, good communication, innovation, flexibility, a caring approach to business, as well as the company’s dedicated employees, have all been the keys to S&S’s success. “We have the best people, and they are all committed to the success of the company,” he says. “Our employees are our number one asset.”

A dedication to safety and the company’s powerful concern for life give S&S both a higher calling and a greater measure for success. “The work that we do is very exciting, and we can go home at night and say, ‘I did something today that will prevent an injury to a worker, or even worse, a fatality,’” Knight says. “Because of this, we get opportunities to touch many lives and influence both thinking and behavior.” eiq

S&S provided a unique fall-protection solution for an open-trench hazard in Seattle’s Sewer Trench project.

Thank you 3M for being a great partner for over three decades.

Find these 3M products at Safety & Supply

(800) 525-7233 (SAFE) www.safetyandsupply.com 76

energy international quarterly july/august 2010

job-site safety

In order to keep up with demand, RET has expanded its fleet with vehicles such as this 2010 roll-off truck.

Reliable Environmental Transport, Inc. Working to keep energy-development sites clean and green by sheena harrison

a recent surge in natural-gas development in the Appalachian Mountains is turning into a wealth of opportunity for Reliable Environmental Transport, Inc. (RET), a multiservice transportation company offering a full range of waste transportation. RET has been working with some of the nation’s foremost players in exploration of the Marcellus Shale, a sedimentary rock formation that houses large stores of untapped natural gas and extends across several states, including West Virginia, Pennsylvania, and New York. A 2008 survey

by Chesapeake Energy Corp. estimated that the formation contains about 363 trillion cubic feet of recoverable natural gas, which the US Geological Survey estimates could supply the American population at current consumption levels for the next 15 years.

President and owner Jonathon Marks says his company is in a prime position to expand as Marcellus Shale exploration and development ramps up. “We’re one of the only transporters who operates an office in this part of West Virginia, so we’re in a fantastic area to grow that operation,” he says.

RET, which is based in Bridgeport, West Virginia, provides environmental-waste transportation and disposal, industrial waste clean-up, and high-volume industrial

vacuum services for companies in a range of fields, including natural-gas, petroleum, steel, and chemical production. Clients of RET—which also operates a tank-rental division for the natural-gas industry—have included Chesapeake, Marathon Oil Corp., and Atlas Energy Inc. The company also works to provide top-notch customer service while offering services that keep companies in compliance with environmental regulations. “We strive to provide the highest level of professionalism, honesty, and integrity under the harshest conditions,” Marks says.

Originally founded under the name Ryan Environmental Inc. in 1972, the company specialized in small excavation and earth-moving projects. In 2002, Marks and two partners—Alan Anderson and Claude J. Ryan IV— acquired the assets of Ryan Environmental, and in 2004, they formed Reliable Environmental Transport, Inc. as a separate company. Marks, who is active in the company’s day-to-day operations, says RET’s growth outpaced Ryan Environmental, and the new entity reduced liability issues associated with transporting hazardous materials.

Since 2004, RET has grown from 5 employees to 52. In that same time, the company grew from about $1 mil-

energy international quarterly july/august 2010

at a glance location: bridgeport, wv founded: 1972 employees: 52 2009 revenue: $7.5 million

77

job-site safety reliable environmental transport, inc.

lion in revenue to $7.5 million. That growth placed RET on the 2009 Inc. 500 list, which recognizes the fastestgrowing private companies in the United States. “Many companies have been curtailing services or laying off,” Marks says. “So it’s a great thing that we’ve consistently expanded through these difficult times. It seems that we must be doing something right.”

RET’s growth is rather remarkable considering that the company does not do any advertising. Marks says nearly all of the company’s customers, who come from states throughout the Marcellus Shale region, found RET through word-of-mouth recommendations. “Because of our track record and commitment to professionalism, honesty, and integrity, our reputation has developed on its own,” he says.

Because of our track record and commitment to professionalism, honesty, and integrity, our reputation has developed on its own.

—Jonathon Marks, President & Owner

Marks says the company has a commitment to its clients that brings previous customers back to RET and helps bring new customers in the door. For instance, clients can contact RET 24 hours a day, 7 days a week for onsite assistance, which Marks often provides himself. “I consistently interact with our clients on a daily basis,” he says. “I’m hands-on, and I provide expertise when necessary. I’m not just a figure setting behind a desk; I try to stay actively involved with each of our clients.”

RET also works to make sure its employees are treated as well as the company’s customers, Marks says. It’s a philosophy that he believes has helped the company to flourish. “Our recognition of the fact that our employees are the most important part of our company has made a tremendous difference in the success of our company,” he says.

Employees receive such benefits as above-average pay for the environmental-services industry, health insurance, paid holidays, pay bonuses, and a profit-sharing program that was started this year. Marks says RET also invests in new equipment on a regular basis to help employees do their jobs more efficiently. “We recognize it’s their name going down the road,” Marks says. “So if we provide great equipment, the employee feels good about running it.”

78

Marks, who is working to double the size of RET’s propane and natural-gas liquids transportation division by 2012, says the company’s emphasis on customer and employee appreciation is something that will continue as the company grows. “We’re a modest company; we don’t like to toot our own horn,” Marks says. “We just go out and do our jobs, and it results in good things.” eiq

ret’s extensive services • Bulk hazardous/nonhazardous material and waste transportation and service • Nonhazardous/hazardous drum management, transportation and disposal • Lab-packing service • Industrial vacuum services • Mobile frac-tank and storage-tank rentals • Industrial roll-off services (hazardous/nonhazardous) • Jet rodder, pipe-cleaning services • Bulk water services (potable) • Flatbed transportation services

energy international quarterly july/august 2010

WORK-READY TRUCKS ON THE GROUND

Serving the Appalachian Basin for 75 Years 14 Locations throughout PA, NY, & NJ Hunter Truck Sales & Service | 100 Hunter’s Way | Smithfield, PA 1-800-257-8782 | www.huntertrucksales.com

southwest disposal service inc.

Dewatering equipment at the SDS Seminole facility.

southwest disposal service inc.

Oilfield-waste-disposal company sets new standard in the Texas energy market by erica archer

at a glance

southwest disposal service inc. (sds) may have the most exacting disposal methods in its market, but general manager Chad Williams has a simple explanation for the company’s expansive success. “We treat drivers nicer than everyone else,” he says. “We give them coffee, donuts, take their pictures. If drivers like a facility, they might go a little out of their way… Plus we have better facilities.”

location: odessa, tx employees: 35 area of specialty: oilfield-waste disposal

Soaring oil prices in 2008 pushed the oil industry in West Texas to peak operations. Although several of SDS’ competitors shut down due to noncompliance issues, SDS bulked up its facilities and operations to handle the rush. A facility handles between 40–70 trucks per day and can service up to 10 trucks at a time. After the rush, SDS was the last one standing, the only actively permit-

80

energy international quarterly july/august 2010

ted disposal facility of its type in West Texas. “[During the spike in oil prices] everyone was running at capacity and well beyond,” Williams says. “We were able to weather the storm.”

The oilfield-waste-disposal company has grown tremendously since its 2006 founding. In 2009, its Odessa, Texas, facility accepted more than 530,000 barrels and 20,000 cubic yards of waste. This year, the company projects processing more than 720,000 barrels and receiving more than 40,000 cubic yards of waste at this same facility.

The waste that SDS processes comes from storage tanks at well sites, as well as from spent drilling fluids.

After cleaning pumpside tanks once or twice a year, oil

southwest disposal service inc. job-site safety

producers truck waste to the disposal site. The waste is pumped out of the trucks and centrifuged to separate any remaining oil from the basic sediment and water. After processing, liquid waste—largely brine—is injected back into underground geological formations. Solid waste is placed in lined pits. “Our goal is to de-water all of the incoming waste, unless of course it’s in solid form,” Williams says. “The water is what poses the greatest environmental threat; if you have any type of liquid, that liquid can then leach through the soil.”

The facility’s processes are able to reclaim about 97 percent of the oil remaining in the waste, which amounts to tens of thousands of barrels a year. The reclaimed oil, which is rated West Texas Sour Crude, is sold and piped to refineries. (Sour crude oil refers to oil with sulfur content greater than 0.5 percent, as compared to lowersulfur sweet crude.)

Nonhazardous oil-and-gas waste is not regulated by the EPA, due to the 1976 Federal Resource Conservation and Recovery Act. In SDS’s market, the Railroad Commission of Texas regulates oilfield waste. “People don’t understand how regulated we are with respect to waste,” Williams says. “Every barrel of waste that comes into our facility is categorized, recorded, and scanned for radiation. Then I have to submit all of those results, and [the Railroad Commision] keeps them on file [at two offices]. And then those results are matched up with the operator who says that they disposed of that barrel amount.”

Oil producers’ fear of potential environmental issues makes waste disposal the least discussed segment of the oil industry, Williams says. Before sending waste to a disposal site, an oil producer may take a year or more to audit that site’s practices, he says. “Nobody [in the industry] wants to really admit that they produce waste,” he says. “The oil companies are trying to go as green as they can, and they’re very sensitive to it… The last thing anybody wants is to discuss how waste is disposed of because they’re fearful of the liability.”

Williams partially attributes SDS’s success to its diligence in constructing its waste-disposal pits. SDS’s disposal pits use both a 60-mil high-density polyethylene (HDPE) primary liner and a 40-mil HDPE secondary liner. Sandwiched between the liners is a leak-detection system that can also be used to remove any liquids, should there be a breach in the primary liner. The industry standard has been thinner 40-mil HDPE rating for both primary and secondary liner. To this, SDS adds

an additional 200-mil cushion of geocomposites and 12 inches of compressed caliche dust above the primary liner. “We go well beyond the norm for landfill disposal pits in Texas,” he says.

SDS facilities also treat liquid waste more carefully than the competition. “The difference between us and any other pit in Texas is that we don’t put any liquids into our pits,” Williams explains. “That eliminates any risk of leakage to ground water or environmental contamination.”

SDS’s disposal pits were designed by engineering firm Tetra Tech. Texas regulators now use SDS’s dewatering measures and pit practices as the new standard for pit disposal throughout the industry. SDS and Tetra Tech have now entered a formal partnership. “We view ourselves as pioneers in the waste-disposal industry,” Williams says. “[Tetra Tech] has gone a long way toward making us the standard for oilfield-waste disposal in Texas.” eiq

280 offices worldwide | 10,000 employees | Engineering | Consulting | Technical Services www.tetratech.com

Our Services Include: •

Environmental Site Assessments

•

Soil and Ground Water Contaminant Investigations and Risk Assessments

•

Remediation Design and Implementation

•

Hydrology and Water Resources Investigation, Characterization & Monitoring

•

Clean Air Act Compliance, Including Title V Operating Permits

•

Underground/Aboveground Storage Tank (UST/AST) Management

•

Spill Prevention Control and Countermeasure (SPCC) Plans

•

Naturally Occurring Radioactive Materials Services

•

Solid Waste Facility Design and Permitting

•

Regulatory Assistance and Permitting Services

Gary Miller | Area Manager 1910 North Big Spring | Midland, TX 79705 p 432.682.4559 e Gary.Miller@tetratech.com

Tetra_Tech_Energy_International_Quarterly_Ad.indd 1

2/10/2010 3:24:17 PM

last word

Oil Imports to the US

Is the uS too reliant on foreign oil?

The top 10 exporting countries of oil to the US in thousand of barrels per day.

Canada

Venezuela

2001

Mexico

1119

Saudi Arabia

902

1099

The top 10 exporting countries account for

82%

of US crude oil imports.

The US imported over

60%

of its oil in 2007.

Angola

Russia

435

Brazil

305

Iraq

Nigeria

374

769

269 Colombia

286

25,000

30.5 thousand milion barrels

20,000

Known US reserves

US Consumption

12.4 years

15,000

How long the US’s reserves will last at the current R/P rate

Total Imports

10,000

22.5% of total oil prduced in 2008

5,000

was consumed by the US

US Consumption and Imports

7.8% of total oil produced in 2008

(in thousands of barrels per day, by year)

was produced by the US

0 98

99

00

01

02

03

04

05

06

07

08 Source: Energy Information Administration BP, June 2009

82

energy international quarterly july/august 2010

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The only firm in southeast NM providing all facets of project design n n n n n

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84 energy international may/june 2010 Let Pettigrew bequarterly your energy resource caLL 575 393 9827 or visit Pettigrew.us