It is not an easy time to be in the oil and gas industry; in fact, it stands to reason that any company serving this industry may be hard at work facing down challenges.
Perhaps contrary to what might be expected, many of today’s leading oil and gas companies are finding that an expansion of their services is necessary to build new customer relationships and remain competitive. Based in Edmonton, Alberta, with offices in Calgary, Whitehorse and Fort McMurray, Environmental Refuelling Systems (ERS) is one such company. An innovative, creative, customer-driven company, ERS is celebrating its tenth anniversary this year. Business in Focus spoke with Sales and Marketing Manager, Cheryl Grue, to learn more.
Environmental Refuelling Systems offers complete fuel management. The company has accounts with all of the major refineries for fuel procurement, and the backbone of ERS’s business is large, remote projects.
In the ERS business model, fuel is picked up at refineries throughout Western Canada by trucks, trailers and rail, then transported to customer storage or project sites. This fuel is then either sold through ERS’s strategic cardlock networks or delivered by onsite fuel trucks for usage.
The company was formed in 2005 by Maury Van Vliet and his sons Scott and Todd. Maury, while operating his aviation company, was asked by one of the large oil and gas players in the Oilsands to provide storage and recording of fuel purchases to their site. Today, this family run company from Alberta is focused on the oil and gas markets throughout Western Canada, with increasing attention given to meeting the fuelling needs of the construction, pipeline, and wheel to wheel sectors.
“It started with the need for a project based cardlock operated fuel storage and dispensing system, and then that same company asked us to also fill the tanks with fuel,” explains Cheryl. “We used a third-party transport company to deal with the fuel logistics, but that was inefficient and unreliable. So we started our own transportation company.” It all started with the tank – but the recording of transactions, the security of supply and the logistics to transport the fuel on a timely basis became key elements that ERS addressed successfully, with its own fleet of trucks and on-site distribution capabilities.
ERS’s fuel tanks and patented cardlock systems are core components of their business, and the team has both cardlock and storage tanks that are used on site. The ERS cardlock systems can accept their own proprietary cards, MasterCard, or Visa. ERS manages the cards and accounts to track all the fuel that is consumed.
“We track the exact volumes,” says Cheryl. “With on-site distribution, we have the technology on our trucks and tanks to track every single litre of fuel and which piece of equipment that it went into. It’s a really in-depth reporting system.”
Traceability in this industry is crucial, and, as the ERS team tracks fuel use all the way from the refinery through to each and every piece of equipment or vehicle, they can give the customer a tailored report outlining when it was purchased and delivered and exactly how much fuel was used and by whom. Customers can use this reporting to forecast and budget for their own projects. The company has been developing the system for several years, and the recording and logistics tracking is a feature customers have come to rely on for accurate and timely budget control. Customers want to know exactly what they have spent in a specific period of time so that cost overruns do not occur. Theft can be a very serious issue as well, and this tracking to the litre is a key component in reducing or eliminating it.
This information, of course, is incredibly valuable to customer. There are some federal rebates available for specific fuel uses, for example, and because ERS can track where the fuel goes, it can also give customers a report which can be used to apply for tax credits.
As regional economies change, such as what is occurring currently due to the price of oil, ERS is looking at other industries with which to get involved in order to stay busy year-round. “We are finding new areas and new ways to get into industries that we have not been in before,” says Cheryl.
Pipelines, LNG plants, shale gas development, and wheel to wheel are some of these new areas and ERS is working closely with companies that are bidding on these projects. Of course, there are new challenges to working in this area. For a pipeline, the project covers a huge area, and the worksite is always moving; fuel stations and tanks must move with the project.
Another new area for the company lies in the newly developed network of strategic fuel depots and cardlock systems throughout Alberta and BC. ERS is providing public access fuel systems for people working in areas like Farrell Creek, Fort St John region, Fox Creek, and the Grande Prairie region. ERS has worked together with local companies and project owners who want to have fuel systems on their properties.
To increase their Complete Fuel Management offering, the ERS team has expanded their maintenance offering, with trained tank technicians able to perform maintenance and repairs on customers’ storage and distribution systems. ERS has also found success in offering lubricants and a mobile mechanical service to organizations that see the benefit of contracting out preventive servicing needs or emergency repair work. Heavy duty repair service is also available at the ERS shop in Edmonton, and in Spring of 2015 the company will have their B620 designation to provide fuel tanker certification. “As well, we are also weights and measures certified by the Government of Canada,” Cheryl explains. “Not many others are, and we have six tank technicians who have been certified. They have been trained to calibrate fuel trucks and metering systems to ensure accuracy.”
ERS’s HR department adapts to the diverse needs of projects by using workers from across Canada, particularly the East coast, to meet the needs of seasonal projects or more permanent activities. As their involvement in the BC market increases, ERS will be focussed on finding local workers to meet the growing needs of the company.
Security of supply is one of the things that separates ERS from the competition. Fuel shortages happen for various reasons – and more often than most people realize. Others may have agreements with a single refinery, but ERS has multiple accounts throughout Western Canada and the U.S.A. As such, if there is a shutdown or an accident, ERS can easily obtain fuel from a different refinery.
ERS has also built security of supply by owning much of the inventory in their tanks. When a cardlock tank is filled, that fuel is owned by ERS until it is pumped out and dispensed. The company has depots throughout BC and the Fort McMurray area so fuel can be shuffled, if necessary, to mitigate shortages or logistical issues such as highway conditions. “By having fuel systems with web based inventory readers placed throughout our project areas, we can dispatch our transport teams to move fuel throughout the network to eliminate shortages even though our supply lines from the refiners are temporarily closed,” says Cheryl.
Certainly, there are many challenges in this industry, and manpower is one as people tend to move around due to the different opportunities that are available. Another issue is that, although fuel is one of the largest investments in a customer’s project, it has very low margins. The customer is always looking for the best possible price and educating the customer concerning the benefits of efficiency, as opposed to price, is important.
“Often, you can find cost savings by creating efficiencies on a project. So, by bringing us in and letting us take a look at how your project runs, where your equipment is located, etc., ERS finds a way to provide the fuel so that you don’t necessarily have to decrease the price, but you will save money because the fuel provision is more efficient than the original setup. With ten years of experience, our operations staff are very knowledgeable with the fuel aspect of things.”
Cheryl believes that the current industry challenges could last through 2015. It has affected all the service companies and project owners to varying degrees, and many of ERS’s customers have asked for rate reductions and increased efficiencies to help support their bottom line during these current market conditions. Service companies, like ERS, must squeeze margins and find cost savings. This has had an upside as it encourages working closely with customers to find better ways of achieving goals.
When the oil sands were first being developed, times were different and the main goal was to have projects up and running as soon as possible to take advantage of the market needs; expenses were often high to meet these immediate demands. The downturn is now giving ERS the chance to examine the industry with a little more scrutiny and determine where changes need to be made. Now efficiencies and cost reductions top the priority list for customers; in the long run, it will make client companies stronger since, once the market does improve, ERS can work together with companies to help carry out a project with lower costs.
“I always try to find an upside in the whole situation. It is going to be tough because lots of owners are trying to use this time to lock in at lower prices. This makes it difficult for service companies like us. We are continuously looking at ways to provide the same services at lower prices. The market will always improve but during these economic times we work very hard with our customers to ensure both the client and vendor come through profitable and healthy.”
Cheryl adds that many clients are willing to work with the company to look at short term solutions. ERS will review its contracts and attempt to find immediate savings; in three to six months, the team will review again and make decisions based on where the market is then. The company is doing what it takes to weather the economic storm with extra services that add benefits for valued customers.
“It’s a real give and take process which is really important now in the industry. It hasn’t always been that way and isn’t the case with all customers, but I think, for the most part, it’s what you have to see between the operators and the service companies.”