After building two successful oilfield service companies for other owners, Roger Nevill decided it was time to create something of his own. The company he and his management team founded got off to a fast start and is riding the wave that is the oil and gas shale boom.
Based in Fairfield, Texas, Green Energy Oilfield Services LLC commenced operations in early January, and serves oil and gas producers in some of the busiest oil and gas fields in Texas. The company runs 74 tractors, 55 vacuum trailers, 400 frac tanks, and a variety of other well-site support equipment.
“We specialize in providing fluid management systems for drilling and production operations,” Nevill says. “While this is a new company, our management team and employees represent many decades of experience in oilfield-based services. We know this business well, and we give our workers the equipment, tools, and training that it takes to deliver the best possible service to our customers.
“One factor that sets our company apart from other oilfield service providers is our commitment to natural gas as a vehicle fuel. Ninety percent of the tractors in our fleet are fueled by natural gas, a fuel generated here in America that lessens our country's dependence on foreign energy sources. We believe our commitment to natural gas-fueled trucks has opened quite a few doors to us.”
Business plan
When Nevill began laying out the business plan for his own company, he drew on more than two decades of experience in the oilfield sector. He grew up around the oilfields in east central Texas, and spent a number of years working as a roughneck on offshore oil rigs. Family issues brought him back onshore to be closer to home.
For the next 12 years, Nevill worked as a manager in oilfield service operations. By 2001, he had his first opportunity to build an oilfield service company from scratch — Bayou Tank Services, which was running 70 tractors and 1,200 frac tanks when it was sold to a larger oilfield service company.
Next, in 2005, Nevill helped start Azurite Services, a company that hauled process water and managed frac tanks. “We were very active in the Haynesville shale play (in East Texas and western Louisiana), and we built the operation up to 115 trucks and 600 frac tanks.”
In 2006 he co-founded Vaquero Energy Services where he was vice-president and director. Nevill also sat on the board of directors as president of GEOS Acquisitions LLC, which focused on well servicing investments and exploration and production industries.
Finally time
Over the years, he had a number of opportunities to start his own oilfield service company. He decided it was finally the right time in 2011. “I wanted to build something of my own for quite awhile, and I saw some opportunities this time that were too good to pass up,” he says.
With oil and gas shale activity continuing to grow in Texas, Nevill went to work rounding up key customers and lining up investment capital. Very involved in the process was Kent Kendall, Nevill's banker at the time and now Green Energy's vice-president of operations and treasurer.
“We started this project in 2011, while the gas shale areas in East Texas were still very busy,” Nevill says. “We decided from the beginning to focus on water hauling and frac tank rentals, because those are the activities we know best. Water hauling is the number one operating cost after a well is drilled. We may expand into frac sand hauling, but we will stay away from hauling hazmat.
“We entered into a first-call agreement with XTO Energy, a wholly-owned subsidiary of Exxon Mobil, and significant producer in the area surrounding Fairfield. We also lined up investment capital with Lone Star Investment Advisors, a Dallas-based private equity firm. Lone Star is the sole investor in Green Energy.”
Funding for Green Energy was in place by December 2011, and the company launched operations in January 2012. “We had to work hard and move fast once we got the funding,” Nevill says. “I brought in colleagues from previous startups to help with this project, and they helped ensure that everything came together.”
In addition to Nevill and Kendall, the management team includes Richard “Keith” Rand II, vice-president of sales and marketing director; J R Nevill, vice-president of safety and risk management, and Marla Collins, vice-president of human resources. In all, the management team represents over a century of experience in oilfield services varying from fluid management, trucking, well fracturing, safety, and general services provided to the oil and gas industry.
Fast start
In short order, the management staff had to pull together a driver team, acquire equipment, and establish a base of operations. The start-up process got a boost when Green Energy acquired a small oilfield service company in the Fairfield area.
Initial operations were focused on the Freestone Trend formation (located on the western shelf of the East Texas Basin in Freestone, Robertson, Limestone, and Leon counties), which is where XTO Energy manages 3,500 gas wells spread over 290,000 acres. The Freestone Trend wells generate more than 50,000 barrels of salt water per day.
The oilfield service company wasted little time in expanding operations. The company is now serving clients in the Woodbine/Eaglebine shale play in Grimes, Madison, and Walker counties (roughly north of Houston along I-45), and the Eagle Ford shale play in South Texas.
“The Woodbine/Eaglebine shale play is just coming on line, and we are supporting a company that is drilling test wells,” Nevill says. “In the Eagle Ford, we're primarily hauling water to well sites where drilling is underway. We also lease frac tanks down there.
“We're not done expanding. Our next move will be into the Permian Basin (in West Texas). We'll go where our clients need service.”
Since January, Green Energy has opened a headquarters location and three equipment staging yards in the Freestone Trend area. The 14,000-sq-ft headquarters facility includes a maintenance shop and an automated exterior tractor and trailer wash.
Woodbine/Eaglebine operations are supported out of the Freestone Trend facilities. Green Energy has opened two yards in the Eagle Ford area.
Driver team
To serve its clients, Green Energy currently employs approximately 130 drivers in a slipseat operation. “We haven't had much trouble finding drivers in the Fairfield area,” Kendall says. “It's a bigger challenge in South Texas as we expand into the Eagle Ford shale play. There is a real shortage of truck drivers down there.”
The company hires only experienced oilfield drivers, and they must be at least 25 years old, according to Kendall. Minimum requirements are two years of oilfield driving, a commercial driver license with tank endorsement, and a driving record with no violations for the past three years. The hiring process includes a driving test and a criminal history background check.
“Even though we don't haul hazmat, we prefer drivers with a hazmat endorsement,” Kendall says.
New hires complete a one-day orientation that covers hydrogen sulfide issues, Mine Safety and SafeLand requirements, first-aid, and Department of Transportation regulations. They also take a 12-hour defensive driving program.
That is followed with at least two days in the field with a driver trainer. “We want to get a good sense of the newly hired driver's ability to do the job,” Kendall says. “We want to immediately address any concerns.”
Natural gas commitment
Most of the drivers are assigned to tractors running on natural gas. Of the 74 tractors in the fleet, 60 run on natural gas. From the very start of the planning process, Nevill was looking at a natural gas-fueled truck fleet.
“It just made sense,” he says. “The more I studied it, the more I liked it. I knew natural gas-fueled trucks would work in the oilfield and it would offer some great benefits. On the environmental side, engine emissions are 95% lower with natural gas. Engine oil stays cleaner with this fuel.
“Natural gas prices are at least half that of diesel, which is a major operating cost benefit. Natural gas prices have increased to the $4 to $4.50 per thousand cubic foot range, but we could tolerate a price increase of up to $8 per thousand cubic foot and still remain competitive with diesel. Natural gas is a competitive fuel even though the fuel tax is higher than diesel on a Btu equivalent basis. We don't even need a fuel surcharge with natural gas.
“The price of the natural gas fueled tractors was probably the biggest negative for me. These trucks are expensive. The engine and fuel system add about $60,000 to the cost of each truck. The natural gas fueled truck we chose cost about $240,000. A comparable diesel fueled version would cost around $148,000.”
Nevill adds that even with the higher price, he expects to see a 16-month payback on the natural gas fueled tractors. “We're going to get that payback just through the lower fuel cost,” he says. “We believe we can show the rest of the trucking industry that natural gas fueled trucks are cost effective. If these trucks will work for us in the oilfield, they'll work anywhere. After all, the oilfield is one of the most demanding work environments for a truck.”
Green Energy chose liquefied natural gas (LNG) as best for the oilfield application. The refrigerated fuel is more portable and can be carried in a smaller fuel tank. The fuel is supplied by Clean Energy, which has committed to build a publically accessible LNG fueling station in Fairfield during the first half of 2013. Clean Energy also is building an LNG fueling station at Three Rivers, just off I-37 in the Eagle Ford shale play.
Until the commercial facilities are open, Clean Energy has supplied portable LNG fueling systems at Green Energy's facilities in Fairfield and Gonzalez, Texas. The portable units are refilled by Clean Energy every day.
Texas suppliers
The trucks chosen by Green Energy are Peterbilt Model 388 daycabs purchased through Rush Enterprises. “We were very excited to partner with Texas-based companies in building our LNG-fueled vehicles,” Nevill says.
Peterbilt builds the Model 388 in Denton, north of Dallas, and Rush Enterprises is based in San Antonio. Nevill and his management team worked closely with the Rush personnel to specify the trucks properly for maximum performance in the oilfield.
“They (Rush Enterprises personnel) provide great service, and they jumped on this project immediately,” Nevill says. “We were told that this was the first large LNG fleet order placed directly through Rush Enterprises, and they wanted to make sure our operation is successful and the trucks work well for us.
“We chose Peterbilt because we believe it is a leader in alternate fuel technology. These vehicles offer us the quality and reliability we need for rugged oilfield operation, while enabling us to honor our commitment to operate natural gas-fueled trucks in the field.
Following a pilot review at the Peterbilt plant in February, Green Energy put the first of the LNG-fueled tractors into service in March. All 60 of the vehicles in that first order were at work in the oilfield by May. Of those trucks, 50 were specified for use as tractors with vacuum trailers and 10 were set up for use as winch trucks to handle the frac tanks.
Green Energy's initial order of LNG-fueled trucks were specified with 475-horsepower Westport GX 15-liter engines, Eaton Fuller 13-speed manual transmission, 40,000-lb-capacity Dana Spicer tandem-drive axles, and a Peterbilt Airtrac suspension. Trucks also were spec'd with Bendix air disc brakes, cruise control, and roll stability. Product handling equipment includes a Fruitland vacuum pump.
The driver's job is made easier with GeoForce GPS units that include real-time GPS mapping and tracking. “This system pings the truck every 60 seconds, so both the driver and dispatcher know the truck's location,” Kendall says. “That's important in the oilfield.”
The company also runs 14 diesel-fueled tractors. A mix of daycab and sleeper units, these trucks are used in applications where it is not cost effective to run the LNG-fueled equipment.
Vacuum trailers and frac tanks are supplied by Dragon Products, which is based in La Porte, Texas. The non-code 130-barrel vacuum trailers are constructed of carbon steel and have an epoxy lining. The 500-barrel frac tanks also are fabricated from carbon steel. In addition to the frac tanks, Green Energy's rental equipment fleet includes mud tanks, mud pumps, acid tanks designed for 17% hydrochloric acid, and gas busters.
Busy fleet
The equipment is getting plenty of use, and the LNG-fueled tractors are proving that they can handle the challenges of the oilfield, according to Nevill. “With the showdown over the past year in gas shale operations, we've had to scramble a bit, but we are busy,” he says.
Vacuum transport drivers typically haul six to eight loads of process water per shift. Winch truck operators stay busy repositioning the rental equipment to meet client needs as drilling rigs are moved from one location to another.
Drivers have responded well to the LNG-fueled tractors, and the engines are performing well. “We've had very few engine problems, and we're getting about 4.5 miles per gallon with the LNG,” Nevill says. “The engines deliver plenty of power and torque. We've put more than 20,000 miles on each of the trucks so far, and we expect annual mileage to average 100,000 miles per truck.”
He adds that Green Energy is on track to meet its goal of more than $24 million for 2012. “We're here for the long haul,” Nevill says. “We've built a solid team here at Green Energy, and we are working hard to give our oilfield clients the very best service.” ♦
