Even in the midst of one of the deepest recessions in recent US history, production work continues in the oil and gas fields. Drilling rigs and other machinery are still running, and much of that equipment is fueled by diesel.
Petroleum marketers and haulers like Western Petroleum in Vernal, Utah, make sure the oilfield production companies have the fuel and lubricants they need to ensure uninterrupted operations. Since 2000, the oilfield activity brought steady growth for Western Petroleum and provided around-the-clock work for the company's transportation operation.
“When our oilfield customers need fuel, they need it immediately,” says Perry P Taylor, Western Petroleum president. “They don't want to hear excuses about delayed deliveries. If the drilling rigs run out of fuel, they have to shut down, and that can be very expensive.
“The oilfield is just one side of our business, though. We serve a diverse range of industrial and commercial accounts spread across five western states. Industrial customers are our specialty, and we believe we are in a good area to grow our business. Despite the economic challenges, we are confident that the industrial base in this region is solid.”
Diverse market
In addition to industrial customers, Western Petroleum operates three of its own convenience stores and six card lock locations. Customers are spread across a region that stretches east to Denver, Colorado; south and west to Las Vegas, Nevada; and north to Billings, Montana.
The petroleum marketer has partnered with Wright Express' fuel card program for the card-lock operation. The marketer handles branded product from Sinclair, Chevron, Exxon, and Conoco-Phillips. This includes Chevron and Exxon lubricants. A full range of refined fuels are distributed, including biodiesel, which is used in the drilling process by some of the production companies.
Western Petroleum serves its customers with a fleet that includes 43 tractor/semi-trailer and truck-and-trailer transports, 16 tankwagons, 20 lubricant trucks, and 10 propane bobtails. The petroleum marketer also uses for-hire tank truck fleets.
“We contract out 20 to 30 loads a day during our busiest times,” Taylor says. “We would need an additional 30 to 40 transports of our own to cover that volume, but those rigs would be parked when business is down. For-hire carriers are a more cost-effective option.”
Fleet locations
The Western Petroleum fleet operates out of various locations, including six bulk plants in Steamboat Springs, Craig, and Grand Junction, Colorado; Roosevelt and Vernal, Utah; Stanley, North Dakota; and Rock Springs, Wyoming. Bulk plant capacity ranges from 200,000 to 250,000 gallons.
“These bulk plants are critical to our operation, because there are relatively few petroleum terminals in this vast area where we operate,” Taylor says. “We need the bulk plants to handle areas that are too far from a petroleum terminal. That's the only way we can meet customer needs. Many of our bulk plants are so busy that they turn their inventory daily.
“We have also partnered with BTI (a transload facility operator) and Musket Corp to manage rail shipments of diesel from refineries along the Gulf Coast. The fuel is distributed primarily in the Rock Springs market.”
Becoming one of the region's largest petroleum marketers was a gradual process for Western Petroleum. The company that exists today was built over the course of approximately four decades. The foundation of the company goes back to the 1970s when Darryl B Taylor Transportation expanded from produce hauling into crude oil. The carrier had completely transitioned into tank truck operations by the 1980s.
“My father (Darryl) eventually built a tank truck carrier that was primarily focused on petroleum products, and our customers included a number of fuel jobbers,” Taylor says. “My brother (Sam) and I grew up in the tank truck business.”
Then in 2000, Darryl sold the trucking company to Iowa Tank Lines. The Taylor family wasn't out of the petroleum hauling business for long, though. They purchased United Oil, one of the jobbers that had been served by Darryl B Taylor Transportation.
“We wanted to get into petroleum marketing because we saw growth potential,” Taylor says. “We started with one bobtail serving customers in the Roosevelt area. We achieved slow, steady growth over the next couple of years.”
By 2002, the company had grown enough that the Taylors were able to buy Western Petroleum in Vernal. “We took the Western Petroleum name for the entire company, because it was well established,” Taylor says.
The company continued to expand through acquisition and internal growth. Western Petroleum made a significant move into Wyoming with the 2003 purchase of the Fleishli Oil terminal in Rock Springs, an operation that is now the petroleum marketer's highest volume location. That same year brought the acquisition of Basin Petroleum, an Exxon/Mobil lubricants distributor in Vernal.
Chevron Corp assigned Western Petroleum its lubricants market for the western slope of Colorado in 2005. A year later, petroleum marketer expanded fuel distribution operations in that region with the purchase of Weston Oil Company, a marketer with locations in Craig and Steamboat Springs. Acquisitions continued into 2007 with the purchase of LCL Oil, a Phillips jobber and propane distributor in Roosevelt.
Such a far-flung operation demands good management oversight. “This is such a competitive business today, that we must keep a close watch over all facets of our operation,” Taylor says. “On the marketer side, we check product prices at least hourly using in-house-developed software. We also pay attention to accounts receivables and credit underwriting. Accounts receivables are killing many marketers today, and it is important to focus on faster collections.”
Efficient driver and fleet management also are critical. Western Petroleum uses the capabilities of DM2 Software Inc to schedule customer shipments and maximize fleet productivity. The DM2 product was designed for petroleum marketers.
Due to trip distances and some challenging delivery requirements in the oil and gas fields, the petroleum marketer is limited to a single driver shift at most locations. “The distances and travel times make it very difficult to achieve more than a single haul per day, per transport,” says Ronnie Bastian, Western Petroleum vice-president of operations. “Many of our deliveries are made off-road.”
Even with just one driver per truck, the company faced staffing shortages in recent years. In spite of the challenge, the petroleum marketer was able to build a solid core group of drivers.
“In the past, we have hired drivers with relatively limited truck driving experience, as long as they met our basic requirements,” Bastian says. “We will hire people without tank experience. We also bring in 18-year-olds to work in our bulk plants and lubricant warehouses. We put them through a progressive training program in which they move from delivering lubricants to driving our petroleum transports.”
Minimum age is 21, and drivers must have a commercial driver license with endorsements for hazardous materials and doubles and triples trailers. Western Petroleum also requires a clean driving record.
Premium trucks
Drivers on the petroleum transport side are assigned to Kenworth and Peterbilt trucks and tractors, most of which are purchased through the c-buying group. “The c-buying program, with its rebates for new truck purchases, has been a real plus for us,” Taylor says.
The newest trucks in the fleet are Kenworth W900L long-nose conventionals with 36-inch sleepers. “We like the 36-inch sleepers, because they don't take up much cab space,” Bastian says. “That sleeper fits well on both tractors and trucks, and our drivers only use the sleepers occasionally.”
Until recently, trucks were specified with 550-horsepower Caterpillar engines. “We were not happy with the performance of those engines in our 2007 model-year trucks,” Bastian says. “With Cat pulling out of the market, we're switching to the 600-hp Cummins ISX engine.”
Heavy-duty trucks and tractors also are specified with an Eaton 18-speed transmission and Spicer Super 40 drive tandem with full locking differential. “We need the full locking differential for off-road operation and the steep grades that are typical in the region where we operate,” Bastian says.
All of the trucks and tractors have Qualcomm satellite tracking and communication. Trucks and tractors configured as pumping units carry Blackmer pumps with control modules from Safety Pumping Systems. Running gear includes aluminum wheels and Michelin tires. Western Petroleum runs only new tires, which are purchased through AmeriQuest Transportation Services.
Trade cycles
Heavy-duty trucks and tractors usually are on a four-year trade cycle. High mileage is the primary factor driving the replacement schedule.
However, trucks in tankwagon and propane bobtail service are run much longer. “We do that because tank changeouts, especially for propane bobtails, can be very expensive,” Bastian says. “Changeout also are time-consuming, sometimes taking six months. We also don't have a set trade cycle for our tank trailers.”
Tractors pull 9,000- to 9,200-gallon petroleum semi-trailers. Western Petroleum also runs Rocky Mountain doubles combinations, which include a lead semi-trailer and a 5,000-gallon pup. Truck-and-trailer combinations consist of a 4,500- to 4,700-gallon truck tank and 5,000- to 8,000-gallon pull trailer. The Rocky Mountain doubles units are specified to handle gross combination weights up to 129,000 pounds.
Semi-trailers have three compartments, while the pups and pull trailers are single-compartment. “Most of our petroleum transport equipment is configured for hauling diesel and for lightweight,” Bastian says.
Most of the tank trailers in the fleet were built by Beall Corp and were purchased used. Western Petroleum has just begun buying new DOT406 trailers for its fleet.
The varied full hauling fleet gives Western Petroleum the flexibility needed to meet a wide range of transport and delivery requirements in the region it serves. That flexibility has helped ensure steady success for the petroleum hauler. ♦
