Since late 2021 oilfield construction has begun returning to busting dirt and pouring concrete, hopefully leaving 2020’s collapse in the dust. But issues with supply chains and hiring are holding back the good times to some degree. Permian companies like Saulsbury Industries and Electrical Maintenance and Construction (EMC) are finding ways to adapt to these new realities.
Odessa-based Saulsbury is reconnecting with previously hibernating clients although the sector’s focus has changed since the downturn, said the company’s new President, Matt Saulsbury. Matt, along with brothers Mark and C. R. (Bubba) and sister Dianne Zugg, belongs to the second generation of the Saulsbury clan to lead the family business launched by their father, Dick Saulsbury. All siblings are involved in the company in various capacities.
Matt Saulsbury observed, “We’re seeing a continuing focus on capital constraint, even with the increased activity we’re seeing over the last year.” That constraint is not affecting the size of projects, but it is changing their design. “They’re just making them very fit-for-purpose, not putting in any extra bells or whistles. Just the bare necessities of what they need. Capital efficiency is the driving factor in all the projects we talk about.”
One demand that has not changed is the need for speed. But on that score the supply side is creating challenges, Saulsbury said. Their engineering, procurement, and construction business, in which the company is responsible for every phase of a project from start to finish, has seen some delay issues in the procurement phase.
“On our EPC side of the business, it’s always been speed-to-market, quick turnaround,” he said. “Once we’re awarded a project, they want these things up and running as fast as they can possibly get them. In the midstream side there’s not always a lot of pre-planning. You don’t have a year/year-and-a-half of visibility on these projects. They’re really a quick turn.”
Those quick turns now take more pre-planning by Saulsbury’s procurement team to assure the supplies are available. Many of the company’s electrical and mechanical-engineered equipment items have a backorder time of 52-70 weeks now. “Pre-Covid, those same items were 24-36 weeks out,” Saulsbury said.” So now midstream clients are having to plan further out.”
Growing the Family
Saulsbury has always prided itself on being a family—literally and figuratively. Matt says their core values of fairness, honesty, and integrity have remained intact as they’ve replenished their workforce. “We’ve grown over the last 12 months back to pre-Covid levels [of staffing], which was an extremely rapid incline.” That quick growth, basically doubling the staff count [hiring 1,000-1,200 people], was taxing, but worthwhile. “It was a focused effort on getting back to where we knew we were in 2019, to re-baseline there and start growth efforts. There were a lot of cutbacks during COVID.”
The company makes a conscious effort to attract and keep employees. “We want to be the employer of choice. To do that we want to maintain a positive working atmosphere, take care of all of our employees. We have a solid family dynamic culture that we fight really hard to keep. The bigger we get the harder it is to keep, but if we fight hard enough we don’t have to lose it,” he said.
There’s plenty of work to keep everyone busy for now. Matt Saulsbury says the company’s 2023 lineup of work is the best they’ve ever had at the beginning of a year.
After starting in 1967 with one small office, Saulsbury has expanded across the United States. As for their current lineup, Matt noted, “We have offices in Odessa, Abilene, a shop in Henderson, Houston, Port Arthur, Tulsa, Oklahoma, and Bismarck, North Dakota. We still work anywhere from coast to coast when the right projects present themselves.” They’re focused on the central United States, including Texas, New Mexico, and Oklahoma, with North Dakota also in the mix.
In those areas, Saulsbury says they have a mix of client types. “We’ve always tried to strike a good balance between private equity-backed midstream companies, owner-operators, and the majors, trying to keep that relatively diversified.” The company’s current business is strongest in the PE-backed midstream firms “just because that’s because that’s where the big push in the oil and gas side is.” They also count major utilities in the mix. And the energy transition has opened new client doors.
Energy Transition in Motion
On changing with the times, Saulsbury noted, “We’ve put a lot of strategic emphasis on positioning the company for longer-term energy transition. While we’re taking full advantage of the current upswing in the oil and gas market, we still continue to build a portfolio on a number of different types of projects, solar being one.” He counts CO2 capture and sequestration (CCS) along with hydrogen, battery storage, liquefied natural gas, renewable natural gas, electrical vehicle (EV) infrastructure, and charging stations.
A large solar project in Arizona, the company’s second, is underway now, and Saulsbury says the addition of green projects is going well. They are focusing on projects that are a good fit, which involves mostly mid-sized facilities.
EMC Endeavors in Their Niche
Electrical Maintenance and Construction is unusual, if not unique, in the service industry. They never have to worry about losing old clients or finding new ones, no matter how the economy seesaws. That’s because they’re owned by the only client they need— Midland-based Endeavor Energy Resources, LP.
It is a luxury they do not take for granted, instead enjoying the fact that this allows them to thoroughly understand and meet the needs of their client. There is no juggling of priorities between jobs, just working full-tilt for the one.
They do pretty much everything that involves electricity, says EMC Manager Jerry Waltrip. “We’re pretty much a full service electrical company,” he said. “Anything from the wall plugs in the offices downtown to big, major distribution facilities.” They also help build power substations and local infrastructure associated with cross-country distribution lines. EMC handles designing and building automation systems, flowback, and artificial lift, as well as saltwater disposal (SWD) construction, maintenance, and repair. They handle materials and warehousing and one-call 811 for locating existing lines, which is required before doing any digging.
Seventy-one employees either perform all that work or oversee third parties who do it, Waltrip explained.
Adjusting to Lead-Time Changes
As it is for most businesses these days, including Saulsbury as mentioned above, the biggest challenges may be in supply chains and staffing. Before COVID, 6-8 weeks would have constituted a long lead time for delivery of equipment or parts, which was very manageable. That’s changed.
“Last week I quoted some items that were out towards 100 weeks,” Waltrip said. “Being able to plan for these projects, making sure we’re sufficiently stocked for the projects that we need, is very challenging for that department.”
And, also as with Saulsbury, labor is an issue for EMC. Waltrip says the company looks for top talent, people who want a career with one company offering high pay and benefits. Because EMC is part of Endeavor, there are expanded opportunities to advance in either company. They also offer extensive training for people at all levels, and they provide an in-house child care facility and a clinic.
Progress Is the Norm
There’s no standing still for the company’s development, said Waltrip. EMC encourages everyone to test ways of upgrading procedures, both for efficiency and safety.
One of the more recent improvements involves the way the company lays pipe onsite. Before the change, crews laid thousands of feet of galvanized rigid pipe, an effort that required dozens of joint welds and 30-40 days of work. It was expensive, time-consuming, and left a lot of potential leak points.
Now they’ve switched to installing cable trays and laying flex pipe in those trays, dropping the build times to 14 days for a typical installation. Reducing the number of joints is a big part of the efficiency, and fewer joints means fewer possible leak points.
Smooth Move
Endeavor’s Director of Energy Services, Kevin Northcutt, noted that EMC recently moved their facility from south FM 1788 to “a massive warehouse just east of Midland on I-20, which gives Jerry and his team easier, quicker access, fewer miles driven, and all those things, to the six core counties that Endeavor is focusing on.” Northcutt also pointed out that the new facility is much larger, a 25-acre lot with 68,000 square feet under the roof instead of the 12 acres and 15,000 foot building on 1788. Waltrip says they made the move over the entire year of 2022, with no service disruptions.
The greater inventory space has helped overcome supply chain issues, by allowing them to backstock more parts. In the old location, “We were busting at the seams. Now we have plenty of space,” he said. They have 18 months of inventory for many items.
The Synergy
The combination of producer and service company helps both, say Northcutt and Waltrip. For EMC, There’s no worry about prioritizing one client over another—there’s only one. There’s no marketing. And projections for the next year involve only keeping abreast of Endeavor’s plans.
In fact, said Northcutt, “For 2023 and beyond, Endeavor has a very aggressive drilling and completions plan.” That plan informs the workload for all of the company’s divisions, including EMC. “It’s just really trying to be right-sized and properly aligned with the changes they make as they make them.”
Endeavor, on its side, is not at the mercy of a third party’s busy schedule, never delayed by waiting for a crew to finish working for another producer before starting an Endeavor job. Northcutt said Endeavor Chairman Autry Stephens’ goal in the acquisition was “to have overall control, planning, and cost efficiency associated with it.”
Northcutt also feels it’s a good fit. “ It’s always so much fun to watch how they are dedicated to working with a standard, delivering their safety and their quality and their efficiency in working together. It’s exciting to see that synergy within a division.”
By Paul Wiseman