When energy companies came on strong with Marcellus Shale natural gas rigs, Bishop’s Full-Time Portables jumped at the chance to expand its support services
Thanks to a local economic boom prompted by natural gas extraction on the Marcellus Shale, demand for Steve Bishop’s portable sanitation services in Ulster, Pa., has mushroomed. And while he’s not complaining about the dramatic spike in business volume, the unexpected rapid growth has spawned a host of challenges for the owner of Bishop’s Full-Time Portables.
From expensive equipment purchases to keep pace with demand to competing for qualified workers with out-of-town service companies, Bishop is challenged to balance revenues and expenses … while remaining profitable for the long-term. And though there are no guarantees energy prices will sustain expansion in gas production, Bishop has been told to expect a decade of rising orders.
CRACK THE WALLET
So how does a small-business owner handle this kind of fast, unexpected growth? For Bishop, the answer is four words long: business line of credit. He says he was fortunate because he doesn’t believe in carrying a lot of debt, so he had sufficient equity built up in his business to borrow money for the influx of unplanned capital expenditures.
“I prefer to have as little debt as possible,” he says. “I never planned on making those expenditures, but I was fortunate enough to get the call, and my low debt allowed me to obtain loans.
“It could’ve just as well been a restroom company other than me. I was in the right place at the right time and our nearest competitor is about 20 miles away,” he says. “I was able to make some (equipment purchases) out of cash flow and financed the rest.”
Bishop is one of many area businessmen who’s benefitting from – as well as struggling to keep pace with – the economic whirlwind of the gas boom. For starters, consider the growth of his equipment inventory.
“We had about 150 restrooms and no restroom trailers when all this started in 2008, and just two small service trucks,” says Bishop, who also owns Bishop’s True Value Plus Mini Mart. “Now we have about 450 restrooms, 20 restroom trailers and 10 service trucks.
“At times, it’s hard to keep up,” he continues. “I look out in the yard and see a load (of restrooms) come in and six days later, we might have just six left … you think you’re caught up, and then something happens and you’re right back behind again. But that’s business. It’s all a great opportunity.”
Much of the company’s restroom inventory supports crews at construction sites for drilling pads and pipelines. The rest stands at construction sites for things such as motels, mini-marts, restaurants and bars associated with the influx of gas rig workers, Bishop says.
RIGS POP UP ALL OVER
Local residents knew for years that they were sitting on top of the gas reserves. Perfection of horizontal drilling techniques now makes it feasible to tap those supplies, and landowners are jumping on leasing rights offers from the energy companies. This created a great opportunity for Bishop to build his new business. Good timing made early marketing efforts pay off big.
Bishop started out with a modest marketing campaign that included advertising in a local newspaper and putting more visible lettering on the trucks. Between that and word-of-mouth referrals, he says sales revenue almost doubled during the first year of operation.
But that early growth was nothing compared to the deluge that started in June 2008, when the first drilling rig appeared in the area. Then suddenly there were 20 rigs –and that was from just one drilling company.
“Now there’s more companies drilling in the area,” Bishop says. “Nobody really had any idea about the size and impact this would have on our area. When it first started, some of our county commissioners went to a town in Texas to gauge the impact. They came back and said it’s going to be a lot different from what we’ve known, and told us to get prepared … especially in terms of an influx of people and traffic from trucks carrying water in and out for fraccing. Some guys who had two trucks now might have 20 or 30 to haul freshwater in and frac water away to treatment centers.”
Increasing demand requires Bishop to upgrade his moneymaking equipment often. Today, his inventory includes 450 restrooms, mostly made by Satellite Industries Inc.; 20 10-foot restroom trailers manufactured by Rich Specialty Trailers (each trailer features heat, air conditioning, two toilets, two sinks with automatic shut-off valves and two waterless urinals); and 500 250-gallon plastic holding tanks made by PolyPortables Inc.
To pump sewage from holding tanks at temporary housing facilities for drilling rig employees, Bishop’s relies on a 2000 International 8100 with a 2,500-gallon steel tank, a 2006 International 4400 with a 2,500-gallon steel tank and a 2010 Peterbilt 340 with a 3,600-gallon steel tank, all built by Pik Rite Inc.
To service restrooms, the company owns the following trucks, built by Crescent Tank Manufacturing with steel tanks: a 2002 Chevrolet 3500 with a 300-gallon waste/100-gallon freshwater tank; a 2006 GMC 4500 with a 650-gallon waste/300-gallon freshwater tank; a 2006 Chevrolet 6500 with a 950-gallon waste/500-gallon freshwater tank; a 2008 Isuzu NRR with an 850-gallon waste/350-gallon freshwater tank; a 2009 GMC 5500 with an 850-gallon waste/350-gallon freshwater tank; and a 2011 Ford F-550 with an 850-gallon waste/350-gallon freshwater tank. The company also owns another 2011 F-550, equipped with a 650-gallon waste/350-gallon freshwater steel tank, built by Satellite Industries.
“I like the flat tanks from Crescent because you can actually put six restrooms on top by using a lift gate,” Bishop says. “That comes in handy if we get a call from a site where a company is finished fraccing and they ask us to leave two restrooms there, but take away, say, four others and deliver them eight or nine miles down the road to the next site.
“Without the flat tanks, we’d have to make two trips, or drag a trailer around, which isn’t very practical because there’s not a lot of space at the drilling sites because of all the trucks, people and equipment,” he adds. “It’s a huge advantage for my business. I can send those trucks out and carry 12 holding tanks, too.”
The business spurt also forced Bishop to erect a 60- by 80-foot pole building for a garage and shop facility. He says keeping trucks indoors reduces wear and tear during winter because they won’t start out frozen every morning. “We’re also working on getting a full-time mechanic on board. Right now, we lean on local repair shops, but sometimes you can’t get work done when you need it. Having someone on board would help minimize downtime.”
Bishop’s currently works with three drilling companies and services about 24 drilling rig sites twice a week. All three contacted Bishop through a word-of-mouth referral from a local excavator who built drilling pads for the companies.
Interestingly, the drilling companies are responsible for cleaning the interiors, while Bishop’s crews service the restrooms and holding tanks. The length of time the restrooms, trailers and holding tanks stay at each site varies, depending on how many wells crews drill at each pad.
“We have one rig with six wells,” Bishop notes. “We think that’ll be the norm … typically, they drill about two wells per pad, but that depends on the company and how long the leases are. We set up anywhere from 15 to 24 holding tanks per rig. The rigs run 24/7 and crews there use portable temporary housing.”
The holding tanks are hooked up to the mobile trailer homes, which the drilling companies rent from other support service companies.
The dramatic increase in business is prompting Bishop to consider embracing new technology, such as routing software that includes Global Positioning System capability and software that monitors equipment maintenance schedules.
“We need to achieve more density on service routes, both for the gas fields and the monthly rentals,” Bishop says. “There are times when I find we have trucks following each other around, plus it’s hard to get new drivers familiar with all the locations. It used to be simple because I knew where drivers were if we needed something addressed. Routing software will allow us to service sites quicker through increased efficiency.”
It looks like a busy decade ahead for Bishop, who estimates the bulk of the drilling rig service work will stick around for the next 10 years or so. “A lot of it depends on how much land each company leases, and whether the price of natural gas stays high enough to warrant continued drilling,” he explains. “Business may double or triple next year. Maybe there’s potential for that, maybe not. It’s hard to know.”
Does Bishop ever worry about over-extending his business with investments in equipment that might suddenly become idle? “Yes, I worry about buying all this equipment,” he says. “But it’s all about taking risks. Nothing is guaranteed, but when the opportunity is here, you take advantage of it while you can.
“We’re fortunate to be busy,” he adds. “In a lot of places around the country, it’s not. Even 100 miles away from here, you don’t see all the hustle and bustle you see around here.”