MBI Energy Services experiences full-throttle fleet and driver growth to keep pace with demand from busy oil field customers.


North Dakota is experiencing its equivalent of the 1848 California gold rush, with eager prospectors flocking to the state hoping to capitalize on the rich shale oil play and booming economy. MBI Energy Services had one key advantage over others arriving on the scene in recent years – it was an established area business long before the oil boom hit.

MBI Energy Services (formerly Missouri Basin Well Service), based in Belfield, N.D., has had the good fortune of being in the right place at the right time. Quick to respond when the North Dakota oil and gas boom hit, the company – with current revenue of $600 million annually – is now growing at near-breakneck speed. Offering fluid management, wireline, workover and trucking services to oil and gas companies serving North Dakota’s Williston Basin, the 33-year-old company – owned by CEO Jim Arthaud and his brother, Jody – has flourished in recent years, adding employees and trucks faster, at times, than they can source them.

The growth of the oil and gas industry and the companies that support them in the region is almost incomprehensible.

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“In the last five years we’ve grown our company five times over,” says Jim Arthaud. “We went from 200 employees to 1,100 employees, and we went from 100 trucks to 500, with another 500 subcontracted. In the next five years we plan on doubling that again.”

And with about 200 drilling rigs running in the region now, and another 200 to 300 expected to be added in the next five years, MBI Energy Services continues to ramp up and innovate to meet the growing needs of its customers. But with the velocity of growth, there are bound to be bumps in the road.

 

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PEOPLE PROBLEM

Growing pains on a giant scale can be significant, but the company has been quick to figure out new ways to help meet oil and gas companies’ pressing demands. Among its many challenges, hiring qualified workers is the company’s biggest struggle. Consider that North Dakota has the lowest unemployment in the United States – just over 3 percent – and you can see just how the Bakken and Three Forks oil booms have contributed to a labor deficit that affects nearly every industry and every profession. And so Arthaud’s top priority became finding people to fill driver positions.

Arthaud said the company hired 400 drivers in 2011 and expects to hire another 400 this year. The state’s relatively low population is a hindrance to reaching those goals, he says.

“The No. 1 challenge is it’s very rural,” says Arthaud. “Everyone who wants a job has a job.” Williston has grown 15 percent in the past decade yet still has fewer than 15,000 residents. So the company breaks out of its geographic chokehold by bringing labor in.

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“We’re creative,” Arthaud explains. “We go to job fairs, and we have an employee from every state in the United States working for us, including Hawaii.”

The labor challenge keeps the human resources staff busy.

“It’s a two-prong problem,” Arthaud says. “You have to find the people and then with the population growth you have to provide housing. We have probably 400 people in company housing. It’s very costly and a very hard task to do.”

Living quarters are dormitory-style housing for multiple workers and is a necessity attributable to the housing shortage created by the oil boom. MBI provides housing free to employees for the first 90 days, and then begins charging rent, which often convinces workers to seek permanent residence.

To ease the culture and climate shock for those who are hired and move to North Dakota, many of the company’s recruitment efforts are focused in other Midwestern states, such as Minnesota, Michigan, Wisconsin, Idaho, Montana and Colorado.

 

RETENTION TENSION

Finding employees is one thing, but once they join the company ranks, MBI wants to keep them on board for the long haul. For one, it’s expensive to hire and train employees. Arthaud says as much as $20,000 can be invested in a driver before they even hit a route on their own. This includes two weeks in training and another 30 days spent riding along with another driver.

“It’s tough,” Arthaud says of his drivers’ jobs. “You’re leaving family behind, you get homesick, so you try to transition people to permanent housing.”

Some drivers are tapped to receive more training to become hazmat-certified crude oil haulers, a designation with more stringent regulatory requirements. This certification involves an FBI background check and safety training.

And with annual turnover tracking in the 43 percent range, the company has every incentive to keep people or see dollars walk out the door. Even so, Arthaud says 43 percent isn’t so bad for the industry. “We looked at some studies where turnover was 100 percent.”

Having the right carrots in place can help to keep employees happy. “We have the best benefits package you can have,” says Arthaud, citing health, dental and vision insurance. And, the wage isn’t too shabby either. “A good hardworking truck driver can make in excess of $100,000 a year. And once you get them to North Dakota, it’s a great place to live.” Good educational systems, low crime and governmental budget surpluses round out the reasons why Arthaud says North Dakota is a desirable place to live, work and raise a family.

Most people who move for these trucking jobs were unemployed in their own states. With its 1,100-person strong payroll MBI has become the largest private employer in western North Dakota.

 

SAND MAN

So why the lightning-fast growth associated with these drilling operations? One reason is advances made in fracking technology. The freshwater, wastewater transport and disposal and sand needed to support these efforts have driven much of the demand for MBI’s services.

To that end, the company is hauling, on average, 100,000 barrels of fresh and frac water daily.

“Once it’s extracted you put it into disposal wells,” Arthaud says. “There are commercial disposal sites, but we have our own – 30 of them. It’s a service you have to provide to have a full package for your customers.”

The company’s current service area sprawls across western North Dakota, eastern Montana and northwestern South Dakota. MBI has satellite operations in Ross, Watford City, Williston, Dickinson, Lignite, Westhope and Minot, N.D.

The company now runs 100 sand transport tractors and trailers specifically for sand hauling. For the transport of liquids, the company’s fleet includes 400 trucks and trailers. They are a mix of Freightliner, Kenworth and Peterbilt models. About a quarter are certified and used for the transport of petroleum crude oil. Trailers are from Heil Trailer International, Polar Tank Trailer LLC and Dragon Products, among others.

The company also has 15 wireline units and 15 workover rigs. MBI assembles its own trucks with some assistance from several third-party vendors.

“About half our equipment is just a fifth-wheel tractor hooked up to a trailer with either a blower or a pump attached to the truck. Another 40 percent is what we call double-bottom trucks. These would be long-frame tractors that a body tank is mounted on and these require some work from us, the vendor or some third party,” Arthaud explains.

Procuring the right equipment can be problematic, too. “Turnaround times are long. In the current business climate it can be six months before we get this type of equipment out and working.”

Yet, these hurdles come with the territory given the demand and thinly stretched resources. In 2012, North Dakota is slated to surpass California and Alaska to become the No. 2 oil producer in the United States, beat out only by Texas, and contractors will be required to keep up alongside the oil companies.

SAFETY FIRST

For behemoth oil producers such as Conoco
Phillips, Marathon, Statoil and Hess, safety is the
utmost priority. Thus, it is of the highest importance to MBI as well and the company works in conjunction with its customers to make sure every driver is highly trained and capable of adhering to regulations and restrictions.

When working with these companies, says Arthaud: “You have to have a very robust safety program, and you have to be very serious about it. Just about 10 percent of our workforce is safety personnel.”

Arthaud himself is heavily tied to operations and is deeply committed to safety; he keeps his phone on 24 hours a day and gets reports every 12 hours on any issues that might arise with equipment or people. “It’s safety all the time. If there’s an incident, I know it. You have to live and breathe this if you want to do it – you have to be available.

“We have safety meetings for everyone once a month and tailgate meetings every day before drivers go out,” he adds.

In addition to U.S. Department of Transportation and Occupational Health and Safety Administration training, oil companies send people in to train their way on their policies and practices. “All of the companies are on the same page, but there are some specific things with each company,” says Arthaud. Drivers aren’t allowed on companies’ sites until they’ve received their training.

Two weeks of classroom training and 30 days with a designated trainer see pass rates around 90 percent. Training includes lessons on winter driving, which is something new for those not familiar with North Dakota’s snow and cold.

 

FUTURE INVESTMENT

The good news is there’s no end in sight when it comes to the prosperity and work that will be required to service the region’s oil boom, Arthaud says. In fact, this is work his company and other beneficiaries of the boom can bank on.

“We like to say that with these unconventional plays, the geological question is taken out of it. Regulatory changes and price can affect it, but you know the wells are going to get drilled – it’s not if, it’s when. You can go out and know for the next 20 years how many wells are going to be drilled,” he says.

The research and development efforts of the oil giants has brought prediction of where the oil is to a science level. “It’s amazing the science that goes into that stuff,” he says. “The fracking part is unbelievable. There are some very brilliant engineers in this game.”

MBI will continue to hire employees and buy equipment, and plans to invest $4 million in technology this year to automate dispatch, delivery, billing and make operations nearly paperless.

The rich resources mean there’s plenty of prosperity to go around. “There are all kinds of jobs out here. I don’t care what profession you’re in there’s a need for you out here – doctors, welders, lawyers – there’s not an occupation that’s not needed out here.

“It’s mind-boggling the dollars spent out here,” he adds. “There are billions of dollars that are going back into the economy.” GOMC


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