Savage Companies helps energy exploration clients transport frac water and other hard-to-handle materials more efficiently.
Kenneth Savage started C.A. Savage & Son in 1946 with a $600 International stake-body truck, used to haul cinder blocks and coal in Utah. His brothers Luke and Neal quickly joined him, and together they envisioned building a company providing far more expansive services — a business that would take a big-picture approach to solving problems for customers facing materials-transportation challenges.
More than 65 years later, consider their mission accomplished.
Today, the still-family owned company — now named Savage Companies — boasts more than 2,500 employees spread across 150 locations in the United States and five countries. It owns huge fleets of equipment as well as loading and shipping facilities. It serves customers throughout North America and overseas, and handles more than 100 million tons of chemicals, liquids, fuels and other commodities and materials annually for customers across the mining, gas, oil and other industrial sectors.
And reflecting its founders’ original vision, the company takes a bird’s-eye view of customers’ supply-chain logistics and develops efficient material-handling solutions, says Allen Alexander, Savage president, chief executive officer and chairman of the board.
“Kenneth always said you can’t be just a trucker,” Alexander says. “He believed you have to provide more than just a truck. So we look at systems — how we can add more value to what we do.
“For example, maybe we can offer loading and unloading facilities and tie it into rail service … expand our role to take out the inefficiencies of (material) hand-offs that often take place in supply chains, and expand services in such a way that no one can duplicate them,” he continues. “Through the years, we’ve become good at this supply-chain management.”
The company’s services aren’t for everyone, Alexander notes, pointing out that Savage strives to deal with customers interested in long-term relationships that add value through cost reductions and increased supply-chain efficiencies.
“We look for opportunities to put our people, processes, technology, equipment and facilities into a situation where we can develop long-term business relationships … where customers see the value we bring and make a commitment to us,” he says. “We dig deep to understand their unique needs.”
Savage concentrates on efficient delivery of the materials companies need to frac wells.
“For example, they might need 65,000 to 70,000 barrels of water on site to frac,” he says. “That’s something we can focus on. When you start looking at the sand, the supplies and the tubulars, we come in with our management systems and streamline things. We take small things that may seem insignificant and reduce costs and create value for customers.
“In areas such as wastewater management, we can demonstrate savings of 20 to 40 percent, which can amount to millions of dollars annually.”
A specific example of what Savage does currently takes place in Utah’s Uinta basin, where the company helps a major exploration company haul production water, a byproduct of natural gas and crude-oil production. The customer contracted Savage to handle the more than 460 million gallons of wastewater produced annually at more than 2,000 well sites.
To haul produced water, the company wanted a truck that would meet its objectives for personal and environmental safety, while hauling the largest payload legally allowed. So, unlike many frac-water haulers, Savage took the unusual step of working with Polar Corp. to develop a custom, five-axle truck and pup-trailer with a 3,600-gallon vacuum tank on the truck and a 3,000-gallon vacuum tank on the trailer.
In service since 2009, each unit has a gross vehicle weight rating of 87,500 pounds and is designed to maximize payload capacity in bridge-formula states like Utah, where gross weight limits are determined by the length of the vehicle, the number of axles and how they’re spaced.
“This was not a one-size-fits-all situation. We worked to design and configure a vehicle with a specific length and weight in order to optimize the gross vehicle weight limits, as well as understand how it’s configured, emptied and so forth,” Alexander says.
Along with the Polar truck/trailers, Savage relies on tankers from Beall Trailers and tractors made by Kenworth and Mack Trucks Inc. The tankers use pumps made by Masport Inc.
In addition, Savage took a broader view of water management beyond a typical let’s-move-water-and-dispose-of-it-approach. The company developed a system that features a Global Positioning System unit and a small readout screen in each truck. Among other benefits, the system monitors things such as the number of barrels of water being loaded, and when trucks arrive and depart from each well site, Alexander says.
“We went from what was traditionally just trucks (hauling frac water) to a real-time management of where water is and where it needs to go,” he explains. Before the solution, “it sometimes took 60 to 90 days to figure out how much water they moved and how much it cost, and it was all done on paper spreadsheets … literally hundreds of reports a month that required a lot of manpower and was prone to mistakes, too.”
Through increased efficiencies, the company cut daily truck shifts in half, reduced man-hours in ticketing and invoicing by 92 percent and decreased wastewater hauling costs by 20 percent.
Savage is now in its second generation as a family company. Alexander says the founding three brothers wanted the company to remain intact for future generations.
“That changes how we view our business — and how customers look at us,” Alexander says. The company is not pressured by quarterly earnings reports and is able to take a long-term approach, he says.
A customer-oriented mindset is also part of the company culture, Alexander says. But it’s a focus that can be difficult to implement because of the company’s 150 locations. So Savage keys on human resources and worker retention.
“Anyone can duplicate our equipment, but not the people. To keep finding and retaining good people is one of our major challenges, especially in the oil and gas sectors where we must compete for employees that share our values and culture,” he says.
To attract and retain quality employees, Savage provides competitive wages and benefits packages. But it must go above and beyond that in areas like North Dakota’s Bakken formation, which is beleaguered by severe housing shortages and other problems created by the oil and gas boom.
Savage does its best to adjust work schedules so employees can meet family commitments amid the long hours their jobs require. Sometimes the company works out multiple schedules tailored to specific employees.
“For instance, someone might work five days on and have two days off, or five on and three off, or four on and four off, or even work 10 to 12 days,” he says. “We adjust to what employees think will work for them.
“Another challenge in emerging areas is lack of housing, so we help employees look for short-term and long-term solutions,” he continues. “It’s a tremendous challenge … in Williston, for example, it’s not unusual to see long-time residents with fifth-wheel trailers in their driveways (owned by oil- and gas-industry employees who rent out parking space).
“Before we started working in the Bakken, we secured some long-term housing under construction, which has benefited our construction workers,” he continues. “And we’re now right in the middle of trying to develop long-term housing for families. We’ve even hired an outside group to study whether it makes sense for us to be in the business of building houses and selling or leasing them (to employees).”
Alexander sees the continued use of fracking technology as a growth driver for Savage in the years ahead.
“Continued development and use of fracking technology will keep unleashing (oil and gas) reserves we never thought would be available,” he says. “Fracking provides great opportunity for companies like us that offer supply-chain solutions.”
How does the company protect itself against the volatile boom-and-bust cycles for which the gas and oil industries are noted? By not overinvesting in areas that might be subject to such cycles, Alexander says.
“We try to understand the downside,” he explains. “We tend to be aggressive, but conservative on the control side so we don’t overinvest, and recognize that there are cycles. Much of our investment is in ‘wheels,’ and we can move them around. But we have to invest wisely in fixed facilities.”
And, as always, keep an eye on the big picture.