NAES finds opportunity in oil companies’ old pipe and drums and creates a growing demand for its services.
It’s not high-tech or headline-grabbing work, but the crews of New Age Environmental Services, Inc., provide a valuable service to oil, gas and support services companies. They help with cleanup by removing old, damaged or new leftover pipe, then sell it to be repurposed into pallets, conduit and other useful items.
“NAES is an on-site, full-service recycling operation,” says Dennis Michael Rodriguez, co-partner of the Midland, Texas-based business. “Since the majority of field offices are stockpiling and sending this material to the landfill, we retrieve this material, potentially create a new revenue stream for these organizations and lower their carbon footprint.”
With public scrutiny and landowner requirements, demand for their services continues to grow in the Permian Basin, and companies are also contracting NAES to work with them in the Bakken and Eagle Ford Shale oilfields.
“The sad part is that there is so much [pipe] out there, and millions of pounds are going to landfills,” Rodriguez says. “We are keeping it out of the landfills, it’s going to a recycled product that’s being repurposed and everybody likes it. It’s just a matter of getting the word out there. To my understanding, we’re the only ones out there that have the flexibility to do what we actually do.”
Rodriguez and his business partner, Ana Cecilia Tejada, have 20 years of experience in the recycling industry. Tejada brokers a variety of recycled materials domestically and internationally. Rodriguez’s focus is on-site fieldwork – harvesting unneeded poly lines used for oil, gas, water and sludge. He also contracts with wind power companies around Carlsbad, N.M., to cut up, remove and recycle old wind towers that blow over or are damaged. (Workers use gas-powered Stihl chopsaws to cut through the thick fiberglass blades.)
NAES’s oilfield work started with drums in 2003.
“I had clients in Midland. They called me to recycle some of the poly drums that were coming out of the gas and oil fields. Some had 10,000 to 20,000 drums,” Rodriguez explains. Made of high molecular weight, high-density polyethylene (HMW HDPE), the raw material has value. He brought in crews and a mobile grinding unit to grind up the drums, which he sold to domestic and foreign markets.
“Once the oil boom started, companies were asking me to handle the poly pipe. We started out very small with some of the companies just doing the liner,” he adds.
As the oil fields boomed, NAES grew. The company also had help from Mother Nature, which hit Texas with brush fires in 2008.
“Instead of trying to blend the lines together after they burned, they [companies] would just lay out a 20- or 30-mile section of new pipe and have me come in there and pick up all the burned pipe,” Rodriguez says. At first NAES worked with third-tier supply companies, but now they contract with companies of all sizes including some of the largest in the gas and oil industry.
Though they don’t deal with all the hazards that oil rig workers do, NAES crews face tough challenges.
All field technicians, laborers and supervisors are required to have safety training and are equipped with H2S monitors. Each day starts with a quick “tailgate meeting” to talk about potential H2S gas leaks, wind direction and an exit plan. The crew wears flame resistant clothing, steel-toed boots, hard hats and safety glasses.
“The number one thing they have to be aware of is the elements,” Rodriguez says, including things such as rattlesnakes, excessive heat and dust devils. “It’s usually very remote, so the guys have to make sure they are hydrated and that they are fed. They can’t be stuck without gas. The ATV can be 25 miles into an oilfield. There’s no cell phone coverage.”
When an oil company or oilfield service business requests NAES’s services, Rodriguez evaluates the material to be moved. Sometimes it has already been cut up and stockpiled by roustabouts hired by the oil company. For miles of pipe intact in the field, he often flies over with his Cessna or drives through the area to survey and take photos of the pipe to make material and labor estimates.
“The main materials we process are 2-, 4- and 6-inch HDPE pipe from oil and gas fields. We also manage HDPE thread protectors and HMW HDPE 55-gallon drums,” Rodriguez says.
Typically four-man crews take care of pipe in the field. NAES has two crews in the Southwest — one in Texas and the other in New Mexico. Each crew has a 2004 Nissan pickup to get to the job site plus a Honda gas generator to power Skil and Makita jigsaws. They also have a Yamaha 250 ATV to take workers along the pipeline to cut it in long lengths with hacksaws, depending on the size. For 2-inch diameter line, for example, pipes are cut in 300-yard sections. Several of the lengths are chained together and hooked on the pickup’s hitch and hauled to a staging area. A 6000 GVW extending forklift is used to pull and load heavy, large diameter pipe.
Workers cut the pipe in 16-foot lengths and load them into 53-foot vans for transport to the Midland, Texas, yard for processing, or directly to manufacturing customers or railroad yards for shipment. Including a day or two for prepping the pipe, crews average two 40,000-pound loads per week.
When there is a large volume of pipe (500,000 pounds or more), it is more efficient to process the pipe on site with a mobile grinder and a five-person crew. NAES has a custom fabricated grinding unit with a proprietary design to use on site. But the company also contracts with other businesses to grind material including pipe and barrels stockpiled in NAES’s Midland yard. Typically a crew can grind about 20,000 pounds of pipe per day.
Good business model
“NAES is very lean; we’ve learned from Big Oil that it is far more efficient to subcontract services and manage from the field, versus maintaining full-time crews,” Rodriguez says. “We utilize a variety of independent contractors for all field service work.”
That includes subcontractors to ship all the materials from the field and from the Midland operation. With less overhead and operations to oversee, he focuses on growing the business and markets. Since 2008, Rodriguez estimates that NAES has removed 500 to 600 miles of pipe and grown about 20 percent each year. He anticipates 25 to 30 percent growth this year with expansion in the Bakken and Eagle Ford Shale.
Breaking through the bureaucracy and letting large companies know about their services is his biggest challenge.
“We’re the last thing these guys think of. These guys want to move oil,” he notes. “And we’re not even charging them.”
No money changes hands for about 75 percent of the contracts NAES sets up. The company makes money by selling the material.
In some cases, NAES pays companies for their pipe if it is new or in good condition. For example, gas companies often don’t want to deal with picking up new 28-inch diameter pipe left over in the field. Rodriguez makes a per-ton offer based on the quantity and location.
In other cases, companies pay NAES to remove pipe. Usually the pipe includes material – fiberglass – that can’t be recycled.
He notes that he is starting to receive more calls from companies seeking their services after fires, when cattle are on the land or when landowners insist that unused pipe be removed. And, as more companies think “green,” NAES can help them meet goals.
“We provide detailed reporting on volumes, pounds and miles of material processed for our larger, high profile clients to assist with their yearly reports regarding recycling and minimization plans,” Rodriguez says.
Even as he works to pick up more jobs for his crews, he balances the marketing end of the operation. He has personal investment in two companies that make recycled products. One turns the ground pipe into pallets, and the other makes conduit.
Other buyers prefer to buy the 16-foot pipe lengths to ensure quality control through the washing, grinding and pelletizing process. That’s important for products such as conduit for fiber optic lines, for example.
The ground pipe is also valued overseas in places like India and China, and with cash payers, NAES maintains good cash flow to pay subcontractors immediately.
Facing future challenges
One thing NAES doesn’t have to worry about is running out of material. Rodriguez estimates there are 5 million pounds of pipe in the Permian Basin that have been out of commission since the brush fires. Companies have many reasons to contact the recyclers — pipeline sections are removed due to disasters like fires, when wells have shut down, lines are moved or lines were used to move water or sludge.
“Every job is site specific,” he says.
He looks forward to meeting his clients’ needs by expanding in Eagle Ford Ridge and the Bakken oil fields, though he recognizes there are challenges. Housing and wages are higher in the Bakken, for example. He checked out the area last fall and started crews in the region this summer.
Another growing opportunity is recycling flexline gas line pipe, which includes fiberglass that can’t be recycled. The pipe has up to 60 percent HDPE, however, so NAES has set up a warehouse, hired workers and developed a method to remove the fiberglass so the HDPE can be recycled.
That means that NAES can prevent even more material from being wasted and get it to buyers who find value in the recyclable materials.
“It just hurts me when companies tell me they just shipped pipe to the landfill,” Rodriguez says. “But we are slowly catching on.”