Well-Earned Recognition for Speedy Growth
ShalePro Energy Services
In 2019, ShalePro Energy Services made Inc. magazine’s annual Inc. 5000 list of the fastest-growing companies in America. It was the third time the Houston, Pennsylvania-based company was included on this prestigious list. The magazine also cited ShalePro as the fastest-growing energy company in Pennsylvania and the twenty-fifth-fastest-growing energy company in the United States. In addition to the company’s headquarters in the center of the Marcellus/Utica Shale Basin, it has seven other locations in Pennsylvania, Ohio, West Virginia, and Virginia to serve customers across the region.
ShalePro offers midstream and production services for natural gas and oil companies working in the Appalachian Basin – Marcellus/Utica shale play and basins nationwide. Services are grouped into two categories: operations/maintenance and projects/construction.
It currently operates seventeen compressor stations, services hundreds of miles of gas system pipeline, and operates and maintains nearly one thousand wells. The company’s midstream operations/maintenance team keeps compressor stations “up and running and operating. We also have a pipeline group that does maintenance and operations services on the pipelines that make up the main infrastructure of midstream companies,” states ShalePro President and CEO Bill Johnson.
“On the project or construction side of midstream, we’re not really a long-haul pipeline construction company. We do more of the mechanical piping work at facilities such as compressor stations and gas processing plants. [We work on] small interconnect pipelines. These aren’t the pipelines that are going across the country. These are small diameter pipes that go around these facilities,” he adds. Specific midstream duties include pigging, welding, fabricating and installing equipment, pressure testing, and repairing leaks.
“On the production side, in operations and maintenance, we have a group that handles what’s commonly referred to as well-tending. When a well is up and producing, we have a route of wells that a well-tender goes around to daily, to make sure things are okay, make sure there are no safety issues and everything is operating at optimal performance. They do various pressure and flow readings at the well and other support equipment to make sure everything is operating properly and nothing is in need of repair. They have daily reports they have to fill out,” says Johnson.
As for project or construction work on the production front, the company does not drill or frack, “but once the well is in place, we do all the above ground piping and interconnect work. So, there are tanks, sand traps, gas production units, dehydration units, filters and heaters,” he says. “All this aboveground apparatus that in one shape or form is basically filtering what’s coming out of the well.”
Despite the recent downturn in gas and oil prices, he remains optimistic about the company’s fortunes. He attributes the company’s rapid rise to a combination of factors.
“Number one, the company got established early enough in the boom here that we’ve been able to kind of ride the wave with the growth of gas production in Appalachia. During our history, gas production volumes have significantly increased in the region,” he says. “Number two, we made a few acquisitions. That certainly helps the growth rate. And three, if you look at the services we focus on, they are services that seem to be in demand consistently and don’t fluctuate much with the price of gas. I also think we have a great team in place.”
It all began in the summer of 2014 when Johnson partnered with a Richmond, Virginia-based private equity group called Turning Basin Capital and acquired four companies in the natural gas and oil sector. Pigging and compressor operations firm ProActive Services was purchased first in 2014. A year later, the fledgling outfit bought Starett’s Well Service which does maintenance and operations work. A well-tending and production company called Appalachian Production Services was merged in 2016. A year later, Katko, a company that does fabrication, well hook-ups and installations, was acquired.
“Each of those companies had been in business for various periods of time, with the oldest company being Appalachian Production Services which was started in 1994. So, we have roots that go back to 1994,” he says.
Initially, these acquisitions were placed under the auspices of a holding company called Basin Energy Group. Two years ago, the business structure of this parent company was altered, and its name was changed to ShalePro Energy Services.
“We just thought ShalePro was a better name. At that point, we also decided to consolidate all the brands. Whereas Basin Energy Group was more of a holding company, we’ve rolled everybody into ShalePro now. So, the subsidiary names have basically disappeared,” states Johnson.
From roughly thirty-five employees at the start, the company now boasts more than 350 workers. It likes to hire people who are self-driven, hard-working, and flexible. “We don’t tend to follow an eight-to-five schedule in this industry. You have a lot of odd shifts. You have night shifts. You work long hours, and you have weather to deal with,” he explains. While experience in the oil and gas industry is a bonus, the firm has a good track record of training people for any vacant position.
ShalePro has earned industry kudos for its speedy rise, and Johnson has also received personal honors. Thanks to his position at the helm, the company was included on the 2020 University of Florida Gator 100 list which salutes firms run or owned by University of Florida Alumni that have demonstrated impressive global revenue growth.
This growth has been complemented by attention to quality. Quality standards are maintained through a combination of employee efforts, inspections, and customer input.
“Quality is tied to our frontline supervisors and the training that they get and then the inspections that take place from upper-level management, plus client feedback. If we think we’re doing a good job [we want to know if] the client agrees with that. If there’s a difference of opinion, we sit down with the client and figure out ways to fix things,” states Johnson.
Safety is handled in an equally comprehensive manner by ShalePro Energy Services’ seven-person safety team, “which we think, for the size of our company, is best-in-class,” he reports.
The safety team goes to job sites to engage in inspections and offer in-the-field training. Staff members are expected to take part in safety training programs required by both the company and clients. ShalePro conducts drug screens and background checks on all new hires, holds weekly mandatory safety training sessions, and sets a maximum number of work hours per day “so people don’t get fatigued,” Johnson says.
While focusing on natural gas and oil, ShalePro is “always looking at expanding the services we offer. Right now, we’re looking at expanding our operations and maintenance pipeline services,” he continues.
One of these operations is a 33,000-square-foot fabrication shop ShalePro runs in Steubenville, Ohio. “We’re looking at how we can support other industrial applications out of that fabrication facility, beyond just oil and gas,” he says. It is also “evaluating other basins that we could move into that we really aren’t doing much in.”
As for the biggest challenge at present, Johnson names, “the low price of natural gas. That puts extreme pressure on our clients, which then flows downhill to us. It’s looking for ways to not just cut costs, but to be more cost-effective for our customers – how we can help our customers survive in a low-gas price market.”
Market conditions are likely going to cause the company’s growth to temporarily plateau. On top of this, the 2019 to 2020 winter was mild, meaning not as much natural gas was used for heating as usual.
“We’re seeing, for the first time, a slowdown. If you look at gas production, it’s forecasted to be flat in 2020, which would be the first time ever in Marcellus/Utica it will be flat. I think our fate will somewhat follow that. We’re looking at this being more of a flat year for us,” he says.
While the recent precipitous drop in oil and gas prices is disconcerting, such price fluctuations are to be expected in the resource sector, he adds. “This tends to be a cyclical industry. So [to an extent] you’re not too worried about it. I think what’s a little different is that we’re so oversupplied with gas this time. You look around and say ‘Where is the demand going to come from to suck up that supply?’ and it’s not clear there’s much of a really big demand increase coming.”
Nonetheless, Johnson offers a positive forecast for the near future. “I think in three years, we’ll be into a different phase of the market cycle. I can see us potentially adding a few more acquisitions in the company and continuing to execute on our growth plans which will probably take us to other parts of the country in meaningful ways.”