With a good handle on equipment inventory and a plan to build a quality workforce, TEC Well Service expands deep into the heart of Texas
TEC Well Service Inc., an East Texas company founded in response to a shortage of services during the boom market of the 1970s, now finds its biggest challenge is to meet the growing demands for its services.
Stephen Shore, president and chief operating officer of the family-owned company, says, “Our business is a capital and labor intensive business and both of them are in short supply right now. We have the business to move forward, but we can’t get the capital to expand.”
Shore says that despite a stellar credit history, his company has found it difficult to borrow the money to expand its fleet of workover rigs, swab rigs and related equipment in response to the needs of customers. He said the combination of new banking regulations and cautious lenders have dried up the lending markets.
Because of the tight capital markets, TEC has had to free up cash from its operations to add two workover rigs and two swab rigs in the past two years.
HELP YOURSELF
Solving such dilemmas is a big part of the company’s heritage. Shore, part of the third generation of his family working in the East Texas oil field, is following a pattern set when his father and grandfather – Ron and C.W. “Bill” Shore – decided more than 30 years ago that if they couldn’t get timely workover services, they would do the work themselves.
The East Texas oil field was booming with activity in the 1970s when Ron Shore joined his father in the oil production business. By the mid-1970s, however, the Shores were getting frustrated because they often had to wait for contractors who were struggling to keep up with their demand for service.
“They were a small independent producer and they just couldn’t get the service in a timely manner,” Stephen says. In 1978, the Shore family – including Ron’s late wife, Grace – launched a new business and bought their first workover rig, a used piece of equipment that Ron rebuilt himself.
Stephen Shore says, “They started the well service business primarily to take care of their own wells, but also to serve other operators. To this day, our production company is still our sixth or seventh largest customer.”
Many of TEC’s early clients were small, independent producers operating stripper wells in the historic East Texas oil field. Today, TEC’s client list at the original East Texas division is half majors and half independents. About 60 percent of the wells serviced in the East Texas region are natural gas and 40 percent are oil. At the company’s new Permian Basin division in West Texas, the client list is about 70 percent independents and 30 percent majors. The Permian Basin field is still dominated by oil production, with about 90 percent of the wells TEC services pumping crude.
TEC began business with a single workover rig servicing wells in a fairly narrow band of the historic East Texas oil field. Stephen Shore says the family business grew quickly with the addition of a wireline truck, a tank truck and a swab rig. By 1981, TEC was operating three workover rigs and as operators continued to seek ways to maintain production in the maturing field, TEC expanded to six workover rigs during the 1980s.
The company’s original division now serves oil and gas producers in a region spanning northeast Texas, northwest Louisiana and southwest Arkansas. TEC operates 16 workover rigs and six swab rigs and has 150 employees at its original Ark-La-Tex division based in Longview, Texas. The company also has six workover rigs and 30 employees at its new Permian Basin division in Odessa, Texas.
The most recent additions to TEC’s fleet of equipment are two Tiger General Swab Master swabbing rigs acquired in summer 2011. In 2010 the company took delivery on two new Stewart & Stevenson Crown 550 workover rigs. Other workover rigs in the TEC yards include eight National Oilwell Varco 5Cs, two Cooper (Dragon Products) LTO 350 units, one Cooper LTO 550, one Wilson Mogul 42, one Crane Carrier 300 and eight Franks 400 rigs. In addition to the two new rigs, the rest of TEC’s swab gear includes another Tiger General Swab Master and three National Oilwell Varco units. TEC uses seven Bowen S2.5 power swivels and one Venturetech XK-150 power swivel.
For its high-pressure pumping services, TEC utilizes National Oilwell Varco JWS 340 and Gardner Denver PAH triplex pumps carried on Mack RM series chassis.
FAMILY BUSINESS
Shore, who earned a degree in economics from Stephen F. Austin State University and an MBA from Penn State University, worked as a floorhand for the family’s production companies as a young man, but he spent 1988-1996 working for a Longview-based manufacturer. His youngest brother, Kenneth, who serves as CFO and counsel for TEC, is also president of the family’s Shoco Production LP. Kenneth graduated from Texas A & M University and the University Of Texas McCombs Graduate School Of Business before earning his law degree at Southern Methodist University.
When Stephen Shore rejoined the family business in 1996 as vice president of operations, one of his first initiatives had close ties to TEC’s roots in providing timely service. He equipped field supervisors with laptop computers so they would be better able to update clients on a daily basis and to file more comprehensive final reports on the work performed by TEC crews.
Shore recognizes that the technology he introduced more than 15 years ago falls short of what producers expect now. That’s why he continues to track advances in technology that will help TEC better serve its clients.
“We’re continuing on the same idea,” he says, “But our reporting functions are even more intense now. Now we’re doing reports in real time over 3G connections.
“My main focus is on technology and to drill it down even further, it is on getting information to my customers, especially because many of them aren’t on site anymore.”
In mid-2011, TEC took delivery on two new Tiger General Swab Master rigs that provide real-time data feeds, allowing the rig operators, the clients and their personnel to see exactly what is happening as wells are being serviced. The information includes depths pulled from, net loads, line speed and fluid locations.
Shore says that the ability to see exactly what is going on in their wells should be a useful feature for his customers. If customers embrace the new service, he says, “Then we’ll retrofit it across the rest of our operation.”
FULL SERVICE
Shore wants TEC to essentially be a one-stop well servicing contractor. That’s why the company offers workover rigs (with mud pumps and tanks, power swivels, BOPs, TIW valves, pipe racks, hydraulic catwalks and forklifts), swab rigs, high-pressure pump trucks, tank and vacuum trucks and hydrostatic tube testing services.
After years of providing downwell services, Shore says, “Now we’re trying with just one contractor to provide full services above the ground, as well. We’re trying to do everything with one five-man crew. If we can do the same job with fewer people, that helps with costs, of course. But that helps with safety, too. For the operator, the fewer people you have on site and with all of them reporting to one person, you have better control.”
He says TEC’s crews are experienced on workover and swab rigs, but they can also operate surface equipment including mud pumps, circulation equipment and power swivels.
“This is not rocket science, but we’re trying to anticipate it and we’re trying to be the first ones to fully execute it. Our industry is just like any other industry. We need to get more done with fewer resources.”
The safety benefit of the single crew approach is nothing new for TEC. Since joining the Association of Energy Service Companies Safety Statistics Program in 1985, the company has earned dozens of awards and Shore says one of his family’s highest priorities has always been the safety of its employees.
“Safety, number one, is the right thing to do. Number two, it can be a competitive advantage. When you can work safe and not hurt people it helps the worker, it helps the employer and it helps the customer.”
TEC’s approach to safety has evolved over two decades and Shore credits David Etchelecu, the company’s health and safety/human resources manager since 2004, with designing an effective training program.
Shore says that Etchelecu has developed a group of in-house instructors certified by the Petroleum Energy Council to work with crews and individuals on safety issues. All of the instructors are full-time TEC employees with extensive experience working in the field.
“We’re trying to put our emphasis on incident prevention,” Shore says. “Twenty years ago, the emphasis might have been on determining blame for an accident. Today we try to prevent it.”
In 2007, even as the TEC workforce was expanding by 67 percent, the company’s insurance rating based on actual claims improved 31 percent. Etchelecu was named AESC “2007 Safety Man of The Year” after being nominated by two of the company’s largest clients.
Shore says the company approaches environmental regulations with the same philosophy. He believes training and a focus on prevention help protect the environment, while saving money for TEC and its clients by keeping their operations compliant.
THE WESTERN FRONT
Although a surge of natural gas production in shale formations has fueled much of TEC’s recent growth in the East Texas region, Shore says the decision to open the new division in the Permian Basin was driven by both the desire to grow and the quest for some stability. Although oil prices can be volatile, he says there have been much broader swings in the price of natural gas.
With gas production accounting for about 60 percent of TEC’s East Texas business and oil production accounting for about 90 percent of its Permian Basin business, Shore says he has been able to diversify his business to help it weather market swings.
When he established the new division, Shore says he decided to hire a manager who was already experienced in the Permian Basin. Division manager Dee Johns is familiar with the challenges and the geology unique to his region and has helped get TEC’s new operation off to a good start.
Shore says the biggest demand for workover services comes from oil producers. He says that while business is steady in East Texas, the greatest demand is at the Permian Basin division.
“I could use 20 rigs in West Texas instead of six,” he says. “As long as oil stays above $80 (per barrel), we’ll have all the business we can handle.”
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