It's called the oil and gas industry, but pipes are what most people see when they Google the extraction and transport of “black gold.” All three stages of the oil business—upstream, midstream and downstream—rely on steel pipes to produce wells and transport millions of gallons of oil and gas over vast distances.
Considering the variables—outside diameter, wall thickness, grade, chemistry, connection type, protective coating, length—pipe companies tend to stay in their lane, or rather their stream, because buying from mills in bulk and finding consistent buyers is different for each section of the oil and gas industry.
However, Eagle Pipe President and CEO, Brandon Dewan, who runs a pipe distribution company out of Houston, Texas, says that when oil prices started to fall a few years ago, he bucked tradition and diversified his company. Instead of only selling pipes to upstream clientele on drilling rigs, he started selling to the midstream market that builds transmission and gathering lines.
"We knew the drilling side was going to take a major hit while midstream would be more resilient," he says, adding it was one of the best decisions he and co-founder Jared Light ever made.
Eagle Pipe started in 2012 with just Dewan and Light, but has quickly grown into a company with hundreds of millions of dollars in sales that services every major shale formation in the United States. While entering new markets, the company has also grown, adding 12 new inventory stocking locations and several new offices, including one in Denver and another in Dallas. A third is being planned for Midland, Texas in 2017.
This bold shift and resulting expansions have earned the company industry publications accolades as one of the fastest growing and top performing pipe supply companies in the United States.
Different streams, different pipes
The upstream, midstream and downstream divisions of the petroleum industry involve, in many cases, separate companies and separate equipment.
Upstream or exploration and production companies need Oil Country Tubular Good pipes designed to pump oil and gas out of the well. Midstream companies that lay thousands of miles of pipelines need line pipe that can handle high-pressure flow of oil and gas. Downstream companies, like refineries, need pipes that stand up to extreme heat and corrosive chemicals used during the refinement process.
As a result, switching from one division to another isn’t as simple as selling the same pipe to a different client.
To do that, Dewan says it’s important to forge relationships with companies higher up in the supply chain, particularly pipe mills. “We aligned ourselves with new mills coming into the market that didn’t have huge overhead costs but did have more advanced manufacturing techniques and higher quality overall,” Dewan says.
Working with newer mills enabled Eagle Pipe to forge strong supply partnerships from the beginning. One of the results of these partnerships is that his company has access to both state of the art seamless and electric resistance welded pipes. Seamless pipes are made by extruding a solid “billet” of steel through the equivalent of an industrial pasta machine, whereas ERW pipes are made by rolling and welding a sheet of steel.
Stronger, more sophisticated pipes and connections have become essential, especially in shales, where rigs drill down and then horizontally across the sediment. This relatively new technique puts huge amounts of torque and stress on the pipes as they are lowered into the earth.
Not only does Eagle Pipe have access to better technology because it formed strong relationships early on, but it will continue to have access to state of the art products because those relationships are built to last for a long time.
Newer, faster generation
Dewan says Eagle Pipe has another advantage: it acts quickly. Many of Eagle Pipe’s competitors, Dewan notes, are owned by Japanese trading companies. These companies must often send decisions up a long chain of command, the top of which is thousands of miles away. By contrast the American-owned Eagle Pipe makes its calls in the moment.
"We're here and embedded in the [U.S.] market every day. We can make real time adjustments to our business that benefits our end users as well," he says.
Another advantage is that Dewan and Light are both part of the oil industry's younger generation and have relationships with up-and-coming executives, which they can leverage relationships for the next several decades.
Dewan says his company hasn’t struggled to rise to the occasion and points to its partnership with Oasis Petroleum as proof. Eagle Pipe approached the upstream drilling company in 2014 to help it build out its pipelines. Eagle Pipe fostered a partnership by proposing what Dewan calls a sophisticated and proprietary supply strategy that helped Oasis affordably source and transport quality materials for transmission and gathering lines. The partnership was a game-changer according to Dewan, who said it has helped the two companies bring out the best in each other.
Now, Eagle Pipe is one of Oasis’ key suppliers as it operates in the Bakken Shale Play in North Dakota, one of the largest oil sites to be found in the U.S. in 40 years, and according to the U.S. Geological Survey, one that could yield more than seven billion barrels of oil.
Dewan notices a cultural shift in how the younger generation approaches business, mainly that they’re more analytical. Gone are the days when groups of friendly executives could do all of their business over a few holes of golf.
Eagle Pipe’s partnership with Oasis not only involved face to face conversations, but extensive analysis on both sides of the deal.
“Now you’ve got somebody who’s taking a full look at the supply programs you’re offering and asking you what sets you apart from the competition,” he says.
In oil and gas, there simply isn’t a simple silver bullet that makes one company stand out. For Eagle Pipe growth and acclaim have come as a result of the company’s constant vigilance over the market and its pursuit of new technologies and techniques.
“It really just came from us trying to find better ways to do things that would help us grow our business and stand apart from the competition,” he says.