Brian Zinchuk is editor and owner of Pipeline Online
Scott Larter works in the Estevan Meter repair shop. The company is launching a North Dakota affiliate called Primec Controls, meant to replicate what they do in Estevan and Virden. Photo by Brian Zinchuk
WILLISTON, N.D., ESTEVAN – In the HBO series Game of Thrones, there’s a 700 foot tall wall, made of ice, meant to keep out the bad guys to the north out of the lands of the more civilized peoples. For many companies in the oilpatch, the 49th parallel may seem like that wall – imposing, and nearly impenetrable. And we’re the ones on the north side of it.
That’s why, despite North Dakota’s phenomenal growth in oil production, from 90,000 barrels per day to over a million in a few short years, not a lot of smaller Canadian companies set up shop there. But now, the folks behind Estevan Meter are doing just that, with the launch of Primec Controls LLC.
An affiliate of Estevan Meter and Apollo Electric & Controls, Primec will be based in Williston. It’s the result of a partnership between Doug Martens, Jarrad Skuce, Reg Stephen and Dallas Fleck from Estevan Meter Services, and Jason Haugen and Kris Redka, their U.S. partners. Jason Haugen was a former owner at L&K Electric and subsequent manager for the acquiring company, Expanse Electric. Kris Redka previously managed Twin Services and was employed at Mondak Tank Company.
Martens spoke to Pipeline Online on Dec. 8. They fired up operations on Dec. 1, but are still in the process of standing up the shop. They’ll be more operational come Jan. 3, he said.
Asked how this came about, he said, “The intention is to eventually evolve to have a shop that very similar to what Estevan Meter, Virden Meter Services and Apollo Electric & Controls offers in Saskatchewan and Manitoba, in terms of having a fully-integrated programming repair shop that includes instrumentation, measurement, electrical and combustion service.”
Martens explained, “There currently isn’t anything like that, in Williston. It’s fragmented amongst various service providers. Some of the services aren’t provided at all; repair shop services, it’s pretty minimal. They throw stuff away and go buy new, so we see an opportunity there.”
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He said that’s where there a space for a repair shop and relief valve business. “Repairing valves, rod rotators, chemical pumps, you know, I would say, it’s not glorious work. But it’s a significant part of our business in Estevan. And so, I think we’ve developed a business that we do it very well.”
Partners
A large portion of Estevan Meter’s work over the years has been providing services that allow oil production companies to comply with new regulatory requirements. To that end, he said there are new U.S. Environment Protection Agency guidelines coming in for which they will provide combustors. “We’ve got some channel partners we want to take to market with regards to those products,” he said. “A big part of this is our relationship with Sensia.
“Sensia is a joint venture between Rockwell Automation and Schlumberger,” he explained. Estevan Meter is a tier one channel distributor of their products in Saskatchewan and Manitoba, and now they’ve added North Dakota and Montana. Sensia has acquired Cameron measurement products.
Primec will also be carrying Schlumberger artificial lift automation products, like variable frequency drives and pump off controllers that go on submersible pumps, progressive cavity pumps or sucker rod pumps.
Martens said, “It’s a competitive advantage, that they’ve got Schlumberger’s artificial lift intelligence, Rockwell’s drives and hardware in the field. They hope to couple that with Rockwell’s automation software; internet of things connected software, production software, and kind of have a one-stop shop in terms of production automation and controls.”
And Primec will be that one-stop shop.
“They have no presence in North Dakota,” he said. “Initially, we will be Sensia’s solely focused artificial lift distributor in North Dakota and Montana.”
The days of hockey stick growth in North Dakota are in the past. But the state’s oil production will probably be flat, in Martens’ estimation. He notes in recent years, there’s been a change of how they build facilities in the state, with larger well pads, with much larger facilities. He expects there will be emissions controls regulations which will provide an opportunity for them.
There is a need for combustion servicing, automation, controls and higher efficiency, and that’s where their opportunity lies, he said.
Shorter drive
The Primec shop is on the west side of Williston, ironically in the former Lufkin automation shop. They’ve got three people working there initially. They’ve also got visa applications for three people from Estevan to go down and provide technical support.
Jason Haugen is the lead partner in Williston, and he has local experience and presence, with local knowledge and understanding of the business.
“My piece of the puzzle is I’m bringing to the table some product distribution relationships, i.e. the Sensia one. There’s a couple other ones as well, and combustion servicing and measurement expertise,” Martens said.
He pointed out that Williston is an hour-and-a-half drive from Estevan, while Virden is two-and-a-half hours.
As for that metaphorical wall, Martens said, “I wouldn’t say it’s easy. It’s obviously not insurmountable. But you know, it’s probably not something that a small business would enjoy tackling, but a medium-sized enterprise like us, we can do it. Estevan Meter, 10 years ago, I don’t think we’d have been able to do it.”
“There’s a definite barrier there, for sure,” he said. And it took a lot of investment just to get the corporate structure set up, with legal and visa application fees. “There are significant costs associated with it.”
Motivation
Martens said they had been looking at expanding in Saskatchewan through an acquisition, but the deal didn’t go through. This led them to looking at North Dakota, whose oil production now varies between two and three times what Saskatchewan produces, and nearly all of that is within a two-hour drive.
Martens said, “Yeah, there’s a big barrier. The ice wall is there. But, you know, real world accessibility, driving to Williston, North Dakota, is much more accessible than driving to Swift Current or Kindersley or Lloydminster.”
He continued, “Yeah, there’s some barriers, some hurdles. But I think there’s a bigger opportunity. I just had to find the right partner, who was introduced by a mutual friend.
“He’s been in the business, his family’s lived there for 100 years. He was kind of one of the first guys to develop the automation business down there. He’s got a solid reputation. I think he’s a good guy.”
Another motivation is seeking to diversify beyond the Canadian market. The Canadian federal government has been making life difficult for the oil business, and Martens feels and it could go further.
“I have a real fear that the Trudeau Government, left to their devices, would legislate the oil business right out of business in Canada,” he said.
Martens feels its unfortunate, and he doesn’t like it, but he has no choice but to look beyond Canada, in addition to existing markets here, under this current federal government.
“My preference would be to make investment in my own region and country, but the current political environment compels me to look across the border,” he said.
“There’s still opportunity in Canada. I believe that there is, and we’re going to be focused on our business in Canada,” he said. “We’re not pulling up stakes or selling the shop and moving to the U.S. Because the two are going to complement each other. They both have to be there. But it’s just another piece on the board.”
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