Fayetteville Shale

THE LARGE NATURAL-GAS RESERVOIR IS AN ECONOMIC BOON FOR NORTH-CENTRAL ARKANSAS

Mar 23, 2009

In 2002, the Fayetteville Shale formation in north-central Arkansas was discovered as a potential huge source of natural gas. Since the discovery, energy companies have been busy buying up mineral rights in the region, digging wells, laying pipeline and bringing the natural gas on line.

It’s a long-term project involving many players and huge amounts of money. It’s estimated that there could be as much as 20 trillion cubic feet of natural gas in the Fayetteville Shale. A University of Arkansas study indicated that Fayetteville Shale activity could generate around 11,000 jobs and more than $20 billion during the next few years for the state of Arkansas.

Many H&E Equipment Services customers are among the companies working to help the energy firms develop the Fayetteville Shale. Here’s a look at some of them.

Grademaker Incorporated

Steve Linkinogger came out of retirement because of the Fayetteville Shale. Following a construction career in Maryland, he retired to Arkansas and built a home in Scotland, Ark. It turns out, the property was in the heart of the Fayetteville Shale.

“One Saturday morning back in 2002, my wife and I were sitting down to breakfast and there was a knock at the door,” Linkinogger recalled. “I answered it, and there was a guy who wanted to lease some of my land to drill for gas. Since I had brought a little equipment with me from Maryland, he also asked if I wanted to do some work. I decided, why not?”

Today, Grademaker’s specialty is to clean up after the drill rigs. “We close the pits, do all the seeding, prevent runoff — basically environmental remediation work,” said Linkinogger. “Our job is to return the property to its previous condition as much as possible.”

Linkinogger started the Arkansas version of Grademaker with just himself and one other employee. Today, he employs about two dozen people. When he started, he used the equipment he brought with him. Today, he has numerous machines, including four Komatsu dozers (two D51s and two D65s) from H&E Equipment Services in Little Rock.

“I had run a D65 before and knew it was an excellent dozer,” said Linkinogger. “I wasn’t familiar with the D51, so I demo’d it against another top brand. I’m an old dozer operator so I ran them both myself. I liked the D51 the best but I wanted to see what my guys thought. So I left both machines with them. When I came back a few days later, the D51 had 27 hours on it and the other dozer had just six hours on it — and had broken down twice. The choice was obvious.

“What I like best about the D51 is its balance. With the new cab-forward design, the machine rides much better. It’s like sitting in the center of a teeter-totter, rather than out on the end. It’s much more comfortable and quieter than the other brands, and visibility is excellent.”

Linkinogger also says he’s received good support from H&E. “H&E has good equipment availability and the machines are priced fairly. Support-wise, Eric Hale (Sales Rep) and Charles Sooby (Little Rock Branch Manager) have taken good care of us. They understand that when I need something, I need it now, and they respond accordingly.”

Satterfield Pipeline

Satterfield Pipeline of Norfork, Ark., is one of many pipeline companies at work in the Fayetteville Shale. Loyd Satterfield started the company back in 1972 as an earthwork contractor.

“In the late 1970s, the city of Mtn. Home, Arkansas, came to me to see if we could install its gas lines,” Satterfield recalled. “It seemed like a good opportunity so we took it on and learned the business and that’s how we became pipeline contractors.”

Satterfield spent most of the next 25 years traveling for pipeline work, much of it in Oklahoma. The company, which today employs about 40 people, started work in the Fayetteville Shale in 2006. “This is great,” said Loyd’s son Mark Satterfield, who helps his dad manage the operations. “It’s the closest to home we’ve been able to work in the last 20 years.”

Satterfield Pipeline’s specialty is laying gathering lines to gather gas from the wells and send it to a compressor before it goes out to a high-pressure line for widespread distribution. The company turns to Komatsu machines from H&E and Sales Rep Scott Prior for most of its equipment needs.

“We’re a smaller company, and that was especially true before we got out here in the Fayetteville Shale,” said Mark. “That means dad and I don’t just manage jobs, we also run equipment. Because we’re on it ourselves, we’ve always tried to run whatever we like the best, and for the most part, that means Komatsu. When it comes to productivity, uptime and comfort, Komatsu seems to be a cut above.”

Satterfield Pipeline has five Komatsu excavators (three PC200s, a PC220 and a PC300), two Komatsu dozers (a new D51 and a D41 side-boom pipe layer) and a WA200 wheel loader.

“The Komatsu track hoes are great digging machines,” asserted Mark. “They’re fast, comfortable and everything’s right at our fingertips, which helps improve productivity. As for the dozers, the D51 is everybody’s first choice. We always thought another brand was the best dozer, but the D51 blows away the competition in the size class. It’s the biggest leap forward I’ve ever seen in a dozer. It has more power, is more comfortable and the visibility is unmatched.”

The Satterfields are also sold on the service they get from H&E, including their Sales Rep Scott Prior and Rental Rep Brian Bourne.

“The service we get from H&E is unreal. It seems to me like Scott, Brian and the H&E service department keep this Fayetteville Shale going,” said Mark. “They do a great job of getting us the machines we need when we need them. Beyond that, they’re always delivering parts or teeth, or whatever we need. They also help us move machines if they have a truck around. They’re really almost indispensable, at least for us.”

Satterfield Pipeline not only appreciates that type of service, it also delivers it to its customers.

“We hang our hat on establishing personal relationships and taking care of our clients and their customers the same way I would want to be taken care of if I were in their shoes,” said Loyd. “In terms of dealing with property owners, we try to leave everything better than when we went in — fences, gates, roads — we’re going to give them the same or better because that’s what works. We’ve always been welcomed back to the jobs we’ve done and we have great relationships with our customers, and I’m as proud of that as I am of the work itself.”

HIS Pipeline

Louisiana-based HIS Pipeline is also heavily involved with laying gathering lines for the energy companies in the Fayetteville Shale. Billy Franks started the company with a partner about five years ago, working in the Anadarko gas field in Louisiana. When work there became scarce, they came to the Fayetteville Shale almost three years ago and they’ve never looked back.

“HIS Pipeline had always employed about 20 to 30 people,” said General Superintendent Steve Franks, who is Billy’s son. “Today, we have more than 100 employees. We’ve grown tremendously, much of it in just the past nine months or so.”

HIS Pipeline (the name reflects Billy’s Christian beliefs) primarily builds pipelines that connect the well to a sales point for distribution. For HIS Pipeline, honesty is not just the best policy — it is the only policy.

“Our word is our bond — period,” insisted Billy. “A large amount of the work we do is time and materials (T&M), and you don’t do a lot of T&M work if you’re not trustworthy. I try to emphasize the importance of taking pride in our work, and I think our employees share that attitude. As a result, we do very high-quality work, which is why we’re in demand and why we’ve grown the way we have.”

Equipment-wise, because of the rapid growth, HIS rents a large amount of equipment — most of it Komatsu machines from H&E and Little Rock Rental Rep Brian Bourne.

“We probably have about 10 excavators and four dozers on rent at any given time here in Arkansas,” said Steve. “Most of the track hoes are PC200s and PC220s. We have one D51 dozer and three D61s.

“We believe for all-around performance and value, Komatsu is hard to beat. It’s good equipment and H&E is a good company to work with. Brian does a really nice job of finding us the equipment we need to be successful.”

MSC Pipeline

Another company that’s experienced stunning growth doing pipeline work at the Fayetteville Shale is MSC Pipeline. Michael Simpson and Alan Alvey started it in July of 2008 after Simpson had parted ways with a partner in another pipeline company. Within three months, MSC had more than 100 employees and seven different installations that crews were working on.

“We were able to hit the ground running when we started because people here knew Alan and me and many of our employees,” Simpson explained. “We had a reputation for doing good work and meeting or beating schedules. I went around and talked to owners before we started up and they said whenever we were ready, just let them know and they’d have work for us — and that’s what’s happened. We have quality people and we know how to get the job done.”

Headquartered in Clinton, Ark., MSC Pipeline lays pipeline and builds compressor and dehydration stations for clients throughout the Fayetteville Shale. The company primarily rents equipment, most of it from H&E Equipment Services.

“H&E is our prime equipment provider,” said Simpson. “We like Komatsu machines and H&E provides us with good service. When we first started up, we tried several dealers. Every time we used H&E, our Rental Rep Brian Bourne did a good job of getting us what we needed. H&E was also better than the competition when it came to repairs in the field. Downtime is very serious to us. We just can’t afford to have equipment not working. Brian understands that and makes sure we’re well taken care of when we need service.”

According to Simpson, MSC typically has about a dozen excavators and five or six dozers from H&E at any one time. “It’s good equipment. I like Komatsu machines. The excavators are fast and smooth, but what I like best is their reliability. We count on them to work every day. We need to be productive in order to be profitable, and the combination of Komatsu equipment and H&E is a big part of that.”

Simpson says one of MSC’s claims to fame is its safety record. “Safety is a big issue for the energy companies we work for, so it’s a big issue for us. Among other things, we offer a safety incentive program whereby employees can earn cash bonuses if we’re accident-free at the end of the job. Some of our clients like that so much, they help us pay for the bonuses. Beyond that, we’ve still got to get the job done in a timely manner and at a fair price. With our people, who we believe are the best around, we’re able to do that.”

Arkansas Reclamation Company

The drilling process at the Fayetteville Shale uses an oil-based mud, which is 70 percent diesel fuel — so there’s a lot of petroleum in the drill cuttings that come out of the ground. Arkansas Reclamation Company (ARC), a spinoff company from the Little Rock-based environmental engineering firm Pollution Management, Inc. (PMI), was formed specifically to recover and recycle that fuel-soaked material.

“When drilling at the Fayetteville Shale first started, we got a number of calls at PMI wanting us to haul the polluted material away,” said Richard Davis, Construction Manager and one of five owners of PMI and ARC. “Once we got involved, we saw an opportunity to recycle the material at a centrally located disposal facility rather than just haul it to a landfill.”

In order to do that, Arkansas Reclamation built a state-of-the-art recycling and recovery plant in Beebe, Ark., to accept the polluted material from the drilling sites.

“We receive it basically in a liquid/sludge state,” said Davis. “First we run it through a several-step process to separate the liquid from the solid. The liquid we recover is an oil product that the drillers can reuse in making drilling mud. The solids that remain are still heavily laden with hydrocarbons, which we burn off in a thermal desorber, which cleans the soil to the point where it can be reused as fill material.”

To operate the plant, Arkansas Reclamation has turned largely to Komatsu machines from H&E.

“We own some of our Komatsus and we rent some,” noted Davis. “We started turning to Komatsu and H&E four or five years ago because we wanted two equipment suppliers. Prior to that, we’d worked almost exclusively with another dealer. The more we worked with H&E, we discovered they not only had excellent equipment, but the support we got from Brian Bourne and Eric Hale and the service department was better than we were getting elsewhere.”

Davis says the company’s Komatsu machines, which include excavators, wheel loaders and dozers, have worked very well. “The machines hold up in a difficult environment. That’s important to us, and the way H&E responds is equally important. Whether we need a piece of equipment or require service, they understand we need quick action and they provide it. That’s why a majority of our equipment is now Komatsu.”

Although there are similar recycling technologies being used elsewhere, Arkansas Reclamation has had to fine-tune them for its specific operation.

“As a result, we remain a work in progress despite the fact that we’ve been accepting material since August 2007,” said Davis. “Nonetheless, we think this is well worth the effort because it results in a classic win-win scenario. Compared to hauling the material away, filling up landfills and buying more diesel fuel to make more drilling mud, this is both an economic and environmental improvement. We’re proud of Arkansas Reclamation Company and believe it’s making a positive impact, not just in the Fayetteville Shale, but for the entire state.”