September 2010 Vol. 237 No. 9
Features
Pipelines Or Platforms All In Days Work For Greenes
These days in the Oil Patch, it takes a combination of brains, experience and an uncanny ability to match risks with rewards to be successful. It also helps if you earn yourself a special niche for quality of service.
And that is what Greene’s Energy Group has quietly but effectively accomplished since it began operations as Greene’s Pressure Testing and Rentals, performing hydrostatic testing services in 1953. Formed by H. Rowe Greene, Sr. as a spin-off from Halliburton, Greene’s specialized in testing blowout preventers used in drilling.
By the 1970s, Greene’s was not only performing production tests but was also testing heaters, separators, flowlines and pipelines. The company continued to expand into the testing, flushing and reinstatement of piping, flanges, and valves on production and construction projects. This enabled Greene’s to refurbish offshore drilling rigs, barges, structural production modules and topside production decks for platforms.
Eventually, Greene’s moved to fully integrate its upstream services by expanding into pipelines through buying high-volume pumps and instrumentation. Now Greene’s services land pipelines as well as offshore systems.
In July 2004, Greene’s was acquired by The Catalyst Group, a Houston-based private-equity fund, and members of management. In December 2006, Denham Capital Management LP, along with a management group, acquired Greene’s from The Catalyst Group. Since that recapitalization, Greene’s has expanded into the Rocky Mountain region through its acquisition of Rocky Mountain Testers (RMT) in Marbleton, WY. Greene’s recently acquired Cherokee and Devin International Inc., which will expand its equipment-rental offerings in the Gulf of Mexico.
The CEO of the integrated service company is well-known industry leader Bob Vilyus who came aboard in 2004 in conjunction with Catalyst purchase. Group headquarters for the company are located in West Houston while the operational headquarters are based in Lafayette, LA.
In an interview, the native Ohioan discussed Greene’s strategy to move forward despite turbulent economic times.
P&GJ: What is the main business focus for Greene’s Energy Group today?
Vilyus: Greene’s is a specialized service and rental business that supports the pipeline and oil and gas businesses. Our mission is to set the standard of excellence in safety, services, products and world-class talent. Our vision is rapid growth in our core segments bringing global best practices and exceeding our customers’ expectations.
We have developed a very experienced team of top pipeline, oil and gas service executives and business teams as a foundation for our growth.
We plan to utilize our core business positions to rapidly expand both domestically and internationally, doubling our size in four years.
P&GJ: How is the company segmented operations-wise?
Vilyus: Today Greene’s has five core competencies, which are:
- Land and Offshore Pipeline Services
- Drilling and Production testing, services and rentals.
- Devin Intl. specialized drilling and completion services for support of offshore, deepwater and workover operations.
- Construction completion, hydrostatic testing and commissioning services for offshore platforms, modules and the process industries.
- Special focus on rental equipment for pipeline, drilling, production and construction.
P&GJ: How vital are pipelines to your business, especially as a tool for growth?
Vilyus: The pipeline business is a key core segment of our overall business. Greene’s has been providing pressure-testing services for over 50 years. We have developed what are recognized to be some of the best safety and operational practices in the industry. We have made significant investments in top caliber pipeline equipment. Pipeline is a key element of our four-year growth plan.
P&GJ: What makes the pipeline sector attractive to service companies?
Vilyus: For Greene’s in particular, we are pipeliners as well as oil-service professionals. Pipeline is part of our heritage and culture. We know the pipeline business. We have done pipeline projects throughout North America and the world. We have completed projects in Mexico, Colombia, Trinidad, West Africa, Nigeria, Indonesia, Malaysia and the Middle East. Many oil and gas service companies are not comfortable in the pipeline sector, but we like it and like its counter-cyclical construction market trends. The long-term asset maintenance and service work of pipelines is also a good counterbalance to our drilling and production services, which are geographically regionalized and field-depletion dependent.
P&GJ: How do you prioritize Greene’s activities in pipeline services?
Vilyus: Our key services include: cleaning, drying, dewatering, pigging, commissioning of new pipelines, pressure testing for regulatory requirements, preparation of pipelines for smart-pigging services, and equipment rentals for companies building and maintaining onshore and offshore pipelines.
P&GJ: How are some of the recent federal mandates involving pipeline integrity affecting business?
Vilyus: Since the 2000 liquid pipeline integrity regulations and the 2003 gas regulations were implemented, Greene’s has been busy hydrostatic pressure testing for compliance. We have pressure testing records on file dating back to the early 1970s, and since hydrostatic testing is one of the three methods approved to meet the requirements of Title 49, our customers know they can rely on us. We have scaled up our capacity, added equipment and crews, and work with customers as they plan their test programs in accordance with the Pipeline Safety Act of 2006. PHMSA’s newly published Distribution Integrity Management Program (DIMP) requirements should continue to help grow our hydro testing and drying services in a segment that has not been a traditional pipeline market for us.
P&GJ: With all the merger activity in the service sector recently, how is Greene’s trying to position itself?
Vilyus: Greene’s is building its business to offer specialized services and rentals in each of our core sectors. We are a specialist service company that supports operators, contractors and even other major services companies. We are expanding our footprint geographically in the Haynesville, Marcellus and Bakken shales and growing via the introduction of new offerings such as plug and abandonment services for offshore infrastructure.
Another unique specialty is our new “open-ended” pipe-testing service. We have developed a next-generation fully automated portable pressure testing unit called HydroMaestro. This real-time Web-enabled, multiple concurrent test system dramatically reduces the time to hydrostatically test flange-less pipe for modular construction of gas plants, compressor stations, refineries and offshore platforms.
P&GJ: What makes Greene’s unique among energy service companies? What are some of the more interesting or challenging pipeline projects Greene’s has been involved in recently?
Vilyus: Greene’s is unique in the broad services and rentals we can provide to the industry. There are not many companies that can provide rentals and service to so many parts of the oil and gas industry: drilling, production, pipeline (offshore and land), construction, plants and refining, both domestically and internationally. We recently completed the commissioning of over 200 miles of NGL pipeline without the use of a product heater, achieving 0% nitrogen content with less than 30 minutes of flaring.
P&GJ: Greene’s does not have the profile that some of its competitors. Are you looking to improve on that?
Vilyus: We are in the process of updating and consolidating our brand. The first step will be unveiling a new, more dynamic logo for Greene’s and updating the logos for all of our divisions and subsidiaries in order to present a common “Greene’s” look that is easily identifiable in the market. The old logo was Gulf Coast-focused and didn’t fit our expanded base locations and new international presence in Brazil. The new logo will be followed by the release of new technical brochures and some ads featuring an “experts” based theme. New websites for Greene’s and Devin are also in the works and will be unveiled later this year.
P&GJ: As a long-time executive in the service sector, what are some of the biggest challenges that lay ahead for the industry?
Vilyus: With the benefit of our look back, and with the vast number of very quick developing facets that could have a major impact on our markets, here are what I see to be the biggest challenges for our industry:
- Keeping our businesses healthy in view of the continuing rapid cycles our industry is seeing.
- Rapidly deploying to the new areas of activity.
- Spreading our sound, strong U.S. businesses globally.
- As we spread globally, complying with the strong requirements to provide local content in the developing countries.
P&GJ: What effects do you think recent developments such as President Obama opening more of the offshore to drilling and the disaster in the Gulf of Mexico will have on the petroleum business?
Vilyus: With respect to President Obama, it is encouraging that he is doing something positive in our industry. As the economy recovers, our businesses will as well, barring negative action by the government. With respect to the Transocean Deepwater Horizon rig disaster: My first reaction is relief that none of our people were on the platform, and thoughts and prayers for the families of our fellow workers who perished.
There will be an exhaustive effort to find the root cause and implement some immediate cautionary actions. I believe there will be additional safety precautions mandated. All people and businesses that provide products and services in our industry need to consider this a wake-up call to be more vigilant as to safety and correct procedures.
P&GJ: How did you get into the oil and gas business, and what was the career path that led you to your current position?
Vilyus: Actually, I first started working on pipelines as a co-op engineering student in 1966. Some of my activities for four years included piping design and stress calculations for pipelines, piping, manifolds, valves, etc. These were done with a Lufkin slide rule on a yellow tablet with a pencil, eraser and a Crocker Piping Handbook. Most of those tools are in museums today.
After graduating from University of Dayton with a degree in Mechanical Engineering, I worked in the power industry for several years and then was named chief engineer for a specialty steel products company that had five domestic plants and a foundry in Europe. We subsequently built a plant in Canada.
I then joined a company which made petro-chemical processing equipment and bulk-handling systems, and spent the better part of three years installing systems in the Soviet Union from 1978-1980.
In September 1980 I was named president of a specialty chemical business in Houston which we sold to Phillips Petroleum in 1983. Then I joined Gemoco, a cementing equipment and valve products business as president. In 1996, I transferred to Corpus Christi as head of Weatherford’s gas compression businesses. Then in December 1998, I joined Pipeline Integrity International, running North America. After a period of very rapid growth, we sold this business to GE in 2002; I stayed to make the transition and decided to find a business with a good team and services that I could help grow. I teamed with the senior management of Greene’s, and with several key experienced industry leaders we acquired the business with a private equity group in July 2004.
P&GJ: What are the biggest changes you’ve witnessed since you joined the industry?
Vilyus: It is truly amazing the changes that have occurred both in the pipeline industry and the oil and gas industry since 1966. There have been tremendous changes in materials, methods, technology, communications, computerizations and mobility.
In the 1960s, pipelines were made of mild steel and ERW pipe. Today’s pipelines are generally high-strength steels with much more complex design and construction criteria. We are seeing aging and issues of the aging pipelines such as stress corrosion cracking. Today’s engineers and scientists have much more powerful analytical methods and extremely accurate and refined smart pigs that can see corrosion, cracking, dents and gauges and define interaction of these to predict probabilities of failure. We have much more experience, knowledge and methods for doing hydro testing.
Today’s approaches to qualitative and quantitative risk analyses are step changes in our ability to manage our pipelines. I have heard convincing arguments by experienced scientists and engineers that by incorporating these risk analyses, tools and methods we can keep our pipelines safely operating almost endlessly. At some point, the economic cost to do so may dictate replacing the pipeline.
Oil and gas drilling also has undergone dramatic technological improvements. In the 1960s, almost all wells were vertical, whereas today the majority is now directional or horizontal. The rock drill bit has been surpassed by PDC drill bit technology. 3D seismic accuracy has revolutionized our ability to locate productive reservoirs and drill accurately. Productivity and success rates for drilling have hugely improved. We are now regularly drilling in over 5,000 feet of water whereas in the 1960s, 500 feet was a challenge. We now have extremely effective rig instrumentation, automation and new generation drilling technologies.
Huge improvements have been made in safety and environmental environments of oil and gas.
P&GJ: What would you like people to know about the oil and gas industry?
Vilyus: In the last 40 years our industry has transformed into a very high-technological, efficient and effective provider of energy. The feat of drilling miles down and a mile out to put a completion accurately at such a point wasn’t even envisioned 20 years ago. We are putting sophisticated complexes and installations, including rotating equipment, pipelines and process equipment on the bottom of the ocean in 6,000-8,000 feet of water . . . another remarkable accomplishment.
How will our industry evolve in the next 40 years? It will be dramatic and exciting. I am confident there will be new energy sources in the future, but the reality is that for the foreseeable future we will have to rely on our oil and gas industry to supply our energy requirements, and our world continues to see many countries modernize and consume more energy per person.
We need to be careful to foster and enable our industry to continue its current impressive path of progress, refinement and development.
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