When it comes to doing business with energy companies in Western Colorado, the most sound advice could have come from a seminar conducted long before the Internet was invented. Attend gatherings where energy decision makers meet. Develop contacts. Build relationships over time.
Those were among the suggestions offered at a recent presentation organized by the Grand Junction Area Chamber of Commerce on how to do business with energy companies.
Once they establish relationships, businesses that provide construction, environmental or operational services required by energy companies stand the best chance of landing contracts with firms extracting natural gas in the region.
And, yes, some energy company representatives say they’re determined to hire local people whenever practical.
The business of building relationships is often the key.
“We don’t tend to bid out a lot,” said Doug Dennison, environmental and governmental affairs liaison for Bill Barrett Corp., an oil and gas exploration company that’s purchased leases in the Piceance Basin for the past six years.
Dennison said the key to doing business is to develop relationships with energy representatives. Once those are established, safety and environmental performance are the big concerns, he said.
Colorado attracted national attention when it implemented stricter rules for oil and gas drilling last year. Those rules include a requirement that energy companies keep a strict inventory of chemicals stored near drilling sites and that wells be drilled specified distances from sources of drinking water.
To break into an area where another vendor has a long-term relationship with an energy company, a new business might have to hustle.
“It is very much a good old boy network,” Dennison said. “But if you can show a better way, save money or be safer, you’ll get attention.”
Even if a local vendor loses out in a bid process, it can be worth revisiting the situation after the job is completed. “Once the work’s done, it’s done. But you can challenge (the quality or price of the work),” Dennison said.
Christine Shuss, exploration and production procurement manager for Williams Production, said her company is always on the lookout for local talent. “Three quarters of our employees live and work in the Grand Junction area.”
Williams currently operates the most natural gas drilling rigs in Western Colorado.
Mesa County Commissioner Craig Meis, who works for an energy consulting company and also serves on the board of the West Slope Colorado Oil and Gas Association, said local business people have many opportunities to meet energy industry experts. Those opportunities include chamber of commerce socials, energy briefings sponsored by the chamber, natural gas rig tours and Club 20 spring and fall seminars.
“It’s a lot of time and effort,” Meis said in an interview following the chamber session. “It doesn’t happen overnight. It’s not easy and I don’t think it should be.”
Meis said he spent several years developing relationships to procure business from natural gas companies.
Meis also said the chamber workshops offer great value. “If you put a dollar amount on it, it would be substantial.”
While developing relationships can be the clincher in closing a deal with an energy company, potential vendors also need to jump through some regulatory hoops in an industry that’s highly regulated by federal and state governments.
“How do you become a vendor for Marathon?” asked Frank Ehlman, supply chain supervisor for Marathon Oil in the Piceance Basin. For starters, Ehlman said a vendor must file a tax identification number. Then, if the company wants to work near drilling sites, Ehlman said it must:
Write a contract covering the terms and conditions of the work.
Submit a rate sheet.
Obtain an approved safety evaluation rating.
Provide proof of valid insurance
Complete a 10-hour Occupational Safety and Health Administration (OSHA) course.
Complete a company orientation concerning the Parachute area, where much of the drilling occurs.
“Everything that gets in the way of the supply chain comes through me,” Ehlman said.
In addition to building relationships and filing paperwork, local companies can get a leg up on a deal if they can help keep the environment clean.
“If you can do a cleaner, better job —these storm water issues are huge,” said Susan Alvillar, community affairs representative for Williams Production.
Alvillar alluded to stricter regulations concerning water runoff near gas drilling sites, adding that Williams spent $1.2 billion last year to improve management of storm water.
She said workers install rocks by hand in places that improve drainage in the area.
Not all vendors must go through a bid process to get business from energy companies. Dennison said companies providing office and janitorial work can sometimes walk in the door and leave with a contract.
In the midst of a local jobless rate above 9 percent and a recent national report that per capita income decreased last year in Mesa County, some local organizations encourage companies to hire local people.
That’s the case with Mesa County government and Meis commended energy companies for considering local people when they hire. “We encourage or support a local preference.”
Ehlman said he recently hired a Mesa State College graduate who’s a candidate for working up the corporate ladder.
Shuss said Williams has 400 active contracts and that most general contractors hire local subcontractors.
As Williams and other energy companies ramp up production this year, local businesses will no doubt be looking for a piece of the action in the gas and oil fields of Western Colorado.
For more information about conducting business with energy companies, contact:
Frank Ehlman at Marathon Oil at 244-5757.
Christine Shuss at Williams Production at 263-2733 or firstname.lastname@example.org.
Doug Dennison at Bill Barrett Corp. at (970) 876-1959 or email@example.com.