Executive Viewpoint: Midstream seeks cost-effective, “fit-for-purpose” solutions amid downturn
BCCK Holding encompasses BCCK Engineering Inc., an international natural gas engineering company specializing in nitrogen rejection, nitrogen rejection for landfill gas, NGL recovery, CO2 removal, helium recovery, skidded LNG plants and oxygen removal. BCCK Engineering helps gas producers generate revenue from previously bypassed or contaminated reserves by providing efficient and optimized gas processing solutions and fitting the right technology to the right application. BCCK’s experienced engineering, technical support, financial and operations professionals work together to create solutions to maximize client success.
Gas Processing & LNG talked with Gregory L. Hall, P.E., Executive Vice President for BCCK Holding, about gas processing sector economics and projects amid the COVID-19 pandemic and what it takes to weather the storms in the downstream and midstream industries in 2020.
GP. How has COVID-19 impacted the gas processing industry in 2020?
GH. This year is BCCK’s 40th anniversary as a company. Throughout the years and all the different downturns, we have never seen the industry impacted like it has been in 2020. First, it has influenced how we, our customers and our vendors operate their companies. Everyone is in some form of work-from-home status, which has provided additional challenges.
Second, it has caused financial problems as well, with projects being delayed or cancelled. In some cases, it has caused delays in receiving materials and products from our vendors, which is problematic. Of course, the biggest issue is the drop in oil prices as a result of industry issues coupled with a dramatic reduction in demand due to COVID-19. This has put drilling on hold, and without drilling our customers do not have those incremental gas volumes that need processing.
GP. How have BCCK’s clients been affected by the COVID-19 pandemic in terms of gas industry business, and what advice are you giving to clients looking to optimize their operations?
GH. With drilling coming to a near-stop in many areas, our customers are losing volumes of gas for processing and, of course, with that comes a loss of revenue. This is causing new projects to be delayed, modified or even cancelled.
There are several things our clients can do to get through this. First, they have to watch costs without having a “dollar-wise and pound-foolish” approach. Do not make short-term decisions that may be costly over the long term. Be careful who you do business with, and make sure they are financially strong enough to make it through this pandemic and complete your project.
One thing we at BCCK can do for our customers is provide full engineering, design, fabrication, and construction services if companies need to reduce staff. BCCK has maintained a full staff through all of this thanks to some great projects and great customers, and because we are debt-adverse.
GP. What are the top three things that companies can do to improve their project economics, especially in the gas processing sector?
GH. Consider using a company that is a true EPC to avoid layered margins and layered contingencies. Also, technology selection is key. You want efficient technologies from an operating standpoint. Consider non-traditional technologies that will improve OPEX and CAPEX costs, as well as be a “fit-for-purpose” application. Work with companies that have engineering depth and experience and that can make the overall facility more cost-effective. They will be able to identify a more customized, cost-effective solution.
GP. What new requests are you hearing from gas industry customers, and how are you catering to them?
GH. The first is always to reduce costs, and we have been able to do that in a number of ways. One of the best ways is to implement better technology that can save our customers dollars on both CAPEX and OPEX. We have some customers that want to take advantage of this market where gas processing solutions are basically on sale, so we have been asked to compare current costs to those pre-COVID-19.
GP. What attributes, in your opinion, must a company possess to weather the storms experienced in the downstream/midstream industry in 2020?
GH. There are two ways to look at this—first from a midstream gas processer prospective, and second from the prospective of the vendors and service companies providing support and equipment to the midstream processors.
The midstream processors obviously need reserves committed to their project. Again, they need to be careful who they use to provide equipment and support. They need to use companies with limited debt, credit worthiness and staying power.
The suppliers and vendors must be nimble and flexible to changing market demands. They have to be flexible in the products they provide, but they must also be flexible in terms of how they contractually work with their customers.
GP. What initiatives and technologies are BCCK highlighting at this time, especially in the gas processing space?
GH. We are doing a couple of things. We’re emphasizing the benefits of our more-efficient cryogenic plants, along with the benefits of our full EPC capability. At the end of the day, those benefits have to boil down to reduced costs for our customers, and we believe that they do.
We’re also emphasizing our patented and proprietary technologies that can offer better overall solutions for our customers. These technologies include NGL extraction, nitrogen rejection and CO2 removal.
GP. In light of what has happened in the industry in 2020, what types of technological and process changes do you expect to see in 2021 and beyond?
GH. We fully expect customers to be more conscious of overall projects costs, looking at both CAPEX and OPEX. As a result, we expect them to rely on us to provide unique solutions that are more cost-effective. Although it shouldn’t come as a surprise to anyone, we also expect to see a lot less opportunity for projects over the next 12–18 months. We expect new projects to be phased in over time.
We do expect that oil prices will rise, but we don’t expect to see a lot of movement in natural gas and ethane during that time. We also expect to see more gas processing opportunities that can’t be solved with off-the-shelf technologies, along with an increased desire for non-traditional technologies that will be more cost-effective. GP
GREGORY L. HALL, P.E., serves as Executive Vice President for BCCK Holding and is primarily responsible for the management of company engineering and sales activities. He has more than 19 years of engineering and industry experience and has served in various roles at BCCK. Mr. Hall began his career with BCCK in January 1999, working as a Project Engineer on various gathering systems and midstream gas processing facilities throughout the U.S.
In 2001, he transitioned to project management, where he managed the installation of several full EPC gas processing facilities. In 2004, he began working full time as BCCK’s Director of Sales and was promoted to Vice President in 2010, assisting with overall company management.
Mr. Hall began his career with JBI Partners as a Project Engineer. He is a licensed professional engineer in multiple states (Colorado, New Mexico, Texas, Wyoming and Oklahoma) and holds a BS degree in civil engineering from Texas A&M University.