Note: This article has been re-published and shared with the permission of Alberta Oil Magazine.
It's no secret that the downturn in commodity prices has been tough, not just on energy companies, but on the service providers that depend on them too. Alberta-based Spartan Controls is one of those providers, and its employees have an added interest in assuring the company's success - with no outside shareholders, the employees are the company's sole owners and they share in the company's profits accordingly.
Spartan is a process control, measurement and automation supplier for many different industries in Western Canada, including oil extraction and water treatment. The company's chief focus is on the oil and gas industry, and last year was not an easy one for the sector. Grant Wilde, president of Spartan Controls, doesn't mince words when it comes to how the company is weathering the downturn. Sure, it's getting leaner, but it's also getting more efficient. Today, employee ownership remains at the core of the company's culture and, according to Wilde, it's the backbone of the company's persistence during this recession too.
What has been Spartan's Strategy during the oil slump?
We're focusing on what we can control. The price of oil is not that. We're managing our costs tightly; we're helping our customers reduce their costs; we're trying to help them improve their production efficiency; and we're helping them with their environmental compliance and safety. Those are broad key areas. Another area we're heavily focused on is helping our customers improve their sustainable spending. That would be in the areas of maintenance, reliability and overall performance. We have brought that together in something we call Spartan MRP. As our technology is instrumenting and controlling a lot of [our customers'] assets, we see that we have a significant role to play in helping to improve the ongoing operations of those assets. For us, that means helping improve their turnaround, increasing equipment and facility reliability, improving overall plant performance and operations management. We have a lot of initiatives on the go and, frankly, we're working harder than ever to support our customers in challenging times.
In the long term, we think those are the things that we can do to continue to earn their business and, ultimately, loyalty from our customers. There are areas that we can do better collectively and we certainly need to. It's a global marketplace and we have to compete in that global marketplace and sometimes the playing field is not as level as we would like it to be. However, we have to work on those things that are in our control and do the best that we can.
Having a diverse portfolio obviously limits the risk incurred from a downturn in one particular sector. Yet, it can also be tremendously rewarding to specialize in an area like oil and gas when the commodity is up. How do you find that balance at Spartan?
We provide a very broad range of automation solutions to all the process industries. So that means regardless of whether you're building or operating a pipeline, a power plant, a potash mine, a pulp and paper mill, a gas plant, a refinery, an oil sands plant, or even a waste water treatment facility, our instruments, valves, control technology, packaged solutions, and services have a fit in all of those industries. We are very industry diverse. Having said that, the oil and gas industry is still by far the largest single industry with the greatest amount of automation spend. It is our largest customer base and it's critically important to our business as it is critically important to the economy of Alberta and Canada. This unprecedented downturn is very challenging for our business as it is for all of our customers.
How are you leveraging the low Canadian dollar to your advantage right now?
We are based in Western Canada, so although we do have a significant local automation packaging capability, services, repair and labor pool component and some international exposure through our local EPC engineering contractors and fabrication customers, generally a low Canadian dollar is not a net benefit to our business. So, with less export opportunity does come some significant local focus. We're doing all we can to creatively manage and grow our business here at home.
Cost-efficient and environmentally friendly technologies are all the rage right now and likely will be for the foreseeable future. Is that an area that Spartan is focused on?
Many of our environmental automation technologies and solutions can reduce methane use or emissions and CO2 and NOX emissions. This can be achieved in a number of ways. One is optimizing process performance by using less energy inputs to produce a certain amount of product. An example would be reducing the amount of stream used to produce bitumen in a SAGD facility: it reduces the steam to oil ratio. That would be one way to help. Another example is capturing vented hydrocarbons or methane and piping it into a gas engine to burn them as a supplemental fuel source. We reduce the amount of fuel consumed and the CO2 emissions plus our control technology allows the engines to run better.
For both these examples we are reducing inputs or operating costs and increasing production or revenue potential. So that's the producer side. The service firms side is trickier. Our REMVue technology can also be used by well-service companies where they would have typically used trucked-in diesel to run their equipment. They can now use local onsite natural gas at a reduced cost. A second piece to the service company part of the equation is that service companies also have the opportunity to boost revenues, as some of the modifications to existing facilities will be required to take advantage of the new environmental technologies.
What opportunities are there for Spartan as a result of the recent royalty review with regard to carbon pricing and methane regulations?
If the government can appropriately manage carbon taxes - and those are soon to be collected in a much broader way starting in 2017 - and the industry can leverage those funds for innovation and improvement, then certainly there are significant opportunities for Spartan and our customers.