25 Years of Big Challenges
By Bradley Kramer
Since its founding in 1989, Laney Directional Drilling Co. has made a name for itself by building big rigs to tackle big projects. This year has been a momentous one for the company — in fact, it was a momentous August — as Laney celebrated its 25th anniversary and was acquired by a major investment firm all in the same month.
Laney started out as a family business during the early days of the horizontal directional drilling (HDD) industry, says president and CEO Kevin Fox, who joined the company four years ago after spending 20 years at Willbros Group Inc.
“In the early days, you couldn’t just go out and buy an HDD rig. You had to build your own,” Fox says. “The industry was in its infancy. Laney wasn’t the first HDD contractor, but they did have a knack for building nice, heavy-duty drilling rigs. As the technology and industry evolved, Laney got into larger diameters and longer crossings.”
Now headquartered in the Houston suburb of Spring, Texas, Laney is well positioned for serving the oil and gas pipeline sector, its primary market. The company has the capability and experience to also serve the telecommunications, water and wastewater infrastructure markets.
Today, Laney specializes in HDD services, but also provides integrated engineering, design and construction services across North America. In addition to its large-scale HDD capabilities, Laney has added a smaller rig fleet and a new trenchless method called Direct Pipe, a technology developed by German manufacturer Herrenknecht (see November 2013 issue).
“Historically, Laney has been a subcontractor 90 percent of the time,” Fox says. “Our primary customers are mainline contractors. However, through the engineering services we provide, we have developed relationships with operators and pipeline engineering companies as well. Now we’re working directly with those groups.”
The addition of the engineering capabilities has helped Laney in terms of designing and vetting constructible projects, according to operations manager and general superintendent T.J. Strickland, who says one of the biggest challenges the company faces is “poorly designed crossings.”
“We see a lot of bid packages with HDD designs that are not constructible as designed,” Strickland says. “Since we have a full-fledged engineering group in house, they help us with redesigns. Sometimes the redesigns are rejected by engineers and project owners who aren’t willing to change their designs, but it helps us make bid decisions.”
Strickland says having the engineering department is “like having a backbone” to support the operations side. “We can see problems earlier and mitigate them the best we can,” he adds.
Laney’s engineering division came about with the addition of vice president of engineering Alan Snider, who joined the company in 2011. Aside from the reengineering work Strickland mentioned, the company also offers its project design services to project owners and pipeline engineering companies. Snider says the engineering side of the business allows Laney to have more foresight on upcoming projects to bid and reduces the number of changes that may be required during construction.
“We bring 25 years of constructability to every one of our designs,” Snider says. “We use the knowledge of our superintendents and managers, like T.J., to tweak designs for better constructability while also meeting the current standard of practice. It lowers the cost for owners at end of the day. Kevin and I firmly believe that a project will save tenfold in construction costs and meet tight schedule requirements if it’s designed well.”
Laney has installed pipelines of all lengths and sizes, ranging in distance from 40 to 11,400 ft and diameters from 4 to 56 in. The company is looking at projects that extend to 15,000 ft in length. Snider says, “No project is too big or too small for Laney.”
Roughly 90 percent of those projects are oil and gas related, Fox says. In its 25 years, Laney has developed a knack for setting records and breaking new ground. Just take a look at the company’s list of firsts on page 20.
“Oil and gas pipelines tend to be welded steel pipelines, whereas other industries get more into other materials,” Fox says. “The oil and gas industry fits Laney’s service and ability to do record crossings. With steel, you can pull it a long way, whereas other materials such as HDPE pipe are more limited in the length they can be pulled. Also, with water and wastewater projects, your customers are spread all over. We’re close to our customers here in the Houston area.”
The oil and gas companies are Laney’s “bread and butter clientele,” Snider says. “The success of the oil and gas industry directly relates to our success.”
Oftentimes that success has come in the form of taking on a challenge. Strickland is proud of the company’s achievements.
“We like the large, difficult crossings,” he says. “There are so many contractors out there that jump at what we call the easy crossings. We like the big ones you have to sit down and think about.”
Snider tempers that notion, stressing that the opportunity has to be right when it comes to projects that push the boundaries of the industry.
“We like to push the industry, but there are some projects we will walk away from,” he says. “If the opportunity is there and the client is a good client, and they allow us to do enough engineering, then we’ll take it on.”
While Fox and Snider are relatively new to Laney’s management team, Strickland first joined the company as a laborer in 1997 — the same year he graduated high school. Although he left briefly, Strickland returned for good in 1998 and has since worked his way up the ranks.
In his time with the company, Strickland has seen some major changes take place, though perhaps none greater than what has occurred in the last four years.
“Since Kevin came on board, we’ve come a long way on the technology side,” he says, noting the addition of the smaller HDD rig division and Direct Pipe. “We grew a lot organically. People have moved up the ranks, starting on smaller rigs and moving to bigger ones as they get a better foothold on how we operate and manage our work.”
Strickland takes “a lot of pride” in Laney’s longevity. He says it shows the company has a good reputation in the industry. “It’s a big deal, a huge deal.”
A lot of projects come to mind when Strickland thinks of his personal highlights at Laney. He talks about the company’s record feats, but a 2013 project in Wind Gap, Pennsylvania, was a particular favorite. It was the first use of Direct Pipe in the United States that surpassed 1,000 ft, a 42-in. diameter installation measuring a total of 1,350 ft.
“It was through a bog turtle habitat where HDD wasn’t feasible,” Strickland recalls. “We found a solution. It was fun being on that team and figuring out a new technology.”
Laney is said to be one of only three companies in the United States that have the Direct Pipe technology.
“It differentiates us from a lot of companies,” Strickland says. “Three years ago, nobody wanted to be the first to try it. Now we have the technology and the engineering experience, and we can offer this proven product.”
Strickland admits that it’s been “kind of tough” to introduce new technology to the oil and gas sector.
Adapting to new technology is part of the evolution process that has helped ensure Laney’s success over the past 25 years, Fox says. While there may be significant trial and error involved, using the tools and technology available is important to improving performance as a company. However, he says experience is paramount.
“You just have to keep doing what you do well,” Fox says. “There is no substitute for experience. It’s a niche type of market. Experience is important to longevity. Just about anyone today can go out and buy an HDD rig and go work, but they may not be as successful without having experience. A number of companies that have entered the market in last 25 years have since left the market.”
Laney announced Aug. 11 that it was acquired by Maxim Partners LLC and Falcon Investment Advisors LLC. At the time, Fox said the acquisition represented an opportunity for the company to continue driving growth, increase its HDD capabilities and extend its geographic reach.
“In addition to providing financial sponsorship, we are placing accomplished pipeline industry veterans onto Laney’s board including Rick Turner, an energy industry partner for Maxim, Ron Page and David Lytle,” said Maxim managing partner Ryan Franco in a statement announcing the deal. “These individuals have achieved marked success through their associations with Energy Transfer Entities, Red Cedar Gathering, PVR Partners, El Paso Corp., Boardwalk Pipeline Partners, Saddle Butte Pipeline and Koch Industries, and will supply strategic counsel to the company as it enters its next phase of corporate development.”
Fox says the addition of industry experts on the board will help Laney in the future.
“We didn’t have that previously at the board level,” he says. “These guys will help our management team in many
respects as we look at other areas to diversify and grow to meet the needs of the industry.”
Laney was previously owned by a private equity consortium comprised of Chart Capital Partners, Prudential Capital Partners, Quilvest USA and Basic Materials and Services LLC, which will maintain a minority ownership position with the company.
“Maxim and Falcon … were looking at Laney from our history and for position for the future in the pipeline space, which the general consensus says the next five years are going to be very busy,” says Fox, adding that the prior ownership’s decision to retain a minority interest shows confidence in Laney. “A lot of private-equity investors look to get a return after a set time. They wanted to get a return, but they also wanted to retain an interest in company going forward.”
Over the past decade, the oil and gas industry has become a focal point for political debate, leading to changes in governmental oversight and sometimes delaying projects. Fox says companies like Laney can do more to ease the pressure on the industry.
“Everyone knows that regulatory and environmental standards can evolve and change,” Fox says. “HDD offers a solution to get through environmentally sensitive areas. I have seen a trend of projects being delayed on a pretty frequent basis with a combination of regulatory hurdles and land owner concerns. This is still the method of choice when crossing a body of water or wetland. Our industry has to continue to do a better job and find better ways to work without causing any environmental events to ease the pressure on the industry.”
When HDD was invented, the only other way to cross a river was by open cut, which Fox says causes turbidity issues down river. HDD allows a pipeline to cross a river without causing such problems and has become widely used in the industry. However, new technologies may offer better solutions.
“It’s not a perfect technology for all crossings, like dealing with cobbles, boulders or other difficult soil issues,” Fox says. “However, Direct Pipe brings the ability to cross soils that are not especially good for HDD.”
Direct Pipe is a single pass process that uses a steerable tunnel boring machine cutting head, Fox explains. The technology tunnels and pulls the pipe into place at the same time, filling the void as it progresses.
“It’s suitable for all types of soil,” Fox says. “It ingests, grinds and pumps the slurry back to the surface internally through hoses within the carrier pipe. It uses a low pressure, low volume drilling fluid, which reduces the likelihood of an inadvertent return of drilling fluid to the surface. And you can install pipe shallower under a river, going 15 to 20 ft below a river, compared to 75 to 100 ft with HDD.”
The disposal of drilling fluids and cuttings is also an increasing concern, Snider says. The concern has made disposal more difficult and costly, and has increased liability for companies.
Other challenges Snider identifies are the need to create more constructible designs, the concern related to procuring necessary equipment and the growing need for skilled labor as the oil and gas pipeline industry continues to grow.
One of the ways Laney is attempting to address these challenges is by hosting educational events to inform employees about issues in the industry and new technology.
“One of the things Kevin always says is he wants us to be a learning company, both internally and externally,” Snider says. Regarding engineering, he says project owners need to ensure that pipelines are properly designed to help reduce risk in the industry. “If you reduce everybody’s risk, you reduce everybody’s price.”
Finding qualified employees has been a common refrain in all aspects of construction.
“It’s become harder and harder to find good skilled workers,” Snider says. “Apprentices in the past were the sons or daughters of the workers, but that’s tougher and tougher to find now. Not that it doesn’t happen, we have some of that here, but not as often as 25 years ago.”
Laney’s leadership sees vast growth in the oil and gas sector in the near term. It’s no secret that the development of shale oil and gas has helped drive the need for pipelines over the past several years. However, the type of pipelines being built has changed over time.
“At first, shale drove the need for smaller diameter pipelines,” Snider says. “Laney created a business model to add a small rig division that operated in those types of projects. Now it’s getting to be the larger midstream and transportation lines. They’ve built the infrastructure to get the product out of all the shale plays, but now they have to get it to market.”
Snider sees these larger diameter projects driving the industry from 2015 to 2018. The challenge will be to meet clients’ needs, keeping costs down and staying on schedule.
“Twenty-five years ago, if we entered on one side of the river and exited on the other side, we were happy,” he says. “Now it’s more difficult. The business is much more economic and schedule driven than ever before.”
Fox agrees that the industry is going to be “extremely robust,” but he cautions that the demand for projects could outstrip contractor resources.
“There are already a lot of projects now, but as we approach the end of 2016 and 2017, there very well may be a shortage of contractor resources to get those projects built as demanded,” Fox says. “We expect to grow to meet that need. We will look to add people and grow with the use of technology and tools, as well to improve efficiency to complete more work with what
Bradley Kramer is managing editor of North American Oil & Gas Pipelines. Contact him at firstname.lastname@example.org.