McKees Rocks Industrial Enterprises repositions itself to serve shale drillers
About 10 years ago, Jim Lind wondered what would become of his business. The family-owned industrial park he helped run in Stowe had turned 100, and its factory buildings showed their age. Big tenants were leaving, and industrial business seemed to have a dim future in Pittsburgh.
He made fateful decisions: He and the site's former owner, Jack Klee, converted McKees Rocks Industrial Enterprises into a warehouse and shipping terminal. When shale-gas drilling brought industry back to Appalachia, the terminal was situated to make the small company a big player.
Along the Ohio River, with connections to two major railroads, McKees Rocks Industrial Enterprises gets about half its business as a shipping and storage hub for sand that drillers use. It expanded to 24-hour operation and added five satellite hubs in Pennsylvania and Ohio since 2009.
That led to a record year for revenue in 2012, capping about 300 percent growth over four years, company officials said. The company declined to disclose specific revenue figures.
Its sand work started in 2007 with about 10,000 tons in shipments. Now the business brings in about 300,000 to 400,000 tons — filling 3,000 railcars — in a year.
“It used to be eight hours (a day), get out of here early on Friday. Now this is a dream come true. We don't ever stop,” said Brian Lind, Jim's brother and a company vice president. “We've never said ‘no.' ”
The sand business is big in the oil and gas sector because drillers use more than 2 million pounds for each well, according to Penn State Extension's Marcellus Center for Outreach and Research. Sand can prop open cracks made during hydraulic fracturing, allowing gas to flow out of shale. Drillers used about 8.19 billion pounds of sand in Pennsylvania in 2012, Penn State estimates.
Because drillers work quickly and in remote locations, they need flexibility and a tight turn-around for shipments. It's a competitive business with national and multination companies such as Halliburton, Schlumberger and FTS International joining local companies across the state, said Tom Murphy, the center's co-director.
“It's a very big deal,” he said.
Trucking is expensive, so drilling companies want sand suppliers to have rail access, said Mark Kuhar, the Ohio-based editor of Frac Sand Insider. Shipping by barge is even cheaper, so a sand supplier or transport hub is ideally suited if it has rail and barge access, he said. McKees Rocks Industrial Enterprises is in the middle of planning a river dock expansion, Jim Lind said, declining to give further details.
McKees Rocks Industrial Enterprises distinguished itself by pioneering flat storage for sand, said Carrie Klee Turbiner, who, with her sister, inherited ownership stakes from her father, Jack Klee. Instead of using tall silos, it stores sand in the century-old warehouses on site. The company tests it to ensure purity, a priority for drillers because they don't want foreign substances to clog narrow wells.
McKees Rocks Industrial Enterprises started working with Universal Well Services, Inc. and now works with six drilling service companies, plus four three-sand companies that supply it, Jim Lind said. He declined to detail the company's financial data or name its other partners, citing a need for confidentiality in the industry.
The company's “effectiveness is rooted clearly in Brian Lind; his dedication to our needs and attention to the details of inventory management has (made) them a true partner,” said Thomas J. Watkins, director of supply chain management at Universal's Meadville office. It's all a matter of effort.”
The company set a record for rail shipments in May after signing a deal this winter with its newest sand supplier, U.S. Silica.
The work is constant and changes rapidly. Dozens of trucks can arrive for loading at once, Brian Lind said. Some days, there are no sand cars and then a 100-car train will roll in, Klee Turbiner said.
“Being a small organization, we're quick on our feet and adaptable enough to get things done,” Jim Lind said.
Sand is one of many controversial parts of the drilling boom. Industrial sand, known as silica, can contain high quantities of quartz and can cause incurable lung disease. The National Institute for Occupational Safety and Health reported in 2012 that a sampling it took across the country, including Pennsylvania, showed full-shift workers often were vulnerable to silica limits that exceeded federal safety limits. About a third of the samples showed concentrations so high that safety masks wouldn't help.
McKees Rocks Industrial Enterprises hired a consultant to conduct tests on workers and design appropriate protection, Lind said. Workers wear breathing masks and safety glasses and have the option of wearing full-body suits the company provides, he said.
Jim Lind started at the company as a summer laborer, and the Lind brothers often do the same work as their employees, they said. Most days, Brian Lind directs the trains rolling around the site and has become the train engineer during busy periods, he said.
They don't plan to go public or seek investors that would require giving up control, Jim Lind said.
“We like working for ourselves,” he said. “It's nice to see an idea come to fruition and know you're the reason that it happened.”
Timothy Puko is a Trib Total Media staff writer. Reach him at 412-320-7991 or firstname.lastname@example.org.