Brushing Off Business
What started as a sideline for Alberta contractor Exact Oilfield Developing Ltd. has become major business, with six mulchers working full time.
by Scott Jamieson
In these days of stagnant or falling logging rates, few contractors would turn down a chance to diversify their business. Exact Oilfield Developing Ltd. of Slave Lake, AB, is an established pipeline and oilfield maintenance company with such major oil and gas clients as Paramount and Husky. Even today the privately owned contractor does the bulk of its work in this lucrative field. Yet the company, owned and operated by entrepreneur Ken Carpenter, has established a growing mulching division that both adds value to its existing client base and opens the door to a whole new world.
Exact employs 70 year-round and up to 120 in the winter. The mulching side of the business started in response to a customer request a few years back, and has grown by leaps and bounds each year since, as mulching division foreman Larry Scharf explains.
"About three years ago, we got more into the mulching and cleaning of leases and right-of-ways. Since then we've started doing a lot of re-growth, which is maintenance around existing pipelines. It is a government requirement to maintain a clean area around the pipelines for inspection, and in recent years this has been enforced much more consistently. The result is a steady volume of work that must be done each year, which has opened a huge market for us."
The company owns two Timberjack feller bunchers, but Larry says that in most cases, the maintenance side of pipeline work is much better suited to mulching."There's no salvageable wood to speak of on these sites - sometimes the stands are 20 to 30 years old, so it's thick to get through, and there may be the odd large tree around, but not nearly enough to send in a logging crew, so instead they send us."
It's a growth business, alright, but not one without its own challenges. For starters, Exact's mulchers have to be able to handle a wide range of terrain and tree size. This requires the right mix of power, carrier and, in this muskeg country, footprint.
At the time of CFI's visit just before Christmas 2006, Exact was running five industrial mulchers - Two tracked older model Fecon RT 400s with that company's own mulching heads; two Gyro Trac GT-25 tracked machines with that supplier's own cutting head; and a modified Hitachi Zaxis 230 excavator with a Gyro Trac mulching head attachment used largely for roadside and ditch work.
"The Hitachi is more of a niche machine that we need for some jobs where the tracked machines wouldn't manage, either on slopes or roadside work across ditches, so it doesnŐt work as steady. The other machines though work pretty steady for at least six months a year while things are frozen. They're not as busy in the summer, but we're working on that," Larry says in explaining a seasonal challenge many loggers know too well. "Because of where we work, with all the muskeg, we do a bit of work in the summer but it's not always cost effective."
In fact, it's for this reason that Exact added the two Gyro Trac GT-25s. Although they cut as wide a swath as other machines, they are ultra-low ground pressure units that combine the flexibility to work longer seasons or on softer ground with the mulching power to handle even full-sized trees.
"The Fecons are good machines, and they've done a great job for us in the right terrain. They'll chew anything in their path, and if you didn't have soft ground to deal with that'd be fine. But with the tracks we have, we can't get them everywhere we need to go. We use them when we have good ground, like in most of the leases work, or on frozen ground, or when there's really big stuff to mow down."
In comparing the two machines, Larry notes that while his two Fecon RT400s with 20-in pads sport ground pressures in the 8 psi range, the Gyro Tracs top out at 3.5 psi, or less than half.
"That's a huge difference for us, so right now the Gyros are the busiest machines for us. They're very mobile in muskeg, which lets us do a lot more." (EditorŐs Note: Equipment improvements come fast and furious in this field, and Fecon for its part has a whole new line of mulchers in a wide range of track configurations, hp, and ground pressure that were not available when Exact started their mulching division almost four years ago.).
The Fecon RT400s have 400-hp engines versus the Gyro Trac's 230-hp powerplants, Larry says, but he adds that different style mulching heads and teeth allow both to effectively handle the larger material they often come across.
"The 400s use blunt teeth that turn everything into dust with devastating force, and a lot of clients like the results. But the Gyro Tracs do a phenomenal job for the horsepower. They use cutter heads with sharper teeth on flexible mountings, so they rely less on brute power."
You'd expect this to translate into lower fuel consumption for the Gyro Tracs as well, and Larry confirms this. While the Fecons use anywhere from 35 to 40 litres per hour, the Gyro Trac will typically use 30 or less. This combined with a lower purchase price means the Gyro Tracs boast lower hourly costs than other machines Exact has looked at, and Larry confirms this is one of the reasons they bought the two machines and use them as much as possible. Still, he cautions that none of these machines could be considered cheap to run or maintain.
"Unlike other machines that may cycle, like an excavator, mulchers are always under full load, so they like their fuel. Also, their job is to destroy everything in their path, so it's tough on gear. You go through a lot of teeth, and maintenance is high regardless of the model you choose - It's the nature of the job, and its reflected in our hourly rates."
Given this, Larry says that choosing the right operator, even in Alberta's tight labour market, is key. He chooses operators more for their attitude and mechanical aptitude than actual experience.
"This is a pretty new business, so you don't really expect to find someone who's run one of these before. There's lots of training anyway - especially teaching them to read the terrain, to let the mulcher do the work rather than trying to push the trees over, etc... So instead we look for mechanical skills. Probably like any logging job, the sites are often remote, so operators need to be able to deal with most mechanical problems and maintenance on their own to keep the gear running."
For larger jobs or scheduled work, the company runs a large service shop with several bays in Slave Lake, and indeed one of the Gyro Tracs was in for routine maintenance when we were visiting. Given that most of the clients are billed by the hour, keeping the gear running is vital. For example, the Gyro Tracs are charged out at well over $250/hr plus operator, so Larry is keen to see those machines humming along. The mulchers run single shifts, but long ones Larry adds. In the busiest winter months they will go seven days per week as needed, and will average over 300 hours per month servicing upwards of 15 regular clients.
Future Big?
For the future, Exact continues to expand its client base through - what else - diversification. Among its core group of oil & gas clients, Larry is working to convince a growing number to mulch their leases rather than burning. The latter is a solution quickly falling out of favour in Alberta as elsewhere in Canada.
"There are some companies we work for that it's all they do - They'll log the area with a feller buncher, and then we come in and turn it all to dust, so there is no burning. I think it's the way things are going."
The crew has also done work for municipalities, and in fact one of the Gyro Trac GT-25s and the Hitachi were both wrapping up some local roadside maintenance work when CFI dropped in.
"We've also done fireguards, including one around the whole community of Peerless Lake in 2005, which was almost a two month job. We've done work for the highway department. For instance, we did the Swan Hills highway last year and the public reaction was great - They were so happy to be able to see the wildlife at the road's edge after we had cut the right-of-way back to where it should be that it was covered in the Swan Hills Gazette. The publicity didn't hurt," he adds with a smile.
With business growing in many directions, Exact continues to expand its fleet. Larry was awaiting the arrival of his division's sixth mulcher before the end of 2006, a massive 575-hp RWF Bron mulcher from Edmonton-based dealer Edge Equipment. Made in Ontario, the powerful Bron 500B mulcher will make a good compromise in terms of power and access, Larry says.
"At about 5 psi, it sits nicely between the lighter Gyro Trac and the Fecons we use. We're moving away from machines that limit us to winter work here, so we expect this new one to give us power where we need it and the footprint to still get into most sites. We tried it in Ontario, and liked what we saw. It's expensive at well over $500,000, so you need to use it in the right applications, but it turns things to dust and should be more productive. With that, we should be able to cost it out accordingly when doing hourly jobs."
With a full range of machines to match any condition or tree size, Exact's biggest challenge now may be to ensure repeat business.
"Once we mulch a site, it's good for so many years that they won't need us for a while," the foreman concludes with a laugh as we head back to the office. Yet with his crews going full out and a healthy slate of orders ahead, he doesn't seem to be worried.
