Enzo Energy Services finds niche in acid fracks
The Red Deer trucking company capitalizes on changing completion programs
Business was a little too good for Casey Johnson and Tom Viinikka just one year after they partnered in 2010 to purchase Enzo Energy Services.
The Red Deer, Alberta-based trucking firm specializes in hauling hydrochloric acid (HCl) for the oil and gas industry. A surge in demand for the hazardous material in 2011 created a shortage in Western Canada and sent the business partners scrambling all over North America to supply their customers.
“We travelled to New Brunswick to get HCl, we sent a trailer to New Jersey, South Carolina and Louisiana; we were picking up acid from anywhere,” Johnson says. “There was such an acid shortage that in the fall of 2011 our trucks were sitting.”
Diluted acid, typically in a concentration of 15 per cent, makes up less than one per cent of traditional hydraulic fracturing fluid. The small volume is used in a water-based completion to dissolve metals and compounds in the rock close to the wellbore to improve reservoir exposure.
In recent years, some producers have implemented completion programs using HCl, typically in a concentration of 28 per cent, as the main component of the fracture treatment in carbonate formations.
One of the big differences between a traditional frack and an acid frack is there is no proppant used in the latter. The HCl in an acid frack etches the face of the carbonate rock when it is fractured opened. When the treatment is complete and the fracture closes, oil or gas can travel to the wellbore through the wormholes created by the acid.
Previously, producers would use about 250 cubic meters of HCl per well. As the technology advanced, companies began using volumes between 1,200 and 1,400 cubic meters of HCl per well on multi-stage frack operations.
“The whole infrastructure surrounding acid, hauling acid, delivery of acid to Western Canada and the distribution of it, was based on very small volumes. Then in 2010 it just exploded,” Johnson says. “That’s caused a lot of problems; it has been incredibly volatile.”
Supply shortages of HCl caused the chemical’s price to almost double between the third- and fourth-quarters in 2011.
Canexus Corp., a chemical manufacturer, predicts demand for acid from the oil and gas industry will increase by 30 per cent between 2012 and 2017.
To meet the expected demand, Canexus is increasing its production and improving its infrastructure to bring HCl from its facility in Vancouver to its transload facility in Bruderheim, Alberta.
Johnson and Viinikka hope these developments will break the lull that has set in on their business during the summer. “The niche focus does make it a bit difficult when business is slower,” Johnson says, as nearly half of Enzo’s fleet is sitting in the company’s yard during an overcast August morning. “I don’t think we expected the acid volatility nearly as much as it has been; both the massive upswings and the free fall.”
The business partners, both 34, moved from Edmonton to Red Deer to acquire the company’s three trucks and one trailer for $650,000.
Enzo now has a fleet of 16 trucks and 10 trailers. The company earned $6 million in revenue at the end of the fiscal year in June 2012. Despite the recent slowdown, the company still has a positive outlook for 2012-2013.
“We’re always going to third-party loading facilities, which kind of controls our fate to a certain extent,” Johnson says. “If we had some control over that supply chain with our own transloading facility, or inventory with tanks and blending, that would be incredible. We see that as the next step.”