America’s biggest truck-stop company wants to be the solution to some of the shortages bedeviling the Permian shale basin.
Pilot Flying J, better known for its more than 750 roadside travel centers, announced two deals earlier this year to almost double its crude-hauling capacity to 220,000 barrels a day. The company backed by Warren Buffett’s Berkshire Hathaway Inc. has plans for even more growth, with expansions into wastewater trucking and sand delivery that would add two more services crucial to hydraulic fracturing in the U.S.
Truckers are in short supply in the Permian, joining pipelines, electricity and other essentials struggling to keep up with booming production in the oilfield that sprawls across West Texas and New Mexico. Already a major fuel distributor for its truck stops, Pilot Flying J is looking to capitalize on its expertise — and bring scale to what’s largely been a world of smaller players.
“It’s a market that’s set for a roll-up,” Shameek Konar, chief strategy officer for the Knoxville, Tennessee-based company, said in a phone interview. “We deliver a load of fuel somewhere in the country every 20 seconds, so trucking and logistics is a core competency for us.”
In June, the closely held company and two other firms announced a joint venture to provide disposal services for saltwater — a major waste product in fracking — to producers across Texas, Louisiana and Oklahoma. Pilot owns a majority of the new business, PWT LLC.
The following month, PWT bought Bridger Environmental LLC, a saltwater transport and disposal company. At the same time, Pilot Flying J acquired a separate crude business, adding 10 disposal wells and two oil pipeline injection terminals in Wyoming. Terms weren’t disclosed.
Last year, Berkshire Hathaway bought a stake in Pilot Travel Centers LLC, owner of Pilot Flying J, and detailed plans to become its biggest shareholder in six years.
The company has doubled its nationwide fleet of oil trucks to 400 in the past year and employs more than 2,000 drivers, a 30 percent increase. It’s now the biggest third-party transporter of crude in the Permian, Brad Jenkins, a Pilot vice president, said in the interview. It also has a 10-truck sand-hauling business with plans to expand, he said.
The work is a natural outgrowth of its longstanding business buying crude from some of the industry’s biggest producers, including ConocoPhillips and BP Plc, said Konar.
Pilot’s size and stability appealed to clients, he said: With $20 billion in annual sales, it was the 15th biggest closely held company in the U.S. last year, according to Forbes’ annual rankings. Clients are looking for a “one-stop shop” for materials supply and takeaway services in the Permian, according to Konar.
The company’s hoping its national scale gives it an advantage in hiring and retaining talent, one of the basin’s biggest challenges. Pilot Flying J can offer better benefits than mom-and-pop truck operators, and it’s got the size to ride out the booms and busts of the oil market, Konar said — although any downturn looks far off right now.
“All of our customers want us to find more trucks and more drivers and to get the logistics of the basin in better shape,” Konar said. “We just have more work than we can handle.”