Material Logistics in the Energy Industry

00:00:00 Speaker 1
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00:00:28 Speaker 2
Welcome to the Energy Pipeline Podcast with your host, KC Yost. Tune in each week to learn more about industry issues, tools, and resources to streamline and modernize the future of the industry. Whether you work in oil and gas or bring a unique perspective. This podcast is your Knowledge Transfer Hub. Welcome to the Energy Pipeline.

00:00:55 KC Yost
Hello everyone, and welcome to this episode of the Energy Pipeline Podcast. Today we'll be discussing material logistics in the energy industry. Our guest, someone I've known for, gosh, over 20 years, and is very well known in the oil and gas business. His name is David Nightingale, CEO of CIG Logistics. Welcome to the Energy Pipeline Podcast, David.

00:01:15 David Nightingale
Well, thank you, KC.

00:01:17 KC Yost
Glad to have you here. Good to see you again, too.

00:01:19 David Nightingale
Nice to see you.

00:01:20 KC Yost
It's been a long time-

00:01:20 David Nightingale
It has.

00:01:21 KC Yost
...since we've seen each other face-to-face, so that's good. Good. So before we get started talking about getting materials to remote locations, which is everywhere along the pipeline and in production and all of that kind of thing, take a few minutes, if you would please, and share your background with our listeners.

00:01:37 David Nightingale
Okay. Well, I started back in 1980, got out of college with a civil engineering degree from Bradley University and went to work for our Natural Gas Pipeline Company of America. Worked for them until 2017 when we sold to KN Energy, and then stayed on with KN for a while. And after that, KN diversified and went and sold them business to the guys at Kinder Morgan. And by then I had left and started working for Duke Energy. Spent a couple of years over at Duke Energy, and then in the late 1990s, early 2000s, I decided to kind of go a different route and got into the oil field service business. I saw the activity going on with shale and vertical wells, horizontal wells and all that. I tried that, and I've been doing that for now for the last 20, 25 years.

00:02:31 KC Yost
Sweet, sweet. So NGPL, when were you there?

00:02:35 David Nightingale
I was there from 1980 until we sold in 1997.

00:02:40 KC Yost
Okay. When I was with Tennessee Gas Pipeline, we were partnered with NGPL on some liquefaction facilities down in Trinidad, and we used to fly the corporate jet over to Miami. The guys from Chi-town would come down to Miami, jump on the plane, and we'd fly on down to Trinidad. But that was late'70s, so it was a little bit before you got over to that-

00:03:06 David Nightingale
Buddy of mine, Ron Brown, ended up running that down for Trinidad for a while.

00:03:09 KC Yost
Yes, yes, exactly. Exactly, exactly. And then the old KN Energy out in Denver. What's the name of the suburb of Denver?

00:03:18 David Nightingale
They were out on the west side. What was the name of that sub?

00:03:21 KC Yost
Golden. Golden? No.

00:03:23 David Nightingale
No, they were actually south of Golden, but I forget the name of it.

00:03:26 KC Yost
It was a hop, skip, and a jump over to the Coors Brewery as I recall.

00:03:29 David Nightingale
Oh, yes. Very close.

00:03:32 KC Yost
I got to do some work for them in the years. Yeah, it was a lot of fun. Good stuff. Good stuff. So anyway, great to have you here. Thanks so much. So let's do a little bit of elevator speech, if you will, about CIG Logistics.

00:03:43 David Nightingale
Yeah, CIG Logistics was formed back in 2009. So we're about 15 years old, and what we do is we are a trans loader, which means we unload product from rail cars onto trucks, or we may unload trucks onto rail cars. We don't buy product, we don't own a product. We just are involved in the logistics. We have 15 terminals all over the US from Sanford, North Carolina to Binghamton, New York, all the way out to Carlsbad, New Mexico, and we handle everything from cement to... We handle corn flakes for... we handle corn syrup for Kellogg's Corn Flakes.

00:04:23 KC Yost
Really?

00:04:23 David Nightingale
We handle roofing granules for GAF to build the little rocks that get colored, put on shingles. We handle a lot of frac sand, we handle chemicals, we handle a lot of pipe, a lot of pipe, especially with all the activity going around.

00:04:41 KC Yost
...it goes in the...

00:04:42 David Nightingale
...inaudible and...

00:04:43 KC Yost
Yeah, sure, sure.

00:04:43 David Nightingale
So we brought a bunch of pipe in for different folks and store it on our location, unload it. And then we're doing a lot of chemicals. It's kind of a three-legged stool. We're trying to get more involved with... We were frac sand for the first eight years of our career. Now we're starting to get involved more in chemicals, more in cement, and more in steel.

00:05:05 KC Yost
I could understand that you would start off with the energy products. That's your background. So the frac sand and that type of work, and the pipe and all of that, that's your foundation, right?

00:05:18 David Nightingale
Yeah, and that's the lion's share of our facilities. We have facilities in Cincinnati and Binghamton and Sanford, North Carolina, but almost all of our facilities are in West Texas, South Texas. So obviously it's an oilfield play.

00:05:31 KC Yost
Yeah. So you don't own the rail cars?

00:05:35 David Nightingale
No.

00:05:35 KC Yost
You don't own the trucks?

00:05:37 David Nightingale
No.

00:05:38 KC Yost
What you do is own the location where the rail is offloaded and stored or loaded onto someone else's trucks and carried on. Do you take care of the logistics on both ends? Do you have relationships with the rail yards?

00:05:56 David Nightingale
Oh yeah.

00:05:57 KC Yost
To rail tracks and all that?

00:05:59 David Nightingale
We can help you with the rail side of it. We can help you with the trucking side of it. We know local trucking companies that can handle that if we need be. But yeah, the lion's share of what we do, provide a final spot for stuff to land, whether it be chemicals, and then we transload it. Well, we can unload pipe, we can unload sand, we have silos for aggregate products.

00:06:24 KC Yost
Really?

00:06:24 David Nightingale
Yes.

00:06:24 KC Yost
Okay. All right. And then the chemicals, if it's liquids, you do liquids as well?

00:06:29 David Nightingale
We do. We do liquids and dry chemicals.

00:06:31 KC Yost
So you have the offloading facilities at your locations for offloading from a tanker to a truck? Or whatever it is.

00:06:41 David Nightingale
We've got grounded and bonded track. So you can offload hazardous chemicals, explosives, all that with no problem.

00:06:50 KC Yost
...inaudible. Well, there you go. 5 to 15% for a natural gas, right?

00:06:54 David Nightingale
There you go.

00:06:55 KC Yost
There you go. There you go. So anyway, into the meat of the discussion. I guess this is a two-part, three-part questions. Why are logistics so important in the energy industry? And our listeners are energy industry-focused type people. That is, what's currently at the top of customer's minds when it comes to material logistics? Is it money? Is it time? Is it both? Is it the fact that you're a one-stop shop and they can get from point A in North Carolina all the way to Pecos, Texas, and then offload onto a truck to go out to the job site somewhere in the Permian, in one fell swoop? What's the good, that stuff?

00:07:42 David Nightingale
Well, I think you and I both know it's always all about the money, right?

00:07:46 KC Yost
Sure. Yeah, yeah.

00:07:47 David Nightingale
And if you get it broken down, everything comes back to money. But obviously, some of the things that benefit our companies are there's been a... Especially since COVID hit, the supply chain has really gotten tight, both on the trucking side and on the idea that you want on-time inventory.

00:08:07 KC Yost
What do you mean it's become tight?

00:08:09 David Nightingale
Tighter in that-

00:08:10 KC Yost
Fewer players?

00:08:11 David Nightingale
The fewer players, expectations in the fact that it's not as easy to get product from here to there. And then also, we don't want a lot of inventory sitting here, because inventory costs money. So customers want to have something that I load it on here, I unload it here, it goes to work. And that's why we think it's become more critical to use the rail side because this reduces warehousing costs, it reduces response time, and it also improves cash flow.

00:08:43 KC Yost
So do you literally, let's inaudible frac equipment or whatever the case may be, or line pipe, it doesn't matter, but you actually have rail sidings where you can let the sand or the pipe sit for a period of time so that the end user can bring it out whenever they need it, and only as they need it, instead of loading it and then going out to the field, offloading it until they need it. You're providing them with that storage as well, right?

00:09:18 David Nightingale
Yes. We have a... Let's say our Loving, New Mexico facility. It's 300 acres.

00:09:24 KC Yost
No.

00:09:24 David Nightingale
Yeah. Has 1500 car spaces,

00:09:28 KC Yost
Wow.

00:09:29 David Nightingale
...and has three sets of silos on location. So you can bring in numerous products, you can store them on site if you want. Now a lot of guys want to turn around... Why we have silos is a lot of people want to turn their rail cars around really quick. So they want to bring them in, unload them into a silo, and then take them out.

00:09:48 KC Yost
Yeah. Sitting on the ground isn't generating them any revenue, is it?

00:09:51 David Nightingale
Exactly right.

00:09:52 KC Yost
Yeah. Yeah. Okay.

00:09:53 David Nightingale
But we have another facility that has nine miles of track on it. inaudible. So we have a lot of room to take care of different products. For example, when I started, our Odessa yard had four customers and eight different products. Right now, we have 12 customers and 27 different products that we handle just in our one facility in Odessa.

00:10:17 KC Yost
See, I had visions of these being 10-acre, 5-acre, 15-acre.

00:10:22 David Nightingale
They're not a little rail siding.

00:10:24 KC Yost
No, this is-

00:10:26 David Nightingale
You'd almost call it an industrial park, where we have people that rent pieces of property off us to store specific products, or if they want to... We've got a guy talking to us right now about wanting to put a mud plant on our facility. We've got pipe stored on our facility. We've got chemicals stored on our facility.

00:10:44 KC Yost
And is this all secure?

00:10:47 David Nightingale
It's all secure, yeah. We have people there 24 hours a day. It's all in-fence, and we're very secure.

00:10:53 KC Yost
Sweet. That's pretty cool. So in order to make all of this work, we're talking about rail as the primary transportation mode of whatever product we're talking about. So why is rail transportation a more reasonable for transporting material than say trucks or barges or other-

00:11:21 David Nightingale
That's a really good question. And first of all, it's like real estate. It's location, location, location. Okay? You've got to have a location that you can load your product onto the rail, and then we provide the location that's going to unload the product off rail. So if you don't have that, if those locations don't match up, then rail doesn't make sense to you.

00:11:42 KC Yost
Sure.

00:11:42 David Nightingale
But if you do have that, it's a lot easier to get product, large amounts of product, long distances on rail. And that's where big advantage is. Trucking is more flexible. Trucks can pick up anywhere, drop off everywhere, but can be a lot more costly, and can be limited on when you're handling big sizes. For example, when we ship sand on a rail car, it handles 104 tons of sand. How many trucks would that take? That takes four to five trucks.

00:12:15 KC Yost
Really?

00:12:16 David Nightingale
Yes.

00:12:16 KC Yost
Yeah.

00:12:16 David Nightingale
So you're replacing four to five trucks with one rail car. So imagine when we bring a hundred rail cars in. You're taking 450 trucks off the...

00:12:28 KC Yost
Off the highway.

00:12:29 David Nightingale
Off the highway.

00:12:29 KC Yost
And it seems to me, I did a study years ago, or found it in the Department of Transportation study that said every 18-wheeler on the highway affects the highway equivalent to over 10,000 cars.

00:12:46 David Nightingale
Really?

00:12:46 KC Yost
Because of the live loads that are placed on it, versus a car's live loads and it just affects the highway that much. That's why you see some of these highways that'll say, no trucks in this lane, or something like that. They're trying to preserve that lane a little bit more to look at it. I'll have to look up that statistic and shout it out again another time. But yeah, it was an unbelievable number. We were at the time arguing the fact that it's better to build a pipeline than to have trucks of refined product drive from point A to point B. Much easier to do that. So I can see the argument for rail. At the end of the day, it's much cheaper than truck, just because of the sheer volume that you can move-

00:13:37 David Nightingale
Exactly.

00:13:38 KC Yost
...for the distance. And that's the same thing with the A pipeline, if you will. You can move-

00:13:45 David Nightingale
Move a lot of product.

00:13:45 KC Yost
...the product, move a lot of product through that pipe, as compared to putting it on a tanker truck, of course we're talking about liquids,

00:13:52 David Nightingale
Yes.

00:13:53 KC Yost
...or refined products or whatever the case may be, but the truck has the flexibility that the pipeline doesn't. So having a location like yours for material and pipe and all of that comes in real handy. By the way, before I forget, I assume that you have ways of handling equipment as well. If someone wants to bring a reset compressor in some location, they load it on a flat bed and bring it in by rail and you can offload it onto a lowboy and take it wherever.

00:14:24 David Nightingale
You bet. We can-

00:14:25 KC Yost
So we're talking about materials as well as equipment.

00:14:28 David Nightingale
Yeah. One of our plants, we've done a lot of work because of the location. It's near a wind farm, so we've brought in a lot of wind farm products, blades, new generators, and even the towers are brought in by rail. Very interesting, because you've seen those blades, how big they are?

00:14:46 KC Yost
Oh yeah, yeah.

00:14:47 David Nightingale
They're actually put on two cars, and put on an articulated base. So when the rail cars come in, it articulates to go around curves.

00:14:58 KC Yost
Yeah. How slick as that? That's pretty cool. Pretty cool. You guys are into everything, right?

00:15:03 David Nightingale
We are.

00:15:03 KC Yost
Good, good, good. So what are the challenges that people run into when moving material or equipment by rail?

00:15:13 David Nightingale
Well, a lot of people aren't familiar with the rail, and that's a big problem. Because the railroads are complex. They try to make it easy, but the railroads can be pretty complex. So that's where we help a lot of folks. You have to find rail cars. You can't ship something unless you... You don't have to buy a rail car, you don't have to own a rail car, but you have to know who to lease the rail cars from. And you have to know how to schedule it with the rail. All of our systems are on class 1 railroads. BNSF, UP, NS, CNXX. But what doesn't happen is that transfer of that knowledge that a guy says one day, "I'm shipping on trucks. Oh, tomorrow I'm going to go ship on rail." Well, it's a little bit of a challenge to get up to par there, and that's where we can help people say, "Let's look at this a little closer. Let's look at your route. We work with the railroads to try to line up the cheapest route," and then we can give them the whole package and then they can see, "Hey, how does this compare to the other things that we want to do?"

00:16:09 KC Yost
Okay. All right. But at the end of the day, so we're talking about just the complexity and the learning curve in knowing which rail to talk to, when, and how to get the rail car and all of that kind of thing. You've already fought that learning curve. And then it's just a matter of working out logistics and, if you will, making sure that the railroad hasn't forgotten that you need to make the delivery. So I assume that there's some expediting involved and calling the rail and saying, "Where's my shipment?" inaudible.

00:16:43 David Nightingale
The railroad has a great tracking mechanism.

00:16:46 KC Yost
Does it?

00:16:47 David Nightingale
Oh yeah. We know where your rail car is 24/ 7. If you call me up today and said, "I've got this rail car. Where is it?" My guys can tell you where it's at. And we usually have enough notice that they say, "Okay, we're going to deliver these rail cars next Tuesday, or next Wednesday." And we know when they're coming in, we're ready for them, we offload them, and we can then put them back on the track ready to be hauled back to wherever they need to be hauled back to.

00:17:15 KC Yost
Okay. And rail transportation is pretty reliable?

00:17:19 David Nightingale
Very reliable. The railroads have been around for 200 years, and they're very reliable. The class 1s, even the short lines, we've had really good luck with all the short line railroads that we work with. They get it to where you need and we never see any damage, we see very little problems. And, again, they have great tracking systems so we know and can communicate where they're at at all times.

00:17:44 KC Yost
Good, good, good. So getting a little bit deeper into this, let's talk about advantages and disadvantages of using the rail systems to ship materials or equipment or that type of thing. What are the advantages and disadvantages of using rail?

00:18:02 David Nightingale
Well, if you've got a big piece of equipment and a long way to haul it, or you have a lot of material and a long way to haul it, the rails are the way to go. They're just more efficient. They can get more, haul more pounds per mile cheaper than anything else.

00:18:20 KC Yost
Short of getting a convoy to run across country.

00:18:23 David Nightingale
Well, even a convoy is going to be pretty expensive by the time... I know we were talking to a trucking company the other day about moving a piece of equipment, and we can move three of those on one rail car, and they need $15,000 a truck to move each one.

00:18:37 KC Yost
Wow.

00:18:37 David Nightingale
So $45,000. We were able to save money by move it by rail. But those are the kind of things you have to look at and say, "Is it a long enough distance to make it work, and is there enough volume to make it work?" And then you have to have the rail car, you have to have a little bit of knowledge about how the rails work because you have to know where you're loading and where you're unloading. So those start the disadvantages, because people want to get a product from here to here and they say, "Well, I was just talking to someone at one of the pipe mills, and they have a pipe mill that is not close to a rail facility." They've been-

00:19:16 KC Yost
Got a pipe mill near a rail inaudible-

00:19:18 David Nightingale
Not near a rail facility.

00:19:19 KC Yost
I've never heard of such a thing.

00:19:20 David Nightingale
I've never heard of such a thing either. And they are just starting to get lined up with a rail service because they've had to truck from their plant to a rail facility, and then from there, rail it out.

00:19:33 KC Yost
Can you tell me what state this is in?

00:19:36 David Nightingale
Here in Texas.

00:19:36 KC Yost
Texas?

00:19:37 David Nightingale
Yes.

00:19:37 KC Yost
Really?

00:19:38 David Nightingale
Yes. But she told me that, "Hey, we-"

00:19:41 KC Yost
And they make API pipe?

00:19:42 David Nightingale
They do. Big stuff.

00:19:44 KC Yost
No kidding.

00:19:45 David Nightingale
Yeah.

00:19:45 KC Yost
Not near a rail.

00:19:47 David Nightingale
Not close enough to a rail to directly load onto.

00:19:51 KC Yost
Who picked that site?

00:19:53 David Nightingale
I think they got it in acquisition, actually.

00:19:55 KC Yost
Oh, okay. All right. And before I forget, I know you're talking about that, but I want to mention you keep saying if the distance is far enough. Can you give me a rule of thumb? Is it 50 miles, is it a hundred miles? Is it 500 miles? What's a good rule of thumb?

00:20:11 David Nightingale
We think 500 miles is a good rule of thumb.

00:20:14 KC Yost
500 miles?

00:20:15 David Nightingale
Yes.

00:20:15 KC Yost
And 500-

00:20:15 David Nightingale
If it's under 500 miles, you probably are going to truck it. If it's over 500 miles, the rail is a smarter way to go.

00:20:21 KC Yost
Okay, all right. And it really doesn't necessarily matter about the volume as much as the distance.

00:20:28 David Nightingale
Yeah.

00:20:28 KC Yost
Okay.

00:20:29 David Nightingale
And size is the other thing. There are some products that, like a transformer. We've been moving some transformers. They're very heavy. They're not that large, but they're very heavy. They move those shorter distances by rail just because it makes a lot more sense.

00:20:46 KC Yost
Sure, sure. inaudible. Okay, so let's get back to the advantages, disadvantages.

00:20:51 David Nightingale
Yeah. The disadvantages, I think, are just the learning curve to get used to rail, knowing what you're going to have to get lined up before you get started. Trucking, easy. You can call a truck driver, he can be there with a flatbed trailer tomorrow, but you can't do that with rail. You've got to plan ahead. You've got to find rail cars that you can lease, you've got to get those rail cars to the proper location to load them. Those are all things that you have to build into your plan. Most of our customers are repeat customers. They already have leased rail cars, or they already have knowledge of the rail business, so they are repeat customers.

00:21:31 KC Yost
I see, I see. So if someone is new though, and they want to get something moved, how long does it take for you from the time they call you to say, "I need to move X to location Y", how long... Do you need a month to get this organized? You say that the industry is much smaller now, number of rail cars, this, that, and the other and all that kind of stuff. I remember back in the'70s, you couldn't find a GROVE B5 ball valve without a 26-month delivery time, and we were just going crazy. But are we running into that situation here? Do you have to schedule something six months in advance or a year in advance or...

00:22:19 David Nightingale
Funny you bring that up, because pipe cars are very hard to get right now.

00:22:24 KC Yost
Are they?

00:22:25 David Nightingale
They are.

00:22:26 KC Yost
Oh, cool.

00:22:26 David Nightingale
And I've had a lot of people call me and say, "Hey, do you know where we can get pipe cars?" So if you wanted a pipe car today, it might take six weeks to get that lined up. Now if you need a sand car, I can get you a sand car tomorrow. Now, depending on where you're at, it might be ready to go pretty close to you. They store rail cars all over the country. They just don't all store them in Chicago, Illinois. We store rail cars all over the country, so if you need one, there's probably one pretty close. But pipe cars, right now I've heard are very hard to get, and people are... What we've seen with some of our pipe customers is they want us to turn that pipe around really quick because they've got a limited amount of cars, so they need to get the cars there, get them unloaded, get them back, ship their next round of pipe.

00:23:12 KC Yost
I see. I see. It's interesting. Is there no way to convert a rail car that does X into a rail car that does Y?

00:23:22 David Nightingale
Pipe cars are longer than regular cars.

00:23:26 KC Yost
Are you shipping it double random length or quad random? Double-

00:23:32 David Nightingale
Double.

00:23:32 KC Yost
Double jointed.

00:23:32 David Nightingale
Yeah.

00:23:33 KC Yost
So they're double jointed, so they're 80 feet long.

00:23:35 David Nightingale
Yeah.

00:23:35 KC Yost
Oh. Okay. All right. So these are large-diameter big projects, got double jointed to cut down the amount of field welding and that type of thing. I got you. I got you. All right, inaudible. Good. All right. So anyway, if pipe cars, you say, may take you six weeks, two months to get something lined up, and then it's just a matter of fitting in to get it. So do you run into situations where you find a car that's in Tacoma, Washington that needs to be in Charlotte, North Carolina?

00:24:10 David Nightingale
Well, the cars are pretty spread out. We can usually find the cars pretty close, but we do have incidents where things... We have locomotive right now that has been on the road for two months, and it's gone within a hundred miles of where we want it to be, and just went right by.

00:24:29 KC Yost
Really?

00:24:30 David Nightingale
So it can be challenging if you're for certain pieces of product, but if you need a box car, a sand car, flat bed, those are easy to get. They're all over the country. You can get them. The railroad will help you. You can get them lined out, you can get them moving really quick.

00:24:47 KC Yost
Well, that's why these guys call you guys because you have already fought that learning curve and it's second nature to you.

00:24:53 David Nightingale
Exactly.

00:24:54 KC Yost
So let's talk about industry trends. What do you see as trends in the industry? You've got two dozen sites now?

00:25:02 David Nightingale
Mm-hmm.

00:25:03 KC Yost
Do you see yourselves having four dozen sites in the next five years because of the number or the demand for your types of services?

00:25:14 David Nightingale
Well, we think about consolidation a lot. Are we going to be growing by... We usually don't build assets. We have assets that we find near locations and we convert them. We've built one or two, but most of ours are facilities that were in place that we've restructured to do what we need it to do.

00:25:36 KC Yost
Cool.

00:25:36 David Nightingale
So we're always on a lookout for those. In fact, the Cincinnati facility, we just opened up two months ago. That was a facility that was just sitting there, no real activity. They had parked some rail cars in there, and we determined that we could use this to handle products with. So we did some work with the railroad, got it converted, and now we're managing that facility for them.

00:25:56 KC Yost
Good. Good. inaudible out there are like you?

00:26:02 David Nightingale
Oh, big ones like us, there may be a dozen to a couple dozen around the country. Short lines, some of the short lines have their own transloading groups. Not all of them, but some of them do. Then there's some big pure transloading companies like Savage and a couple others. The railroads do very little transloading. In fact, most of the class 1s are not interested in transloading. They partner up with guys like me to do the transloading.

00:26:32 KC Yost
Right, right.

00:26:33 David Nightingale
Those guys like to go long and fast.

00:26:35 KC Yost
That's right. There you go.

00:26:35 David Nightingale
They don't like to stop. The stuff that stops, like I have to do, move rail cars around and unload, they don't like that. That's not where they make their money.

00:26:45 KC Yost
Yeah. inaudible an industry association where the 12 or...

00:26:48 David Nightingale
Yeah, we do. We have-

00:26:49 KC Yost
20 of you get together and-

00:26:50 David Nightingale
We have industry meet. In fact, we are just starting an industry luncheon here in Houston. We've been doing one in Fort Worth now for a couple years. Obviously there are a lot of railroaders up there, all the BNSF folks and the people that leave BNSF and start other companies. We've been having a luncheon up there for quite some time, probably two or three years, and they just started. We're going to have our first one here in Houston in September. And then you have different organizations that have... It's more regional. They have a southwest rail group, they have a northeast rail group, they have a West Coast rail group and a southwest rail group. So they're regionally... There are about five or six different organizations that kind of cover rail.

00:27:38 KC Yost
So you guys do get together and talk with the customers and the clients and each other about what's happening and challenges and not different from what you and I used to do at INGA and the Southern Gas Association, American Gas Association. Other organizations talk about the challenges that we're facing. What would we call ourselves? Friendly competition.

00:28:03 David Nightingale
There you go.

00:28:04 KC Yost
Friendly competition. Let's talk about who's got a better mousetrap and maybe it's useful for us type thing.

00:28:10 David Nightingale
And we do a lot of work with the railroads. BNSF has a couple conferences every year where they bring in all their transloading folks and talk to them about what they're doing, what we can do to help, and it really works out well.

00:28:23 KC Yost
I was just going to ask, what do you guys do to address customer needs, and you're hitting the nail on the head right there. The railroads are a customer as well as the end user is a customer. Right?

00:28:38 David Nightingale
Right. Sometimes our customer can be the EMP company.

00:28:45 KC Yost
inaudible.

00:28:45 David Nightingale
If they're buying sand, it may be the sand company. It may even be the pressure pumping company, depending on where you're at. Sometimes the EMP company wants to handle themselves, sometimes they deal directly with the sand supplier, and a lot of times they'll deal with a next tier or a Halliburton and say, "Hey, we want you to bundle this. We're paying you one price. You get the sand, you get the chemicals, you get everything in place, and we'll just pay you."

00:29:10 KC Yost
Total turnkey.

00:29:11 David Nightingale
Total turnkey. So my customers can be sand providers, they can be manufacturing companies. They can be last-mile guys, they can be EMP companies. We've got about 50 customers that range all the way from chemical companies to EMP companies, Oxy, Kim, Chevron, they're all my customers.

00:29:33 KC Yost
What did you say? Something about syrup?

00:29:36 David Nightingale
Yeah. One of our customers makes corn syrup for Kellogg's Corn Flakes. Another one provides, you'll like this, provides a malted barley for Jim Beam Whiskey.

00:29:48 KC Yost
Oh, there you Go. There you go. There you go. There you go. I know nothing about Jim Beam. Know nothing about Jim Beam. Some days we'll talk about my college days at West Virginia University. That was a good time. Okay, so, anyway, let's get back on subject here. So basically, you spend a lot of time on the phone in dealing with a lot of issues and talking with the clients and customers and making sure that you understand what they need. I totally get it. Totally get it.

00:30:17 David Nightingale
It's all about communication. If you're running a pipeline, if you're running a rail business, you're running a trucking business, it's all about that communication. Providing the technology, that's one thing we really think we do a good job of bringing the table. We'll give you your own personal portal on your products, and you can access that portal. It'll tell you how much assets you have sitting in our yard, it'll tell you what tons of assets you've got in our silos, it'll tell you where the rail, how many rail cars are coming in, how many are empty, when they're going to go out. You can access all that from your cellphone. And technology is part of communications now. If you don't have good technology, you're not going to be competitive. So we work really hard to keep our technology upgraded and provide more and more information to our customers so they can manage their needs.

00:31:08 KC Yost
Sweet. Sweet. Okay. Well, we're running out of time, so I just want to check and see if there's anything else you wanted to add.

00:31:15 David Nightingale
Well, I think the most important thing is as we move forward, you should just look at rail as an option. I think a lot of people get down a path and they've done trucking for so long. We've opened the eyes to a lot of people that used to truck their product all the way from Houston, all the way to Odessa. And we said, "Hey, look at rail." And more and more people are looking at rail and looking at that as an opportunity to cut their costs and improve their performance.

00:31:44 KC Yost
All right. Great. And the rule of thumb is 500 miles.

00:31:47 David Nightingale
500 miles is a good rule of thumb. If you're less than that, probably trucking is easier.

00:31:52 KC Yost
Or wouldn't hurt to make a telephone call and do a cost comparison.

00:31:56 David Nightingale
Never hurts. Never hurts.

00:31:58 KC Yost
Very good. Very good. Okay, well, thanks David for taking the time to visit with us today. I've enjoyed this conversation. It's good to see you again.

00:32:05 David Nightingale
inaudible.

00:32:05 KC Yost
So if anyone would like to learn more about CIG Logistics, you can find them on the web at ciglogistics.com. That's ciglogistics.com. Thanks to all of you for tuning into this episode of the Energy Pipeline Podcast, sponsored by Caterpillar Oil and Gas. If you have any questions, comments, or ideas for podcast topics, feel free to email me at kc.yost@oggn.com. I also want to thank my producer, Anastasia Willison-Duff, and everyone at the Oil and Gas Global Network for making this podcast possible. Find out more about other OGGN podcasts at oggn.com. This is KC Yost saying goodbye for now. Have a great week, and keep that energy flowing through the pipeline.

00:32:51 Speaker 5
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