Businesses from the Pittsburgh region looking to break into the Marcellus Shale industry today received some advice from a panel featuring a keynote speaker from Shell Oil Company. Hosted by the Rotary Club of Pittsburgh, the presentation served as an informational session on how non-drilling companies can take advantage of the natural gas trapped in the rock formation underneath much of Pennsylvania's surface.
Sylvie Tran, Marcellus Management Manager for Shell, said interested businesses should do two main things before proposing to be a supplier for a Marcellus Shale company. First, she says to be engaged.
"We've seen a trend with our suppliers that they will be asking a lot more questions now than before, before making a proposal, so that business development is due diligence in terms of understanding where you fit, understanding what the needs are, and making sure the service you have to provide actually fits," Tran said.
Secondly, Tran said businesses should make connections and build relationships.
"That's how business has always been done," Tran said. "This is no different in terms of how local suppliers can get into the Shale revolution."
As for Shell investing in local suppliers, Tran said when negotiating contracts, the company has what it calls a "local content plan," that places weight on three tiers. A certain percentage must be awarded to tier one, tier two, and regional businesses that have an actual office around the impacted area, businesses within Pennsylvania, and those in states surrounding the commonwealth, respectively. Shell did not disclose the actual percentages.
"If you are certified with one of these three organizations, that's definitely something that we would consider in our decision making in terms of contract allocation," Tran said.
As a whole, the panel agreed that entering the Marcellus Shale business is not a matter of reinventing the wheel. Daniel Grottenthaler, General Manager of Kroff Well Services, said his business started with a focus on steel, and then used that knowledge and applied it to Marcellus Shale. Additionally, Craig Tumas founded Marcellus Hot Shot in June 2009, which now transports supplies to and from rigs.
Tran added that an event on August 1st called "Gaining a Foothold on Opportunity" will encourage engagement between local suppliers and select companies including Shell and Halliburton, one of Shell's prime contractors.