Paradigm shifts in the Permian Basin

ACE FLUID SOLUTIONS I PROFILE

Ace Fluid Solutions has over 10 years’ experience providing stimulation chemical and water services to the oil industry of the Permian Basin in Texas. Senior Vice President Sales and Marketing, Jody Ehler, discussed ground-breaking business practices and the changing the shape of the industry in discussion with Phil Nicholls.

Over the ten years of its existence, Ace Fluid Solutions (AFS) has quickly established a reputation as an innovative company with a tendency to challenge established operating procedures within the Permian Basin. The first instance of AFS pushing against industry norms was in 2013 and involved the apparently simple procedure of parking a chemical storage tanker full of product at a horizontal frac oil well instead of totes.

“I remember receiving phone calls from our competitors who were upset with us,” Senior Vice President Sales and Marketing Jody Ehler explained. “They said we were making a mistake and had no idea what we were doing, but we carried on doing it. Those on-site tankers have completely transformed the stimulation chemicals business. If you pull up to a frac job today, then using chemical storage tankers is the norm.”

AFS reached its current form in 2020 following the merger of two companies, each bringing a different set of skills to AFS. Experience within the chemical sector came from ACE Completions, which began in 2012 supplying stimulation chemicals for companies operating in the Permian Basin oilfield. The second company was Terra OFS, formed in 2013 and dedicated to providing water services in the Permian Basin.

Three-part business

Today, AFS operates from a 30-acre site in Odessa, Texas, with an operational rail spur and around 250 employees. The company is split into three divisions operating as one: Products, Services and Technical. Together, these divisions align to provide clients a seamless solution to managing their frac fluids with singular accountability.

The Products division focuses on the stimulation chemical side of the business. “We are highly focused on frac stimulation chemistry,” said Mr Ehler, “These products include friction reducers, surfactants, biocides, clay stabilisers and scale inhibitors. Those are about 90% of our turnover. We also produce guar gel slurries, crosslinkers and other specialty chemicals as needed by our clients.”

The Services division focuses on the water utilised to stimulate a well, including three important areas of concern.

“First, we must have reliable water sources, so AFS has secured several strategic properties holding numerous water wells to satisfy client demands,” explained Mr Ehler. “The second aspect of the water business is the water transfer, so AFS manages over 100 miles of dedicated water infrastructure, transferring water from the source to the operating site. The third aspect is the treatment of produced water thus allowing clients to economically recycle this valuable resource which ultimately reduces the environmental impact of the stimulation process.”

Finally, the third division of the company is the Technical group which operates horizontally across the products and services divisions.

“Scientists work continually to develop new product offerings that maximise performance and economics in this highly competitive

ACE FLUID SOLUTIONS I PROFILE

market,” said Mr Ehler. Additional support comes from a state-of-theart laboratory in the basin which provides AFS with the necessary tools to develop cost effective solutions to their clients in a timely manner.

New working practice

The combination of the chemicals and water into a single business is yet another example of the AFS pioneering vision. The process of integrating the ACE Completions and Terra OFS teams ran smoothly, according to Mr Ehler.

“We are pleased to say the resultant business model is an innovative approach that is slowly gaining momentum.

“It is always a challenge to bring together two different types of business,” he said. “In the chemical business, we manufacture our products in our yard so the only individual that enters the well site is the truck driver. On the water services side, the engagement with the client is much more involved because most of the interaction happens near the well site. So, it was a challenge to combine the operational aspects of these two businesses because they are so profoundly different. I think that’s a paradigm shift within our industry.”

Resolving these new operating procedures within the company was only one aspect of the challenge facing AFS. The larger issue has been overcoming opposition within the industry to this new business model.

“We have experienced resistance to this value proposition,” Mr Ehler explained. “On a marketing level, AFS is now approaching two different divisions within a client’s company. Operators today typically have separate subject matter experts for both chemicals and water, so approaching a client and trying to bring those two divisions together has proven to be quite challenging, honestly.”

Shaping the industry

This is a case of history repeating itself at AFS where innovation from the company first meets opposition, before eventually shifting the industry paradigm to accommodate a new norm. The company

wrote that playbook with its innovation in 2013, barely a year into its existence under the previous incarnation as ACE Completions.

The AFS Services division was providing water treatment and transfer support to a Permian-based operator. The numerous sources of fresh and produced water were creating a high level of variability in the water characteristics thus making it difficult to formulate a reliable chemical package for their stimulation activities.

The AFS Products division was given the opportunity to produce a viable solution using its frac fluid optimisation techniques. Today, the AFS Services and Products divisions operate in unison to provide this client a seamless offering with full accountability for the frac fluid from the cradle to the grave.

“Each day the AFS team works to fully align the stimulation chemical package with the incoming water that we are providing,” said Mr Ehler. “This alignment allows us ability to make changes on the fly before they are needed. To us, this just made sense.”

Alongside a reputation for moulding the industry, AFS is also known within the Permian Basin for the level of service it offers to clients, as Mr Ehler relates: “We’re not just a technology company; AFS prides itself on also being a services-oriented company. If you ask about stimulation chemical providers or water services in the Permian Basin, then most people will acknowledge Ace Fluid Solutions for our superior customer service in the field.”

Dynamic leaders

A new chapter at AFS has also begun with the recent appointment of Jeff Louis as President, moving on from his previous position as Chief Technology Officer.

“Jeff has a unique personality and a skill set that will serve the company extremely well,” Mr Ehler said. “In Jeff’s previous role, he was the driving force behind the technical strategy of the company and he is directly responsible for some of the recent success stories in our friction reducer product line.”

The appointment of Mr Louis as the new leader of Ace Fluid Solutions will further enhance the technical side of AFS and suggests the trend of innovation has much more to come.

Equally important at AFS is its commitment to environmental responsibility. The company’s efforts to protect the environment through 2021 saved over 2,300 days of trucking and over 13,800 gallons of diesel. Furthermore, AFS recycled 30 million barrels of water in 2021.

“The oil and gas business is a wonderful industry filled with great people,” concluded Mr Ehler. “I take a lot of satisfaction in working with these wonderful people. I particularly love talking with a customer that’s having a problem because I see that as a challenge. At Ace, we built our reputation on being flexible and providing solutions. I love dealing with problems, sitting down with a client and putting pen to paper to figure out what we can do to help our customer.” n