Sanford Nowlin Reporter- San Antonio Business Journal
Houston’s Platinum Energy Solutions Inc. will hire up to 200 people at a new South Side facility that will service clients extracting oil and gas in the Eagle Ford Shale.
Platinum has leased 50 acres at Braunig Industrial Park and is building new facilities there, including a plant to process sand for the hydraulic fracturing process used to extract oil in shale formations, according to company securities filings and economic development officials.
“From our conversations with the company, they expect to create 200 jobs with an average salary of $60,000,” says Mario Hernandez, CEO of the San Antonio Economic Development Foundation. “They’ll provide a variety of services to companies working in the shale. It’s certainly not a one-dimensional operation.”
The project joins a growing number of developments in South Bexar County by companies working in the Eagle Ford, one of the nation’s most-active petroleum plays.
Oilfield-services giant Halliburton Co. is building a 1,500-employee complex nearby, and a similar Baker Hughes Inc. facility will employ 500.
Although the EDF and other economic development groups met with Platinum during its site-selection process, none extended tax breaks or financial incentives to lure the company.
“It is our understanding that (Platinum) is using this facility to support logistics related to hydraulic fracturing,” says Lisa Lewis, spokeswoman for CPS Energy, which owns the acreage, located at Interstate 37, south of Loop 410. “That includes administrative functions, support lab/storage and maintenance facilities on the site.”
Officials with Platinum — which in February postponed a $126,000 million-to-$154,000 million initial public offering — didn’t return phone inquiries about the project.
Its broker, Terry Warth of CBRE Group, referred all questions back to the company.
Platinum provides hydraulic fracturing services, pressure pumping and sand to companies working the Eagle Ford and other shale plays.
Drillers pump sand into wells during the fracturing process to keep fissures propped open so oil and gas can flow up from the ground.
The company holds a contract with Petrohawk Energy Corp., one of the shale’s biggest acreage holders, according to its securities filings.
The Petrohawk deal, combined with a separate pact with Encana Corp. in Utah, is expected to generate average monthly revenues for Platinum of $23 million, the filing also states.
Platinum, formed in fall 2010, reported a $23.7 million net loss on revenues of $9.9 million for the nine months ended, Sept. 30, 2011, according to the most recent financial data included it its filings.
Platinum also reports that it is developing a “facility near San Antonio” to process and deliver frac sand to its shale customers. The company has leased up to 461 railcars for transporting raw material from an independent mining supplier, and it is negotiating use of a nearby rail line.
The San Antonio facility will include a high-capacity dryer and covered storage, according to SEC documents. The plant is expected to be operational this spring.
“Because we will not be dependent on third-party suppliers for dry sand or transportation systems, we believe that this will enable us to deliver (supplies) and equipment quickly to our fracturing jobs on short notice,” the company states. “We expect to be able to process the raw wet sand at lower cost than we would typically pay for dry frac sand from outside suppliers allowing us to capture additional margins.”
San Antonio construction firm Yantis Co. is among the contractors building a sand plant, an administrative building and a railyard for Platinum at the site, President Mike Yantis confirmed. Officials with the project’s general contractor, Florida-based DL Porter Constructors Inc., were unavailable at press time.
Yantis says his firm is conducting $3 million in work on the site. However, he declined to place a dollar amount on the overall project.
The development is scheduled for completion in October, although a portion of the facility will be ready sooner.
“We’re pushing,” Yantis says. “They wanted us done with the first phase in the next two to three months.”
Relocating and expanding oilfield-services companies created 2,650 San Antonio-area jobs last year, the EDF’s Hernandez says. That accounts for more than half the jobs his organization worked to attract.
Currently, the EDF is in talks with at least four additional shale-related prospects, each of which is expected to employ 50 to 100 people, Hernandez adds.
“The next phase for us is attracting the second-tier suppliers,” he says. “The investments will be smaller than Halliburton and Baker Hughes, but they’re still bringing good jobs to San Antonio.”