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An energy opportunity that went from solar to supply

Madasyn Czebiniak | Pittsburgh Post-Gazette

Paul and Nanette Battista were struggling to find the right business model. They started with visions of a solar company and then moved on to selling maintenance repair supplies for manufacturing companies.

In 2004, inspiration struck in the form of a Marcellus Shale gas well. That well, drilled three miles from their Mount Pleasant home, helped turn the Battistas’ business — originally named for the solar concept — into a place to buy items such as fire-resistant clothing and metatarsal boots meant to help those in the oil and gas industry stay safe while doing their jobs.

Sunnyside Supply, begun in the couple’s garage in 1980, has been on Smith Twp. State Road in Slovan, Washington County, about 28 miles southwest of Pittsburgh, since 1995. In its two-story main building, florescent yellow shirts, neon-colored gloves, thick denim blue jeans and safety glasses wrapped in clear plastic packaging are displayed on high shelves.

Getting into oil and gas was a good move for the Battistas, who watched their business grow from $1 million to $6 million in sales from 2008 to 2013. But now the couple is seeing a slowdown, partly due to increased competition.

“This past year we didn’t really have any increase [in sales],” Mr. Battista said. “In the beginning, there were just a few of us around and now all of a sudden there’s a lot more people.”

Easy access and availability has resulted in oil and gas companies bidding out certain products as opposed to buying them based on immediate need. That has also driven prices down, Mr. Battista added.

“Where we used to charge $10, now there’s four people who want to sell this product. So now we’re down to $8 or $7,” he said.

Keeping the right product inventory takes some consideration. For example, a hose used in oil and gas extraction cannot be used in manufacturing. And because the industry, and the tools it uses, is continuously evolving, there’s no guarantee that a product will have a long shelf life.

“What we’re using today, you stock up on, [but] it might not be used tomorrow,” Mr. Battista said. “Somebody else comes up with a better idea.”

Related: Supplying the Permian Basin’s Rigs

The company has customized some of its products. Sunnyside enlisted the help of Gibsonia concrete tool company Bon Tool to manufacture products geared toward the oil and gas industry. One is the pigger hook, which is used to help workers safely remove “pigs” from a pipeline. Pigs is the industry term for large polyurethane devices that seal, push and clean a pipe of excess liquids.

“The guys aren’t allowed to crawl into the pig launchers — it’s a confined space — so we came up with a screwable aluminum handle with a hook on it so they can reach in and pull it out,” Mr. Battista said.

Sunnyside also developed a large portable container used to collect fluids, known as the pig trough.

The couple mainly works with the midstream sector of the industry, specifically the maintenance side, because there is less risk involved than in upstream and midstream construction. Those companies deal with the exploration of potential well sites and the construction of pipelines and compressor stations, which can cost a lot of money.

“You have to have more capital outright to compete in those industries,” Mr. Battista said. “Rather than put ourselves at risk, we decided to sell smaller items. The maintenance business is smaller volume, but longer over the long haul. It might be here 30 to 50 years.”

Sunnyside has worked with companies such as Range Resources, MarkWest and Consol Energy. This year, it began working with a rig company selling such items as soap to clean the rigs, antifreeze for pipes, and wire and mesh rope for lifting purposes.

“It was a very unique situation,” Mr. Battista said. “I felt the risk wasn’t as great. This company only has six rigs; we didn’t have to get as deep into specialized materials; they’re usually within two hours of us … a lot of factors went together.”

He predicts the industry as a whole will see an uptick in the next couple of years due to a variety of factors.

“We had a very cold winter so we consumed all the gas we had in storage,” he said. “We’re not putting as much gas in storage as we should because we’re using what we’re producing. I think you’re going to see more consumers using natural gas.”

 

Madasyn Czebiniak: mczebiniak@post-gazette.com or 412-263-1269. Twitter: @PG_Czebiniak

 

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