RJV builds pressure vessels that support natural gas production and processing operations throughout western Canada.

Premier Business Partners:

LCO/ Pan Am

As natural gas prices rebound, Vegreville, Alberta-based RJV Gas Services is chomping at the bit to manufacture pressure vessels for the industry. With natural gas prices again on the rise, the company is gearing up for another busy season.

Business is beginning to pick up from a lull in 2007, CFO Paul Casey says. “The biggest driver of business for us is the price of natural gas,” Casey says. “We follow the drill bit, and natural gas prices determine how much drilling there’s going to be.”

RJV builds pressure vessels ranging from eight to 48 inches in diameter that support natural gas production and processing operations. “When the business was founded in 1976, it was to deal with the service work on lease sites,” Casey recalls.

“In 1984, the company started manufacturing pressure vessels for separator units placed on natural gas well sites.”

The company serves natural gas producers working in western Canada’s sedimentary basin, with roughly 100 natural gas producers as clients, including four of the top-five producers, Casey says. RJV operates 76,000 square feet of facility space, which houses the manufacturing of vessels, panels and electrical components, as well as space for service and supply. RJV stays efficient by being as vertically integrated as possible.

Pressure vessels, the skids for the units and the polyurethane panels that go on the unit are manufactured at separate divisions within the company. In addition, RJV operates Secure Control & Data Acquisitions, a service to drillers that allows them to control natural gas wells remotely.

Steel pressure vessels are welded by B-pressure welders and internally tested using water and air, and again tested using X-ray by the Alberta Boiler Safety Association to ensure the product meets the required standards.

Once a vessel passes inspection, it is stamped with a seal of approval from the association. Because roughly 90 percent of its orders are custom-made, RJV practices just-in-time delivery.

“It’s one of the reasons that we are successful,” Casey notes. “We build custom, but we have a stock of skids and pressure vessels on hand, so we can have a unit ready in four to five days.”

Because pressure vessel manufacturing is labor-intensive, RJV must have the appropriate number of workers during peak production. “We ship about 1,000 to 1,200 units annually, with the majority in the months of October through March and then about 30 to 50 units per month in the off-season,” Casey notes. “During our busy time, we probably work 25,000 hours a month.”

To gear up for peak production, RJV hires seasonal employees and also undergoes lay-off periods when business is slow, but is careful to keep people in positions where talent is in short supply, such as B-pressure welders.

“B-pressure welders are a commodity that is hard to find,” he notes. “We’ve brought in some people from Nova Scotia, and we want to make sure we don’t lose the guys that we’ve got. The [B-pressure welders] we have, have been with us for a long time.”

A Royal Fee
One of the programs with the potential to affect RJV’s revenues is the Alberta government’s royalty program for oil and natural gas. Because the program collects fees from producers, some have considered investing capital dollars outside of the province. “Some have relocated their budgets outside of Alberta,” Casey notes.

In October 2007, Premier Ed Stelmach outlined new royalty formulas for conventional oil and natural gas that operate on sliding scales determined by commodity prices and well productivity.

According to the Alberta government, the formulas eliminate the need for conventional oil and natural gas tiers and several royalty exemption programs.

Solid Relationships
In the future, RJV’s “strategy is to maintain a good, solid business relationship with current customers, and as our business grows through word-of-mouth, we will keep those good relationships based on our product,” Casey asserts.