Washington Rotating Control Heads Inc. taps into the Marcellus Shale market
March 7, 2013 5:00 AM
Jason D'Allessandro removes a stripper rubber from the oven and loads another one at Washington Rotating in Washington County. The rubber piece takes an hour to bake. The rubber inserts are used in the rotating control head the company manufactures for drill rigs and ships worldwide.
Thousands of stripper rubbers are used in the rotating control head the company manufactures for drill rigs and ships.
Denise Johnston and her sister, Joyce Mayernik.
By Erich Schwartzel Pittsburgh Post-Gazette
Joyce Mayernik and her sister Denise Johnston are the first to admit they felt overwhelmed when they took over Washington Rotating Control Heads Inc. two years ago.
The drill part manufacturer started by their father and run by their brother hadn't been a big part of their lives since the days of loafing around the shop in high school. As partial owners later in life, they attended quarterly meetings but neither had gone into the family business: Ms. Mayernik was an interior designer and Ms. Johnston was a nurse.
But when Vaughn Johnston suddenly died, the sisters were left without a brother and the company without a leader. With their father retired, the responsibility fell to the sisters.
"We didn't have 20 years to learn," said Ms. Johnston.
The loss couldn't have come at a more critical time for the business, which builds and services drilling heads and "diverters" that manage mud and fluids generated by oil and gas development. Their product is one of many used on a rig, but had been mostly seen on shallow, vertical wells throughout the state.
By the time the sisters took over, Washington County had earned the nickname "mini-Odessa, Texas" thanks to the drilling boom in the Marcellus and Utica shales that lie thousands of feet below their shop near downtown Washington, Pa.
Once a business whose revenue ebbed and flowed with the greater economic picture, the Washington Rotating ownership found itself inundated with orders from some of the biggest companies in the world.
Soon after taking over, Ms. Mayernik had to turn to YouTube to learn about the drilling process. Now, two years later, the business has brought on six new full-time employees, increasing its total workforce to 22 full-time employees, to handle the growing business.
And it soon will launch a rental operation specifically created for the more sophisticated, demanding client base that's arrived with the Marcellus boom.
In the past, a driller who contracted with Washington Rotating was a guy who could stop by the store in person. When enthusiasm for the Marcellus Shale picked up, that "guy" was suddenly some of the largest, most sophisticated companies of any sector.
Two decisions were made to help attract the new, big kids on the block.
First, the company started the six-month process of becoming certified by the American Petroleum Institute. Certification from the industry group can be a dealbreaker for large companies who use the stamp of approval to weed out possible subcontractors.
"We have to keep elevating our game just to play," said general manager Tom Flickinger, who was hired by the sisters after a career helping companies in crisis.
Second, they started an offshoot called Arch Rentals LLC, an equipment rental service that will launch on April 1 and service operations within a 200-mile radius of Washington County.
Drillers based west of the Mississippi tend to rent equipment rather than purchase it like their counterparts in the East, said Mr. Flickinger. Oftentimes, they're huge operators -- think Chevron or Royal Dutch Shell -- that don't want to be weighed down by assets.
When those companies started moving into the Marcellus region, companies like Washington Rotating that don't offer temporary contracts risked getting passed up.
The company hopes to have 20 parts rented by the end of the year.
The launch of a new side business is a major change for a company that started as a spinoff itself back when the Marcellus was just an old rock.
The owners' father, Bob Johnston, was working in his machine shop in 1976 when his cousin, a driller, came by with a faulty drilling head. Mr. Johnston returned the device a week later with some new accessories, changing its bearings and seals and adding an oil line that could continually supply it with fuel.
The cousin was promised the repair would last a month; it lasted four under grueling conditions and Mr. Johnston got a new business.
Since then, most clients used Washington Rotating devices for shallow, vertical oil wells throughout Appalachia, with the company building a substantial international footprint over the years.
That changed with the advent of horizontal drilling and hydraulic fracturing, which unlocked deep reservoirs like the Marcellus around 2007. Business has grown about 10 percent year-over-year since 2008, said Ms. Mayernik. The private company declined to release more specific revenue figures.
Its parts have been used by drillers around the world -- one recently finished diverter costing about $50,000 sat in the shop this week ready for a client in Africa and operations manager Rick McGinney took a call from Oman on Monday.
Since taking the reins, Ms. Mayernik and Ms. Johnston started hanging flags in the shop from every country where company equipment has been used, a mini-United Nations display intended to remind workers where their products will end up. The list includes heavily drilled pockets of Russia and nascent formations in Indonesia. The company is eying potential business in Australia, where Mr. Flickinger said analysts are expecting a drilling boom.
It's a far cry from the early days of YouTube tutorials, though some touches of Ms. Mayernik's former design career can be seen in office she shares with Ms. Johnston. It is christened with shining hardwood floors and Restoration Hardware lighting fixtures.
A big table serves as a workspace for now -- the two sisters are still searching for a desk they both like.