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Preferred Sands

Preferred Sands is one of North America’s largest proppant, well logistics and resin technology companies. Five former real estate investors took a leap of faith in 2005 when they saw the real estate industry forecasts begin to plummet. The young company sold its impressive $1.2 billion portfolio and acquired its first sand mining plant in Genoa, Nebraska in 2007.  

Today the Company delivers value by answering industry demands through a series of business platforms. It leverages mining, oil and gas, chemical, logistics and technology platforms to offer a unique set of innovative solutions to customers throughout the industry.

Logistics

Logistics is at the core of Preferred Sands. The Company controls, tracks and manages roughly 4,000 rail cars as it ships products from six different drilling sites to various locations in North America.

The Company began offering a logistics platform to help diversify its offerings to consumers, and facilitated the movement of large volumes of frac sand to the benefit of both the Company and its customers.  Logistics is all about efficiency of the origination and destination pairings. Because the end markets were in their infancy when Preferred Sands started, no one knew if the industry – or which markets – would take off or stabilize, which speaks to the uniqueness of its products’ end users.

The Company sells mainly to the oil and gas industries, which due to numerous extraneous influences, are nomadic in nature. Customers move around, which TJ Doyle, Executive Vice President of Preferred Sands, likens to a soccer game. “The industry moves in groups, everyone follows the ball. If oil is hot in Texas, everyone goes to Texas. If it’s hot somewhere else, they go somewhere else. From a logistics perspective you have to get into a rhythm, and this behavior provides a unique challenge. When it comes to logistics, you will never beat it; you just get better at it.”

The biggest difference between Preferred Sands’ customers and the traditional sand consumer is that the end market moves. As Doyle explains, “If you take a glass plant for example, the sand reserve and plant doesn’t move nor does the glass plant on the consumption side of the equation. You’re able to build a nice, neat relationship where you are sending rail cars back and forth and can time them down to the hour. Additionally, both plants run 24/7/365 and it’s a very efficient relationship.”

In the oil and gas market, the sand side of the business wants to run 24/7/365 to maximize efficiency, however Preferred Sands is sending to markets that are constantly changing. While crews work 24/7, products are being consumed and shipped in waves. To avoid having empty rail cars sitting idle, Preferred Sands has set up accordion features on the origination and destination ends in the form of storage.

“For a long period of time nobody really wanted to make the storage investment in the end market because of the fear that as soon as you make a significant investment in storage, everyone will start to chase a different marketplace,” says Doyle. “During the early part of the business, people were relying on third parties for storage, but now that the market is stabilizing and people see longer runs in certain destinations, they are creating large-scale and efficient storage terminals.”

Technology

Opportunities to expand and improve are around every turn for Preferred Sands. Just as important to the Company as logistics is the ability to analyze complex data streams to maximize efficiency and forecast the future of the business. The Company created a complex piece of software to analyze its business down to the smallest metrics it can possibly establish.

Doyle says, “We developed a proprietary technology over the past 12 months that initially came out of the frustration of not being able to get reliable forecasts from our customers. We fine-tuned data, which offers a more holistic view of the market – to understand who is working for who, what market shares they have, how much product they need, etc. – in order to develop a proprietary forecast model.”

The Company takes the massive data deposits, scrubs them and does a statistical analysis by translating some of the data based on its inherent knowledge of the industry in order to put together a forecast. It then back test against the actual regulatory filings to help create an even more accurate forecast model moving forward. In doing so, the Company is separating the noise from the signal to create an edge in respect to its business. The end game is to gain insights into the interaction of products as they are consumed in the market, make them work more efficiently and possibly sell new services based on these insights.

“The data itself can be meaningless – you have to clean it and analyze it in order to gain valuable insight and suggest why things occurred and what is going to occur,” says Doyle.

Safety

To quote Doyle, “Safety is the number one objective of our organization. You can’t do anything if you’re not safe.” Safety is an absolute for Preferred Sands’ culture and anyone in the organization has the ability to stop work in its place if they feel like something is unsafe. The Company employs two corporate safety directors as well as an individual safety director at each site.

A major focus for the mining company is its great reputation with the Mining Safety and Health Administration (MSHA). All employees and contractors on every site are MSHA certified and adhere to the highest standards of safety. MSHA, which is a sister arm to the more familiar OSHA within the US Department of Labor, is mandated to visit each permitted mining site in the U.S. at least twice every 12 months on a unannounced basis. Impressively, Preferred Sands recently had four visits from MSHA in four separate mines with zero citations, which is nearly unheard of.

Doyle says, “MSHA laws range from something as minor as a lid not being on a trashcan receptacle that was used for food, all the way up to something major with serious consequences. You have to take the approach that these rules are the law and understand the laws are to protect your employees. We came up with a safety slogan: Safety has no finish line. Meaning, your pursuit of perfection literally never ends.” Between technology and safety efforts, Preferred Sands prides itself on being a great value addition for its customers. The Company continuously tries to figure out what its client’s problems are and how to fix them. 

Doyle says, “We think of ourselves as solution providers. If you’re solving problems for your customers and you keep adding value, they will keep coming back and provide additional business opportunities. That is the core of our organization. We will try to get our head around any type of problem customers have and try to fix or bring solutions that may not exist. Our customers are valuable and we want to provide them with as many solutions as possible.”

Contact Us

http://www.preferredsands.com

Radnor, Pennsylvania, Unknown, Unknown, Unknown

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Preferred Sands


Preferred Sands is one of North America’s largest proppant, well logistics and resin technology companies. Five former real estate investors took a leap of faith in...

http://www.miningglobal.com/company/63/Preferred-Sands