By: Mark Crawford
July/August 2010

Putting costs without cutting performance is the number-one challenge in this economy. For most companies, after payroll, the next most expensive cost center is fuel. Unlike payroll, however, oilfield service companies have better options for saving money on fuel consumption.

“Fleet managers have two sources of pain associated with their fuel operations,” says Tod McDaniel, sales manager for GASCARD in Midland, Texas. “First is the security of their fuel — they only want to pay for fuel that goes into their vehicles and equipment. The second is the need for accurate data on their fleet, such as miles, hours and usage.”

Fleet managers have two sources of pain associated with their fuel operations — security and accurate data.

The “old days” for many companies — pulling up to the tank, filling out a log sheet, filling up and driving away — are disappearing as more companies are opting for computer-based fuel-management systems.

Types of systems
There are basically two kinds of systems: a passive RFID (radio frequency identification) program; and an operator-controlled program, which is the traditional card-based system that requires the driver to punch a keypad to access fuel. Both record transaction date and time, fueling data and mileage.

Basic Energy Services installed an RFID fuel management system from West Texas Gas to streamline accounting processes and keep each yard aware of its fuel consumption on a day-to-day basis.

“The number-one selling point for the RFID system is the prevention of fuel theft,” says Douglas Crumrine, fixed assets coordinator for Basic Energy Services in the Permian Basin. “We know the fuel purchased for that vehicle goes in that vehicle. The RFID system ensures that the fuel purchased for a specific vehicle is coded to that vehicle and its line of business. A fuel card can be mistakenly moved from one vehicle to another, which can cause inaccuracies in our coding process. It also saves us the headache of ordering new fuel cards every time one is lost or damaged.”

The RFID system minimizes the driver’s role (and potential for errors). This system can collect more data and can eliminate the hassle of lost and misused cards, compromised PINs, etc. The driver pulls into the site, puts the nozzle in the tank and turns on the pump. All data is accurately collected directly from the vehicle’s on-board computer.

Operator-controlled system
Pinnergy Ltd., an oilfield services company headquartered in Austin, Texas with a fleet of 130 vacuum trucks and other large vehicles and drilling rigs, uses an operator-controlled system provided by United Fuel that tracks fuel purchases by vehicle and driver. “Each vehicle in our fleet has a fuel card assigned specifically to that vehicle,” says Tom Cook, vice president and chief accounting officer for Pinnergy. “The card can only be used with the tanks in our yards or at Fuelman locations. Every employee has a PIN number that must be entered before they can gain access to the fuel. Managers and other staff who drive company-owned vehicles must use company credit cards and file expense reports for their fuel usage.” The system can be programmed to examine card usage or set limits on how much fuel can be purchased in a day, week, or month and provide e-mail notices when parameters are exceeded.

This kind of fuel-management system essentially minimizes the opportunity for theft, the single biggest escalator of overall fuel cost. “We always know who is getting how much fuel,” Cook continues. “Even if someone is stealing only five gallons a week, it shows up over time. Almost immediately after a system reporting improvement was made at one of our locations in January 2008, it highlighted the fact that someone was stealing fuel. After investigation, it was determined that a Pinnergy employee had stolen approximately $35,000 worth of fuel over a six-month period and they were terminated. The cost of the fuel card program is built into the company’s overall package with United Fuel — an extra amount on top of rack pricing.

GPS joins in
Pinnergy also uses its new GPS system provided by XATA Corporation to manage fuel usage. For example, XATA’s fleet management system plugs into the engine computer and provides a wide range of real-time engine information, such as engine efficiency and fuel consumption in MPGs in addition to location and tracking information you might expect from a GPS system. History reports by day, week, month, truck, or driver can also be generated. The data can also be analyzed to identify potential maintenance problems and get vehicles in early for service or in identifying drivers for additional training.

Maintenance matters
Despite the computer technology, plain old-fashioned routine maintenance is also critical to fuel savings. “Each time a vehicle is driven we do pre- and post-trip inspections,” says Cook. “Tire condition is checked every time. Our guys are really good — they can tell if a tire is under pressure simply by kicking it with the toe of their boot.”

Proper maintenance on schedule is also important because manufacturer warranties often require records that prove maintenance history. “For most government/ school fleets it’s a mandated requirement,” says McDaniel. “For example, school buses in Texas must have verified mileage and maintenance records.”

Then there’s common sense, of course. Drivers need to be aware of their gear-shifting habits — lugging in too low a gear, or over-revving, burns more fuel. Idling is also a big fuel-waster — if the driver is not in the truck, it should not be running. Also, newer diesel engines are not recommended to idle for extended periods of time due to the complicated exhaust regeneration systems. Finally, don’t speed — it’s been reported that every 5 MPH increase over 65 MPH results in a 7 percent increase in fuel consumption.

How much a company can save with an aggressive fuel-management system really depends on how much there is to manage.

Parting thoughts
How much a company can save with an aggressive fuel-management system really depends on how much there is to manage. A company with a fleet of five can probably run a much less aggressive system compared to a company with a fleet of 500. “Companies that have lost several hundred thousands of dollars call me to put in a system with as many restrictions and controls as possible,” says McDaniel. “For a company that doesn’t have a good handle on its fuel, the savings can be staggering.”

Considering what’s at stake, McDaniel is surprised by how few companies monitor their fuel closely. “There is no magic bullet,” states McDaniel. “No matter what fuel management system is chosen, it has to be worked on a regular basis. A company needs to monitor and audit its fuel- management system daily. Restrictions such as fuel sites, product, gallons, dollar amount and transactions per day/month should be in place to limit their exposure to theft and waste.”

“Make sure the controls are in place before implementation begins and monitor results to verify the controls are working properly,” agrees Cook. “Also investigate any anomalies quickly to be sure theft is not being perpetrated.”

Choose a fuel-management system that is as accommodating as possible for drivers, yet restrictive enough that it greatly limits the opportunities for theft or misuse. “The easier it is for the driver, and the more the system is worked and monitored, the more successful your results will be,” concludes McDaniel.