CRU Logistics: Mastering Frac Sand Logistics in Texas

CRU Logistics was born out of CRU Trading in 2011 to solve a problem that had been plaguing the Eagle Ford Shale in Texas for years: more frac sand than anyone knew what to do with. CRU Trading specializes in petroleum product logistics via tank cars and applied the same techniques to CRU Logistics.

CRU Logistics built transloading terminals to handle all the rail logistics to and from CRU Logistics’ three facilities. All facilities serve the Eagle Ford Shale, which consists of all land south of San Antonio, Texas. Terminals 1 and 2, located in Victoria, Texas, consist of two six-packs of silos with 7.2 million pounds of storage each and serve the Eastern side of the shale play, while the Elmendorf facility, a “light model” facility completed in June 2015 with no silos, serves the entire Eagle Ford Shale. The market began to decline during the building of the Elmendorf facility, so CRU kept its expenses low by not adding on any silos, but still maintained its efficiencies. However, if a customer comes along that needs silos in place, CRU can easily erect them with the equipment already in place.

CRU Logistics knows the market can be very cyclical. “When times are good, it’s fun,” General Manager Bryant Tenorio says. “But you have to prepare for the bad times. If you don’t cover your capex, you could be in trouble when the market hits a downturn. It can happen overnight.”

Frac sand is a commodity, which is why sudden downturns are a regular part of the business. The product is tied to the global economy and that can affect the overall price and need. “When it gets difficult, people cut expenses quickly,” Tenorio explains. “Customers ask to get out of contracts very quickly. It makes us leaner and meaner. Companies that didn’t prepare are going to have a hard time lasting.“

During the second half of 2014, the market was at a peak. CRU’s ability to load a truck in four minutes allowed the company to move 77,000 tons of frac sand on eight unit trains in a month for several months on end.

“People don’t believe it when we tell them because it’s a lot of movement through a small amount of storage capacity,” Tenorio says. “We are really proud of the fact that a 3,600-ton facility was able to transload eight unit trains a month. Even I had a hard time believing we were able to pull that off.“

SandCommand™

To handle customer rail logistics and inventory control, CRU Logistics uses a program called SandCommand™. Through SandCommand™, the company gathers all data possible from the mine to track equipment and railcars and consolidates the data in a user-friendly manner. Customers can then plan accordingly based on ETAs, allowing them to know what is actually being transported so they don’t move too much or too little.

“We are very proactive about letting customers know what’s happening with their supply chain in order to keep their landed costs down,” Tenorio says. “Once the cars come in, we inspect them, we test the product in the railcars ensuring there is no contamination within the silo and check the railcar’s weight variance in order to make sure the customer is getting what they paid for.”

Everything is broken down by jobs in SandCommand™, and CRU Logistics provides an elaborate analysis for customers that they can use to rework rates with trucking companies or anything necessary to keep costs low. SandCommand™ has also been integrated with silo controls. “That’s extremely helpful because not only do you minimize human error, but you are able to seamlessly integrate your logistics with inventory control,” Tenorio explains.

Because the program has been so successful with its customers, CRU Logistics plans to commercialize SandCommand™ and its sister program, BarrelCommand™, which is used for inventory control of liquid bulk such as oil and asphalt. The company would roll out the program under a different entity and offer it to anyone who wants it, whether customers or competitors.

“Approximately six months ago, we noticed that companies were paying much more attention to cost savings,” Tenorio says. “And SandCommand™ has a way to collect data and provide analytics the customer can use. It’s a perfect way to be proactive instead of reactive in cost analysis.”

Behind the Scenes

Tenorio got into the frac sand industry in 2007. Oddly enough, he worked in publishing before moving to Texas to help a friend start a trucking company that was moving frac sand. This move coincided with the horizontal drilling phenomenon and he says that he’s been trying to keep up ever since. “CRU Logistics has typically stayed under the radar,” he says. “Only recently have we taken more to press releasing and speaking at conferences. We firmly believe that our efficiencies in transloading and logistics are what the industry currently needs to survive.”

He describes the corporate office as a small group of professionals, who all wear a lot of different hats. The president, CFO and Tenorio work hand-in-hand on a daily basis. CRU Logistics also strives to maintain great relationships with its vendors, such as Plan Architects and Diamond K, which were instrumental in building its three facilities. “We like to use local contractors if possible,” Tenorio says. “It’s better for the community and for us.”

Although CRU Logistics is a stickler for details and a tough project overseer, its vendors and customers appreciate the hard work. “You try to be creative and stay in contact with customers to help them save money and stay afloat,” he says. “We are very quick to reach out to customers to see how we could help them weather any storm. They appreciate our work and trust us.”