Danos Scores Big in the Permian: Modular Approach Brings Success for Danos

Thursday, April 30, 2020

Original article featured in the April 2020 issue of Gas Compression Magazine - Contributor Daniel Foelber

Growth Abound

Companies large and small have set their sights on the Permian Basin where they think lower break-even costs per barrel can be obtained by fracking the region's vast reserves. The Permian has been the go-to answer for majors such as ExxonMobil and Chevron, both of which plan to ramp production close to 1 million barrels of oil equivalent per day (boed) by 2025. Evolving that goal to reality will take hard work from oilfield services operators like Danos who has been in business since 1947. 

In response to growth out of the Permian Basin, which is now the highest-producing oilfield in the world, Danos has been actively pursuing contracts in the region. Danos specializes in contract delivery, especially with the remote nature of greenfield projects in the Permian Basin. Danos leverages a prefabrication model where it can reduce onsite man-hours and logistics by performing a majority of the fabrication work offsite in its Louisiana fabrication facility. “Danos has delivered several previous projects for these particular customers in the Permian, so there is confidence in our ability to deliver with competent personnel. We are also currently in the process of opening an office in Loving, New Mexico, to better support activity in the region,” said Danos owner Mark Danos.

A Modular Approach

Danos’ modular approach, which standardizes facility designs to make installations more efficient, was initially met with skepticism but appears to work well in the current commodity price environment. With natural gas prices at a 3.5-year low and West Texas Intermediate (WTI) crude oil, the commonly quoted benchmark along with Brent, as low as US$20.06 per barrel to mark an 18-year low, exploration and production (E&P) companies are doing what they can to cut costs without impacting project execution. This becomes all the more difficult with rising costs out of the Permian, which has intensified the need for experienced operators.

According to Danos, the significant reduction in field personnel, equipment needs, and time on site have allowed the company to work around local resource challenges to provide outstanding contract delivery. “The savings [our customers are] seeing on both cost and schedule are allowing them to pursue additional work, creating more opportunities for both parties,” added Mark Danos. “The standardized design is critical because it allows the learnings from each project to be transferred to the next – reducing the incremental cost of each additional facility.”

From a logistics point of view, Danos’ project management team coordinates the various internal disciplines Danos provides, including civil, mechanical, instrument and electrical, as well as managing cost, schedule and overall delivery to customers. “Once the facility is commissioned and online, our production services group is positioned to maintain and operate these facilities through their life, “said Mark Danos.

According to Danos, Permian customers are looking for turn-key contractors to deliver their new facilities, so it’s important to have an effective project management group that can take the lead early on to work with customers and their design teams.

Danos is able to manage its projects from its Permian headquarters located in Midland, Texas, USA. “We provide all disciplines to complete these projects including civil and mechanical work, piping fabrication, instrumentation and electrical as well as painting and insulation. A key differentiator is our ability to engineer and provide dimensional controls allowing us to build and test a majority of the work-scopes in Louisiana, reducing onsite man-hours by up to 50% in some cases,” said Mark.

Relevance to Gas Compression

Danos offers a wide variety of products and services directly related and ancillary to the gas compression industry, including automation, coatings, construction, fabrication, instrumentation and electrical, mechanical maintenance, production workforce, project management, regulatory compliance, scaffolding, shorebase and logistics, specialized consultants, and valve and wellhead.

Danos’ fabrication work on compressor stations in the Permian can help companies overcome challenges they are facing in this remote and difficult location. “We have been able to effectively overcome some of these obstacles and support our customers’ needs by applying technology to make our workers more effective and by modularizing facilities to reduce site installation requirements,” said Mark Danos.

Unsung hero

The infrastructure work that Danos is doing in the Permian Basin is critical for the longevity of the region’s contribution to the gas compression industry. “As a third generation, family-owned provider with a 73-year history, our customers have come to recognize Danos as a company they can trust,” said Mark. “At Danos, our purpose, values and high-performance culture traits are fundamental to how we do business. From our corporate office to every platform and well pad we service, our team is committed to our core beliefs.”