September 23, 2011
Gateway Engineers teams with Bowman Consulting on ‘one-stop shop’ for oil and gas clients
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Date: Friday, September 23, 2011, 6:00am EDT
Two engineering firms, Pittsburgh-based Gateway Engineers Inc. and Virginia-based Bowman Consulting, are joining forces to tackle a growing workload from oil and gas clients.
The partnership, dubbed Gateway Bowman, means the two companies share all Marcellus-related work, with one company serving as the prime contractor and the other as a sub.
“We’re teaming up to pretty much be the one-stop shop,” said Ryan Hayes, director of business development for Gateway.
Gateway has about 130 employees, and Bowman has 270 firmwide.
Last month, Bowman opened an office near Gateway’s headquarters at Foster Plaza in Green Tree. Bowman has 10 employees — environmental specialists and a land surveying crew — and the company is “in an aggressive hiring mode right now,” said James Hall, a vice president at Bowman.
Bowman is looking for more environmental specialists, licensed surveyors, engineers and professionals experienced in pipeline design. Michael Pointer, a Pittsburgh native, oversees Bowman’s office here.
This is the first such partnership agreement for Gateway, but Bowman has been down this road before. It has a similar arrangement with a Chicago firm to service wind industry clients.
Gateway’s motivation for pairing was its growth in the Marcellus since 2008, when it had no clients in the industry, to now, when about 40 to 50 percent of its revenue comes from oil and gas, said CEO Mike Zavoina.
“It’s good, but it was new to us,” he said. While the companies Gateway was serving, such as Range Resources and Atlas Energy, which is now Chevron, doubled and tripled their staff, Gateway hasn’t been able to keep pace.
It has turned away potential clients to focus on existing ones, especially because Marcellus companies tend to spread the word about their contractors, good and bad, Zavoina said.
“We’d rather do less and do it well, than get in trouble and lose it all,” he said.
Gateway was juggling 17 to 20 different subcontractors for energy projects, Hayes said, so the firm began to look for a company that could serve as the single subcontractor on all oil and gas jobs.
Zavoina decided it would be better to partner with another firm than staff up enough to service the Marcellus alone.
“There’s a risk in client concentration that we’re already going through,” he said. “We take the hiring thing very seriously. We commit to our employees.” And the decision to partner was partly to “spread the risk.”
The arrangement also gave Bowman what it was seeking: entry into a new market and an established Marcellus client base.
Gary Bowman, the firm’s president, said the company spent about a year picking a suitable partner.
Bowman’s friendship with Zavoina linked the two companies, and “there was already this reservoir of trust between the firms,” he said. Plus, “Gateway had this tremendous amount of work and this need.”
Bowman expects to have 40 or 50 employees in the Pittsburgh office by the end of 2012.
“This is a big diversification for us,” he said. “Historically, we’ve been a land development firm concentrated in the D.C. area.”
In April, Bowman opened an office in Phoenix, and the firm is looking at options in the western and southern parts of the country. Once settled in Pittsburgh, Bowman plans to open another gas-related office in northeastern Pennsylvania.
Dustin Kuhlman, principal at Civil & Environmental Consultants Inc. Civil & Environmental Consultants Inc., said the Gateway Bowman combination is “probably a good move if they’re looking for capacity.”
Competition among engineering firms is intense in the oil and gas sector, he said — sometimes six consultants will go after a single well pad construction bid. But more commonly, Marcellus companies will develop a level of comfort with particular engineering companies and rely on them for work, without bidding the projects.
That’s how CEC gets most of its contracts, Kuhlman said.
That’s part of the reason Bowman decided to partner with an established firm that already has made those relationships.
“I’ve discovered, as you mature in your career, you don’t have to go and necessarily compete with everybody in the market,” he said.