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March 2009
Servicing Petroleum Systems
By Ellison Clary
 There were many lessons learned in 2008. One standout is the assumption that gas can be pumped whenever it is needed. Hurricane Ike taught most Carolinians how vital the flow of petroleum products is to everyday life.

      As a petroleum equipment distributor, Charlotte-based SouthEastern Petroleum Systems, Inc. (SEPS) is in the business of responding to this need and thrives on the ability to move product from tanks, in and above the ground, to nozzles which fuel vehicles. The company based off Brookshire Boulevard installs, services and maintains commercial and retail vehicle fueling systems of all sizes.

      Typical projects include petroleum handling equipment and its installation for retail convenience stores costing in the neighborhood of $300,000, with additional expenditures for maintenance, to equipment and installation for operators of private fleet fueling systems where the costs can range anywhere from $50,000 to over $500,000 depending on the size of the fleet and types of vehicles.

      “Our strategy is to focus on our customer’s specific needs,” says Blair Shwedo, owner and president of SEPS. “We understand who our customers are and we tailor our products and services accordingly.”

 

Filling a need

      Shwedo traces that credo to what he learned from an influential mentor three decades ago. Fresh out of the UNC Chapel Hill, Shwedo signed with Union Carbide in Charlotte where senior sales representative Curt Brown took him under his wing.

      “Find a need and fill it,” Brown taught Shwedo. “Find out what the customer is looking for and then turn around and meet their needs.”

      That simple philosophy has served Shwedo well. When he bought the company in 1992 from its founder, it was primarily service-oriented and, with four employees, the business base was limited to the Charlotte vicinity. Today the firm boasts 27 employees and annual revenues in excess of $6 million. And in addition to the Carolinas, they are licensed to operate in Georgia and Virginia.

      The company has a 15,500-square-foot facility in Charlotte and 5,000 square feet in Columbia, S.C. It also has a special projects presence in Atlanta.

      “It’s been an exciting adventure,” says General Manager Chris Blumberg, who joined SEPS a year after Shwedo took control. “You just get up every morning and go for it again,” she says. “I love what I do.”

      Strong on service, SEPS handles both retail and commercial business. Retail convenience store owners range in size from the single mom-and-pop operators to the national chains and major oil companies. “We have a lot of factory training and we are authorized to service and install a large variety of products,” Shwedo says.

      A tour of the Charlotte warehouse reveals a staggering assortment of equipment.

There are pumps that push petroleum out of huge underground tanks and into the fuel dispenser used to fill a vehicle. There are various gadgets for the dispenser itself, from electronics for credit card transactions at the pump to hoses and nozzles. Then there are scores of items for the cash prepay and post pay options, environmental monitoring and protection equipment, and fuel management programs.

      There are even breakaway valves on dispenser hoses for the absent-minded motorist. “If somebody drives off with the nozzle still in the tank, which happens a whole lot more than you’d think,” Shwedo chuckles, “the valve will break. It will separate. Then you can come back and reconnect them, if it doesn’t get damaged dragged down the highway.”

      SEPS stocks a large variety of specialty products. Filters for dispensers that allow for using an ethanol-blended fuel were big six months ago when gasoline bumped $4 a gallon. Now they languish in the warehouse. Another special product Shwedo points to is an absorbent cloth that shuns water but absorbs oil.

      Not in the warehouse, but a major part of any service station, are gasoline storage tanks. A standard 20,000-gallon tank has a 10-foot diameter and is about 35 feet long. For installation, SEPS digs a hole 16 feet deep to bury such a tank on a bed of stone, and then covers it with three feet of crushed stone and concrete.

      Generally, a convenience store will use a 20,000-gallon tank for 87 octane gasoline and a 12,000-gallon vessel for 93 octane. A blend valve at the dispenser creates the mix that produces 89 octane. For diesel, a typical station may use an 8,000-gallon tank.

      SEPS also deals in software and hardware that accounts for gasoline dispensed—fuel management programs.

      Private fueling for some companies is essential, for others it is a business choice. As the expense of fuel represents a larger percentage of a firm’s cost to do business, the benefits of an on-site private fueling system, once feasible for only large fleets, are now being enjoyed by smaller fleet owners.

      “With the continuous fluctuations in fuel prices, our customers have been able to put money to the bottom line through management systems that automatically track and account for fuel usage by vehicle and/or user,” says Shwedo. “When people invest in fuel management, they typically save a lot in product, because it provides accountability and discourages theft. In some instances, inventory can be reduced because operators know in real time what volume they are using and can schedule deliveries accordingly.”

      Another big commercial seller for SEPS is fuel tanks for reserve generators, the type many office buildings depend on to kick in when electrical power is interrupted.

 

Blend of customers and installations

      Area locations where Shwedo’s company has performed projects include aboveground tanks with high-tech fueling systems for ground support vehicles at airports.

      At marinas on Lake Norman and the Intracoastal Waterway, the firm has installed and maintains boat fueling systems. Marinas are an interesting challenge according to Shwedo because the proximity to water means all fittings must be extra tight, using pipe with a hard metal shell, to avoid leakage.

      Marina jobs are like a normal commercial job on steroids,” Shwedo says with a head shake.

      “Emergency generator fueling offers its own challenges,” Shwedo continues, “as we often find ourselves dealing with uptown mobilization challenges such as traffic, parking and off-loading of equipment.”

       Shwedo justifiably takes pride in 24/7 service, attests Larry Hunter, environmental manager for the Southeast Division of Circle K Stores, Inc. Shwedo’s firm is the primary gasoline contractor for Circle K stores throughout North Carolina and the majority of South Carolina, says Charlotte-based Hunter.

      “Everybody has issues and problems,” Hunter says. “It’s how you handle the problems that make you a good contractor. SouthEastern is very responsive, and that starts with Blair.”

      On a recent Saturday afternoon, a Charlotte Circle K sought fast service for a minor product release. “SouthEastern was on the site within an hour,” Hunter says. “I don’t know how you can ask anybody to do any better than that.”

      Shwedo highlights performance as the most rewarding part of the business. “It’s stepping back after completing an installation and seeing a happy customer and a functioning system that you can be proud of,” he says. “I get excited when I go to a job and see our people working hard. We do have great professionals. If I could name the number one reason for our success it would be our dedicated and talented staff.”

      Not surprisingly, when hiring, Shwedo looks for “an alertness, an ability to understand and learn and grasp new concepts. A work ethic.”

      Experience with petroleum is nice but not necessary and neither is a college degree. “High school, yes, we do like to see people with the ability to finish things,” he says. “If you didn’t finish high school, it might mean you’ll leave us short, too.”

 

Committed to the industry

      Active in his industry, Shwedo is the current president of the national Petroleum Equipment Institute (PEI). The organization boasts 1,500 members, illustrating how fragmented the industry is. Attempts at consolidation through mergers have largely failed, Shwedo says, because of a strong strain of individualism.

       “From a general standpoint, it is a very competitive field,” Shwedo says. “But when you start to break it down, each one of the companies that we compete with has a little bit of a niche focus. We’re probably more service-oriented,” he says, adding, “We are very well-balanced between commercial and retail.”

      The industry runs the gamut from small operations with about $1 million annual sales to those with multiple offices and yearly sales as high as $60 million.

      He believes the Institute can be invaluable for a company such as his, which is a dead ringer for what the organization’s surveys show is the typical petroleum equipment firm. He praises the PEI’s “10 Group” concept through which executives of 10 companies from widespread geographic territories meet twice a year to share best practices.

      “The more you put into PEI, the more you get out of it,” Shwedo says, adding that he and two of his employees soon will attend a seminar in St. Louis for service and construction managers.

      At 51, Shwedo plans to lead the company for many more years. He’s done some thinking about what that future will look like.

      “We’re anticipating a fair number of changes,” he muses. “Some of it has to do with biofuels, ethanol and biodiesel. Compatibility of materials is an issue in handling them. The infrastructure is going to have to grow. There’ll be more tanks. It will be good for business.”

      With much higher performing diesel engines poised to invade this country from Europe—where 50 percent of cars now sold are diesels—Shwedo predicts a boom of such vehicles on American roads in a few years. The new diesels are powerful, fuel-efficient, quiet and smokeless, he says.

      Environmental concerns will continue to grow, Shwedo forecasts, and adds that he’s confident his industry will adjust to green-friendly measures.

      Keeping up with changes, many related to new regulations, is perhaps the most challenging element of operating a petroleum equipment business, he concedes.     “Sometimes it can be frustrating, when you’re piecing together a system for a customer, and the rules are changing as you’re putting it together.”

      A recommendation that’s been on a customer’s shelf for a few months may cry out for an update when that customer gives Shwedo the go-ahead. Shwedo might point to a product that has been introduced since the recommendation was made and say, “We’d feel better if you put it in there.”

      A bit farther down the road, Shwedo is fairly certain the electric car, in some form, will be a player in individual transportation.

      Noting his age, Shwedo surmises, “I will be able to retire with plenty of petroleum still being dispensed in our market area. But the energy situation doesn’t stagnate. People that choose not to keep up with the changes will disappear.”

Ellison Clary is a Charlotte-based freelance writer.
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