Do you want to start an oil and gas pipeline construction business? If YES, here’s a complete guide to starting an oil and gas pipeline construction business with NO money and no experience.
The most suitable and safe means of transporting petroleum products and gas in the United States of America and in most developed countries of the world is via pipelines and no doubt, those that are involved in the construction of oil and gas pipelines are known to generate good revenue.
As an investor that wants to start a business with good profits, and a business whose products will not only be sold and used in the United States but other countries of the world, then you can consider starting an oil and gas pipeline construction company.
If you want own an oil and gas pipeline construction company, then you would need to obtain all the necessary permits before you can legally launch the business. Although there are competitions at various levels in the industry, but if you are able to come up with a good business strategy, then you are sure of getting your own fair share of the available market in the industry.
So, if you have decided to start an oil and gas pipeline construction company, then you should make sure that you carry out thorough feasibility studies and also market survey. This will enable you properly locate the business in a location that can readily give you clearance and permits to start your oil and gas pipeline construction company.
If you are interested in starting an oil and gas pipeline construction company in the United States of America, then you should read through this article in order to get the required information and direction to follow.
Steps to Starting an Oil and Gas Pipeline Construction Business
1. Understand the Industry
The oil & gas pipeline construction industry is made up of contractors that are responsible for the construction of gas and oil pipelines, mains, pumping stations, refineries and storage tanks.
Please note that this industry also includes construction management companies and special trade contractors that are primarily involved in oil and pipeline construction. The Oil and Gas Pipeline Construction industry constructs pipelines that are essential for transporting fuel supplies to households and businesses.
Overall, declines in energy prices, specifically in the world price of crude oil, have limited capital expenditures by energy extractors as they wait for energy prices to rebound before augmenting production capacity. However, industry activity has been bolstered by the US government’s lift of the ban on raw crude oil exports.
Looking forward, the industry is projected to experience strong demand, as new natural gas resources have caused existing pipelines to reach capacity
Research conducted by IBISWORLD shows that the geographic distribution of industry activity bears little correlation to US population distribution and general economic activity (i.e. GDP). The report stated that the reason for this factor is because industry activity is concentrated in the regions close to gas and oil resources in the Southwest and Southeast.
Industry activity is low in the Mid-Atlantic (8.8 percent of establishments), the Plains (5.1 percent), New England (1.7 percent) and Great Lakes regions (9.2 percent).
The largest states in terms of establishments are Texas (27.4 percent), Louisiana (6.4 percent), Oklahoma (6.6 percent) and California (5.0 percent). The Southwest region accounts for 36.2 percent of industry establishments. This is representative of the concentration of oil and gas resources in the region, most notably Texas.
The Oil & Gas Pipeline Construction Industry is indeed a major sector of the economy of most countries in the world. Statistics has it that in the United States of America alone, the oil and gas pipeline construction industry generates over $55 billion annually from more than 2,337 registered and licensed oil and gas pipelines construction companies scattered all around the United States of America.
The industry is responsible for the employment of over 198,077 people. Experts project the oil and gas pipeline construction industry to grow at a 2.6 percent annual rate between 2013 and 2018. Please note that no company can boast of having the lion share of the available market in this industry.
Some of the factors that encourage entrepreneurs to start their own oil and gas pipeline construction company could be that the business is a thriving business and the products can be sold not just in your country but all across the globe.
Good enough, the oil and gas industry is experiencing a rebound in the United States of America and this in effect means that there will be increasing demand for gas and oil pipelines, mains, pumping stations, refineries and storage tanks hence a new comer into this line of business still has the opportunity to get a fair share of the available market.
Just like any other business, if you are able to conduct your cost analysis, market research and feasibility studies before launching your oil and gas pipeline construction company, you are more likely not going to struggle to grow the business because there are loads of oil and gas contractors that are ready to buy from you.
Lastly, starting an oil and gas pipeline construction business can be financially tasking and challenging, but the truth is that it can be rewarding at the same time.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who make use of gas and oil pipelines are those who are involved in the oil and gas industry. The bottom line is that the accelerating construction in the oil and gas sector will continue to boost the demand for gas and oil pipelines, mains, pumping stations, refineries and storage tanks.
If you are thinking of starting your own oil and gas pipeline construction business, then you should look beyond producing and marketing your products to just businesses in your city, but also people across the United States of America and other part of the world especially if you have a product that can favorably compete in other parts of the world.
3. Decide What Niche to Concentrate On
The oil and gas industry is one of many industries that are highly regulated by international organizations and the Federal Government.
If you choose to start an oil and gas pipeline construction company, you can be rest assured that there is no niche area in this line of business, but it is important to state that most oil and gas pipeline construction companies are also involved in one or more of the following;
- Gas and oil pipeline construction
- Gas main construction
- Oil refinery construction
- Pipeline repair and reconstruction (Pipeline additions and alterations)
- Pumping station construction
- Natural gas processing plant construction
The Level of Competition in the Industry
The level of competition is oil and gas pipeline construction industry ranges from moderate to high depending on where you are operating from.
This is because major gas and oil pipeline brands manufactured in China, Germany, France, Norway, Italy, United Kingdom etc can be found all across the United States of America. So, it will be right to say the competition in the oil & gas pipeline construction industry is tough.
But come to think of it, if there are no competition in an industry, it means the industry is not profitable or a major player is monopolizing the market. The fact that there are 2,337 registered and licensed oil and gas pipeline construction companies scattered all around the United States of America shows that the industry is profitable hence the competition.
4. Know the Major Competitors in the Industry
Irrespective of the industry that you decide to pitch your business tent in, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands have been in the industry for a long time, while others are best known for the quality of their products, how they conduct their businesses and the results they have achieved over the years.
These are some of the leading oil and gas pipeline construction companies in the United States of America and in the globe;
- Texas Energy Corridor Systems LLC
- Core Services Inc.
- Taylor Construction Inc.
- Prime & Oil Gas Corporation
- Beta International Inc.
- Jojones Engineering
- 3 D Construction and Excavation
- 4M Energy Services, LLC
- 522 Energy Services Corp.
- Absolute Pipeline Maintenance & Construction
- AB Welding
- Acero Pipeline Construction
- Adams, J M Roustabout & Pipeline Construction Inc.
- Advantage Pipeline & Construction, LLC
- Affordable Gas Piping
- A & E Pipeline Services LLC
- Oil & Gas Pipeline Construction Company | United Piping Inc.
- TLC Pipeline Construction
- Barnard Construction Company, Inc.
- Jomax Construction Company
Economic Analysis
When starting an oil and gas pipeline construction business, you must get your costing cum economic analysis right if you want to generate profits, grow the business and perhaps expand the business and start competing at national and international levels.
When conducting costing and economic analysis for your oil and gas pipeline construction business, you must ensure that you align your plans with what is obtainable in the international markets. So also, as an oil and gas pipeline construction business owner, you just have to have a proper grasp of your competitive landscape if indeed you want to maximize profits and be in the frontline of the industry.
It is important to note that raw materials, transportation and machine maintenance cost are some of the most important factors contributing to the overall cost of operating this business and should be considered as a major factor when carrying out your costing and economic analysis.
This is why standard oil and gas pipeline construction companies would prefer assembling in – house maintenance and servicing team as against contracting the maintenance of their machines which may result to downturn in the factory.
5. Decide Whether to Buy a Franchise or Start from Scratch
Regrettably, you can hardly find the franchise of an oil and gas pipeline construction company to purchase meaning that if you want to start your own business, then you must be ready to start from the scratch.
The truth is that it will pay you to start your oil and gas pipeline construction company from the scratch. Starting from the scratch will afford you the opportunity to conduct thorough market survey and feasibility studies before starting the business.
Beside, most of the successful oil and gas pipeline construction companies around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success.
6. Know the Possible Threats and Challenges You Will Face
The possible threats and challenges you will likely face when you start an oil and gas pipeline construction company are the inability to compete on tender, the fact that you must comply with government regulations and of course easy and unhindered access to a multi – skilled workforce.
Some other threats and challenges that you are likely going to face is economic downturn and unfavorable government policies. Another threat would be the arrival of new oil and gas pipeline construction companies or even international merchants that deal in gas and oil pipelines manufactured outside of the United States of America.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
When it comes to starting an oil and gas pipeline construction company, the legal entity you choose will go a long way to determine how big the business can grow.
By and large, you can either choose a general partnership, or limited liability company for your oil and gas pipeline construction company. Ordinarily, general partnership should have been the ideal business structure for a small – scale oil and gas pipeline construction company, but if your intention is to grow the business and supply your products all across the United States of America and perhaps other countries of the world, then choosing general partnership is not an option for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your oil and gas pipeline construction company; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes. If you take your time to study the various legal entities to use for your oil and gas pipeline construction company, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
Please note that when you Upgrade to a ‘C’ corporation or ‘S’ corporation, it will afford you the opportunity to grow your oil and gas pipeline construction company so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures.
8. Choose a Catchy Business Name from the ideas Below
When it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will create a perception of what the business represents.
If you are considering starting your own oil and gas pipeline construction business, here are some catchy names that you can choose from;Prime® Oil & Gas Pipes, LLC
- Circular Team® Oil & Gas Pipeline Construction, Inc.
- Allison Parker® Oil & Gas Pipeline Construction Company
- Joe Lazarus & Sons® Oil & Gas Construction, Inc.
- Holloway Festus® Oil & Gas Pipeline Construction Company
- Shannon Pearson Oil & Gas Piping Company
- Frank Boston® Oil & Gas Pipeline Construction Company
- Oil & Gas Pipes and Pumps, Inc.
- Silver Ribbon® Oil & Gas Construction Company
- Texas Brothers Oil & Gas Group, Inc.
9. Discuss With an Agent to Know the Best Insurance Policies for You
In the United States and in most countries of the world, it is illegal to operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. Thus, it is imperative to create a budget for insurance policy cover and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your oil and gas pipeline construction business.
Here are some of the basic insurance policy covers that you should consider purchasing if you want to start your own oil and gas pipeline construction business in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Hazard insurance
- Risk Insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own oil and gas pipeline construction company, usually you may not have any need to file for intellectual property protection/trademark. This is because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even operation concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.
11. Get the Necessary Professional Certification
Apart from the results you produce as it relates to constructing effective, safe and well – accepted gas and oil pipelines, professional certification is one of the main reasons why some oil and gas pipeline construction companies stand out. If you want to make an impact in the industry, you should work towards acquiring all the certifications in the business. Certification validates your competency and shows that you are highly skilled, committed to your career and up-to-date in the market.
These are some of the certifications you can work towards achieving if you want to run your own oil and gas pipeline construction company;
- API’s new Pipeline Construction Inspector Certification
- Oil & Gas Project Management Specialized Certificate
- Degree or Diploma in Pipeline Construction Engineering and related engineering courses
Please note that you cannot successfully run an oil & gas pipeline construction company in the United States and in any country of the world without acquiring professional certifications.
12. Get the Necessary Legal Documents You Need to Operate
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own oil and gas pipeline construction company in the United States of America;
- Business and liability insurance
- Health inspection Certificate
- Tax Payer’s ID
- Fire certificate
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Employee’s Handbook
- Operating Agreement for LLCs
- Insurance Policy
- Apostille (for those who intend operating beyond the United States of America)
13. Raise the Needed Startup Capital
Starting an oil and gas pipeline construction business is capital intensive. Securing a standard production facility and warehouse is part of what will consume a large chunk of your startup capital, but if you choose to start the business on a large scale, you would need to source for fund to finance the business because it is expensive to start a standard oil and gas pipeline construction company.
When it comes to financing a business, one of the first things you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for startup capital for your oil and gas pipeline construction business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from, government, donor organizations and angel investors
- Source for soft loans from your family members and your friends.
14. Choose a Suitable Location for your Business
Starting an oil and gas pipeline construction company comes with its own challenges as it cannot be started in any location of your choice. As a matter of fact, you will not be allowed to start an oil and gas pipeline construction company in a residential estate. You can only be allowed to start an oil and gas pipeline construction company in a land designated for such business and it is usually in the outskirts of town, close to construction sites.
15. Hire Employees for your Technical and Manpower Needs
When it comes to starting a standard oil and gas pipeline construction company, you will need industrial heating machine, molds and other related equipment that will aid you in carrying out your job.
When it comes to choosing between renting and leasing a facility for your oil and gas pipeline construction company, the size of the company you want to own, and your entire budget for the business should influence your choice. If you have enough capital to run a pretty large pipeline construction company with enough parking lot for your distribution trailers, then you should consider the option of a long lease or out rightly purchasing the land.
As regards the number of employees that you are expected to start the business with, you would need to consider your finance before making the decision.
Averagely, you would need the services of the following professionals; Chief Operating Officer (you can occupy this position), Admin and HR Manager, Piping Engineers, Marketing and Sales Executive (Business Developer), Pipe Laying Technicians, Accountant, Distribution Drivers and Customer Services Executive/Front Desk Officer. Over and above, you would need a minimum of 10 to 20 key staff to effectively run a medium scale but standard oil and gas pipeline construction company.
The Services Delivery Process of the Business
Gas and oil pipelines need to be of international standard before they are used in transporting petroleum and gas products hence the need to pay serious attention to their construction.
On the average, an oil and gas pipeline construction company creates a design of the sizes and types of pipelines to be manufactured and of course the materials needed. Once the designs are approved, the raw materials are filled in containers and then heat is applied, the molten materials are poured into the mold/cast of the pipes.
After a period of time when the pipe would have fully formed and solidified, the mold or cast as the case may be are removed and the pipes are transported to construction sites where they are meant to be used.
16. Write a Marketing Plan Packed With ideas & Strategies
When you are drafting your marketing plan, make sure that you create a compelling personal and company’s profile. Aside from your qualifications and experience, it is important to state in practical terms what you have been able to achieve in time past, and the contracts you have handled in the oil and gas pipeline construction industry. This will help boost your chances in the market place when marketing your products.
Please note that in most cases, when you bid for supply and laying of oil and gas pipes from the government or oil and gas giants, you will be called upon to defend your proposal, so you must be pretty good with presentations.
Here are some of the platforms you can utilize to market your oil and gas pipeline construction company;
- Introduce your business by sending introductory letters alongside your brochure to oil and gas companies, and oil and gas equipment and materials merchants amongst others in the United States
- Promptness in bidding for supply of gas and oil pipelines, mains, pumping stations, refineries and storage tanks et al from oil and gas companies and construction giants
- Advertise your services in community based newspapers, local TV and radio stations
- List your business and products on yellow pages ads (local directories)
- Leverage on the internet to promote your oil and gas pipeline construction company
- Engage in direct marketing and sales
- Encourage the use of Word of mouth marketing (referrals)
- Leverage on the internet to promote your business
- Join local chambers of commerce and industries around you with the main aim of networking and marketing your services; you are likely going to get referrals from such networks.
- Engage the services of marketing executives and business developers to carry out direct marketing for you.
17. Develop an Iron-clad Competitive Strategies to Help You Win
The oil and gas pipeline construction industry is a competitive industry, and you must come up with unique and highly creative strategies to be able to outsmart your competitors in the industry. Part of what you need to do in order to stay competitive in the industry is to continue to manufacture durable oil pipelines, mains, pumping stations, refineries and storage tanks.
In other to stay competitive in this industry, you must ensure that you have a good technical knowledge of the product, you have the ability to control supply and align with upstream vertical integration (ownership links).
18. Brainstorm Possible Ways to Retain Clients & Customers
When it comes to business, no matter the industry that you choose to pitch your tent in, one of the easiest ways to increase customer retention and perhaps attract new customers is to produce results and satisfy your customers always. If your customers are satisfied with your products and services delivery, they can hardly source for alternative service provider or products.
Statistics has it that one of the major reasons why clients source for alternative service providers or product is when there is a drop in quality. Another reason is poor customer service.
No doubt one of the strategies that you would need to employ in order to generate repeated sales from your customers and also to retain them is to ensure that your gas and oil pipelines, mains, pumping stations, refineries and storage tanks are of international standard.
The truth is that if the quality of your gas and oil pipelines, mains, pumping stations, refineries and storage tanks and customer service fluctuates, you are likely going to struggle to get your customers coming back; people usually go for products that are of good quality.
Ensure that you offer your customers incentives if you want to retain them and of course continue to generate repeated sales from them and also to attract new customers.
Part of what you need to do to achieve this is to track progress, results or outputs with the aim of improving on them quickly as the case demands.
When it comes to managing your customers, and building loyal clientele base, you should purchase a customized CRM software. With a customized CRM system, you can easily stay in touch with your clients (you can carry out quick surveys, you can introduce new products and prices to them without any hitch, you can felicitate with them on their birthdays and other anniversaries, you can keep track of their progress, you can send bulk sms and customized e – mails and above all, you can easily receive compliant and feedback from them).
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portray your business to be. One of the secrets of large corporations is that they are willing to spend fortunes to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them to be.
If your intention of starting an oil and gas pipeline construction company is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on promotion and advertisement of your brand.
Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your oil and gas pipeline construction company;
- Place adverts on both print (newspapers and related construction/oil and gas magazines) and electronic media platforms
- Sponsor relevant community based events
- Install your billboards in strategic locations all around your city or state
- Distribute your fliers and handbills in target areas
- List your oil and gas pipeline construction company in local directories / yellow pages
- Advertise your oil and gas pipeline construction company in your official website and employ strategies that will help you pull traffic to the site.