Priming the Pump: Surviving volatility in the oil and gas market

A 70-tonne piece of energy equipment had to be sent by air to the inland city of Erbil, Iraq, from Bakersfield, U.S., in February. Many thought it couldn’t be done due to the sheer length and size of the cargo, and the fact that it had to be transported in one piece. Ruslan International, a joint venture between Antonov Airlines and Volga-Dnepr Airlines, was asked to ship the cargo, an oil refinery stripping tower, using an An-124-100. It took more than a month just to plan how to do it.

First of all, the tower – measuring 126 feet by 12 feet by 12 feet, with protruding elements – was 6.5 feet longer than the cargo floor of the aircraft. To accomplish the mammoth lift, Volga-Dnepr Unique Air Cargo designed two special transportation cradles developed with 3D modeling. Timing was critical, but they got it done. Even with the price of a barrel of crude oil at a less-than-optimal level, the energy business marches on.

At press time, the price of crude oil was about US$60 a barrel, but it had dropped to a low of $46 at the start of the year. While most airlines welcomed the dramatically lower fuel costs, the oil exploration industry went into a nosedive as the more expensive methods of oil production – tar sands extraction, oil shale, hydraulic fracturing, etc. – quickly became financially dubious.

But in spite of this volatility, there is still interest in oil exploration, and still plenty of work for the carriers and forwarders who provide logistical support for energy businesses. Oil exploration takes place in virtually every harsh climate – from burning desert sands to humid jungles to the frozen tundra of the Arctic. In many cases, there are no roads, railroads or ocean port facilities near these often-remote locations. But there usually is some kind of airstrip, and the industry must rely on airfreight – there is simply no other option.

And there is optimism even during the current slow period. Like all things cyclical, the price of oil will bounce back, said most logistics firms specializing in the energy field; it’s just a question of time. Soft energy prices are not halting airfreight initiatives in the oil-and-gas industry.

In fact, even with the recent slowdown, existing projects have not been cancelled, and future projects are being planned.