Graco introduces its first product aimed at oil wells

Graco Inc. entered the oil and gas world with gusto last year, buying two equipment makers that cater to the industry. Now it has developed its own product aimed at fracking and drilling firms.

The Minneapolis-based maker of spray and pump equipment introduced the solar-powered, chemical-injection pump at last month's Offshore Technology Conference in Houston.

Graco's high-powered machine shoots chemicals into the depths of the earth to ease oil extraction and prevent corrosion.

The units — to be manufactured in northeast Minneapolis — were designed to be rugged, self-powered and to work in remote, unforgiving terrain.

"These things sit out in the middle of the barren Bakken oil fields, so you have to have some kind of power. Solar is a great alternative," said Graco spokesman Bryce Hallowell.

The machines store enough power that they can pump chemicals into oil wells even if there has been no sunshine for four days, he said.

The Shaq-sized units were also designed so they won't need servicing for at least two years.

That's a "distinct advantage" over competing products already working in oil wells across the nation, said Charles "Chuck" Rescorla, Graco vice president of corporate manufacturing and corporate development. Graco's product — which took 15 months and 15 engineers and designers to bring to reality — also lets well owners control devices remotely using a cellphone or iPad.

As a result, demonstrations of the injector, tank and solar unit won positive reviews last month in Houston, Rescorla said.

"We felt good about the reception. We think our product offering will be an industry leading product," Rescorla said. "But I am also pretty cautious. We know we will have to fight our way into an existing industry where we are not the first player. We will have to convince them that Graco has a better product and they should give us a try."

Erin Roth, spokesman for the American Petroleum Institute in St. Paul, agreed but said Graco's reputation for manufacturing quality industrial equipment might work in its favor. Potential customers will scrutinize Graco's tests to see how its injector pumps compare to competitors' price, reliability and technology, he said.

"Technology is ever evolving in our industry and companies like Graco who are reputable will certainly help advance the industry," Roth said. "Their new technologies may well be something that is useful. That is for the marketplace to decide."

Graco already finished a battery of tests on equipment made by competitors including General Electric, CheckPoint and TXAM Pumps. Field tests on its own machines will wrap up soon in oil fields in Louisiana, Texas, Oklahoma and Canada. Product distribution should begin later this month.

If successful, the new injector pump will generate a fresh revenue stream and make it a contender in a well-traveled injector marketplace estimated to be worth hundreds of millions of dollars. Graco as a whole currently generates about $1.2 billion in annual revenue.

Graco will offer three models of oil-chemical injectors ranging from basic to extremely advanced and costing $1,000 to $6,000 each.

Eventually, "we think we will sell more than 1,000 units a year. But that might take us a little bit of time," Rescorla said. "This is a 10- to 20-year initiative."

Graco officials acknowledge that the oil and gas sector is dragging right now, "but we are in this for the long haul," Hallowell said. "We want to build this oil and gas business. And we have to do that through acquisitions, but then we also want to take technology that we are familiar with to develop new products."

In September, Graco paid about $110 million for Alco Valves, a British maker of high-pressure valves used by oil and gas firms. In January, Graco spent $160 million for High Pressure Equipment Co., a Pennsylvania-based maker of products used in the oil and gas, waterjet cutting and cleaning industries.

Alco and High Pressure exceed $60 million in annual sales. Graco will use Alco and High Pressure's distribution system to sell the new injector, Rescorla said.

Dee DePass • 612-673-7725