Delta Western Inc., one of Alaska's largest petroleum distributors, is acquiring vessels to access new regions of the state.

Even though it is one of the largest petroleum distributors in Alaska, Delta Western Inc. remains nimble to keep its position in the largest U.S. state.

About one year ago, Delta Western acquired shallow draft barges and tugs to make smaller deliveries to more remote locations to which it had lacked access. So far, COO Kirk Payne says this move has grown the business by 10 percent after just one full season with two new tug and barge sets. “With commodity prices reaching all-time highs, people are searching in places that have traditionally been uneconomical,” he says. “In Alaska, people are looking in more remote places for gold, silver, coal, precious metals, oil and gas. As the cost per barrel [of oil] increases, it makes more sense to look in places [they] normally wouldn't explore.

“Our business has grown as we serve these people looking in the far reaches of nowhere for these commodities.”

Delta Western has been distributing fuel in Alaska for more than 20 years to all the coastal communities from southeast Alaska up to the North Slope of the state. Payne says the company delivers petroleum and petroleum products through barges, trucks and airplanes to a range of customers that include homeowners, large and small mining operations, power plants, fish processors and fishing vessels. Heating oil and power generation make up about 70 percent of the business, according to Payne. “We distribute over 100 million gallons of fuel annually,” Payne says. “Revenues are a function of the price of fuel. Revenues can be a lot at times, but it does not reflect profitablility.”

Alaskan Challenges
Payne says Delta Western is a resourceful company that remains adaptable to anything the region has to offer, including extreme changes in weather. “Operating in Alaska means that we have to be fairly nimble and able to restrategize because the big thing here is the weather,” Payne adds. “When we have large mobile assets in operation, the longer they sit, the more they cost. Being able to redeploy efficiently is what we're very good at.”

Payne adds Delta Western is the only distribution company that will engage in risk-management tools not only for itself, but also for its customers. This need has arisen in the last year or so as energy prices remain volatile, and some of the tools the company utilizes include futures contracts and options.

“It is something we saw as an opportunity to offer additional services to our customers, and it allows us to manage our business better,” Payne says. “We've had good customer response, and folks are taking advantage of the different tools and instruments we have offered. It has allowed them to manage their business better. It has allowed them to be more successful, and if they're more successful we're more successful.”

Safety and Environmental Concerns
Delta Western says there is nothing more important than the safety of its customers, employees and the environment, and the company has developed a program for injury prevention.

“Our safety program involves both management and employees in identifying and eliminating hazards that may develop during our workday,” the company says. “Ongoing training for employees and managers is an integral part of this program. Managers are responsible for the safety of their employees in maintaining safe operations to eliminate any hazards. Employees are required to comply with all company safety rules and are encouraged to actively participate in identifying ways to make our company a safer place to work.

“Equally important is conducting our fueling activities in a way that we respect and ensure the safety of our customers, employees and the environment. Protecting the environment and the safety of our employees and that of our customers is the primary goal of Delta Western during fueling activities.”

Delta Western says its environmental policy is to operate in the safest and most environmentally responsible manner possible. The company also says it complies with all regulatory requirements and operates in a manner that provides the highest environmental protection possible.

Bright Future
Payne explains that as long as commodity prices remain volatile, Delta Western faces a double-edged sword. “Communities in Alaska will somewhat suffer, but opportunities in villages and remote areas of Alaska exploring for these precious metals, oil and gas will continue to be there,” Payne adds. “The state as a whole is in a really unique position where it benefits from the high price of oil.

“However, some communities do suffer. It is a natural hedge for the state overall, but the state's legislative bodies have an opportunity to find a balance between the high cost of energy in rural Alaska and the revenue the state generates from the development of state resources. The state government benefits from high commodity prices but the residents and developers pay more for energy to develop the resources.”