Rubis’s Redford sees great potential for LPG
For Graham Redford it has been a busy first year as managing director of Rubis Energy Bermuda, not least because of the $17.7 million purchase of Bermuda Gas from Ascendant Group in April.
There have been other challenges, including the ongoing weight restrictions on the St George's swing bridge that mean delivery tankers from the company's fuel depot at Ferry Reach can carry no more than two-thirds of a full load when traversing the bridge.
And there is the perennial concern of ensuring Bermuda's fuel reserves don't run dry. On that score, challenges range from bad weather preventing tanker ships from discharging at the fuel pier, to the island's relatively small delivery ships being overlooked by international suppliers who are more focused on megatanker business.
However, Mr Redford said it has been a memorable first year in charge, and he sees opportunities ahead for Rubis and Bermuda.
One of those opportunities is growing the business of liquefied petroleum gas, or LPG, as a leading energy source for the island.
Since 1957, Rubis has supplied LPG to Bermuda Gas, the island's leading retailer with 5,000 tonnes of cylinders and bulk distribution per year. That relationship began to change when Rubis became aware that Bermuda Gas had started looking at taking control of its own supply chain, and were planning to import LPG in ISO tanks.
That plan reached an advanced stage. However, Rubis, with its “considerable investment” in importation and storage infrastructure for LPG and its knowledge of dealing with the product, was not about to sit back and do nothing. Instead, as a countermeasure, it looked at entering the LPG distribution market itself.
“Bermuda Gas was likely aware that we would have been forced to enter the distribution market, so it made sense for us to approach them to try and negotiate the purchase of BGU,” said Mr Redford.
“The acquisition represents a strong add-on to Rubis's existing position in this sector. We are able to look at the whole business. Before we were only suppliers, now we can look at economies of scale.”
Following the acquisition of Bermuda Gas, the company is still leasing the Serpentine Road location in Pembroke. It is open on weekdays for custom cylinder size refills and exchanges for new composite cylinders. Mr Redford admits there has been some unhappiness from customers who, at the moment, cannot pay their bills in cash in town.
“We are working on a solution and I hope to resolve it very soon,” he said.
Bermuda Gas shut its retail appliance sales division in 2015, however a number of services are still offered, such as the aforementioned cylinder refills and exchanges, and residential installations and domestic propane appliance repairs that are carried out by a team of two certified gas technicians.
There are also technicians involved in commercial propane installations, and the company offers commercial appliance sales and servicing for businesses such as restaurants and hotels.
Mr Redford is bullish on LPG as an energy source for Bermuda, and favours it over the often more talked-about liquefied natural gas option.
He points out that LPG is a by-product of natural gas and crude oil refining, is sourced from conflict-free countries and emits fewer greenhouse gases than many other fuels. He also states that its energy efficiency across many appliances eclipse other fuels.
“LPG is a good, safe, secure fuel source for Bermuda. The infrastructure is built. It's clean, it's the best alternative, but it's not been explored in Bermuda. I will spend time to look at any opportunities,” he said.
“Rubis has a huge amount of expertise in the business. There's potential for growth in the market, and we are looking at a lot of different openings.
“We are upping our game in terms of infrastructure. We are replacing thousands of LPG canisters; they get eaten alive in this climate unless they are looked after.”
Regarding the potential for LPG to be used more extensively as a fuel source in Bermuda, Mr Redford noted that in Portugal there are Man buses, the same make as used here, that run on LPG.
He is looking at the opportunities that might present for Bermuda. He added: “LPG is an alternative for vehicles. On some islands their entire taxi fleets run on LPG.”
However, LPG is only one segment of the company's operations in Bermuda. Diesel, gasoline and white oils are also imported and distributed in Bermuda by Rubis. The French company bought Shell's Bermuda operations in 2006. The assets included fuel storage tanks at Ferry Reach and Dockyard.
In the east end the largest storage tank can hold 55,000 barrels of fuel, and there are two smaller 12,500-barrel capacity tanks. In Dockyard there are two storage tanks that can each hold 52,000 barrels of diesel.
At Ferry Reach fuel deliveries come ashore via the discharge pier that is owned by Rubis's neighbour Sol Petroleum Bermuda. Barbados-headquartered Sol bought Esso Bermuda's downstream business in 2013.
Although the pier is owned by Sol, it is shared with Rubis. It is an exposed spot, and when the wind blows hard, tankers have to anchor offshore and sit it out — sometimes for days — until conditions improve.
Although almost all of the island's fuel is offloaded at the pier, there is a second facility run by Rubis at Dockyard. It is a fortunate legacy from the days when the British Royal Navy was stationed on the island and constructed a fuel storage facility. That discharge facility is less wind affected. Mr Redford said the facility was “a bit of a security blanket” for the island should anything happen to the primary operations at Ferry Reach.
Being based in the East End presents some logistical challenges, such as transporting gas and diesel to service stations across the island. Road tankers must cross the St George's swing bridge which, due to corrosion concerns, has been subject to weight restrictions since the end of last year. As a consequence, delivery tankers must restrict their loads by 30 per cent to cross the bridge. That adds to the wear and tear on the trucks through the need to make extra journeys, not to mention associated overtime costs.
Another challenge comes from the relatively small size of tanker ships that are used to bring deliveries to the island.
“You realise how small Bermuda is when you look at our annual fuel volumes. We do everything we can to ensure there is not a stock-out, but some of the suppliers do not feel it's worth putting our little tanker in between the megatankers they fill,” said Mr Redford.
Tanker ships delivering fuel to Bermuda can be no more than 120 metres in length. There are only 12 such tankers available on this side of the world. And Bermuda imports a relatively boutique fuel, 93 octane, as it is a better choice for vehicles travelling at the island's low speed limit.
“Some of the other islands have the same challenges as us and we can work with them,” explained Mr Redford, who stays in contact with his Rubis colleagues to the south. That network has proved helpful in terms of coordinating shared deliveries and exchanging knowledge.
Mr Redford has been involved in a number of businesses on the island, and is a former president of the Bermuda Employers' Council.
Reflecting on his first year with Rubis, he feels not being a “gas industry career guy” has been beneficial in many ways, such as looking at challenges and solutions from a broader base of experiences. He has also learnt from those who have dedicated their lives to the industry.
“I've formed a planning committee to look at our depot for long-term changes to make the flow better and from a health and safety perspective,” he said.
Later this year Rubis will mark its 10th anniversary in Bermuda, and as part of the celebrations will run a charity promotion that will benefit 24 organisations and groups.
As Mr Redford spoke with The Royal Gazette he walked around the depot and offices at Ferry Reach, and comfortably shared greetings and pleasantries with employees. The company has a staff of 44 — all Bermudian.
“The staff are phenomenal,” he said, adding that he is thankful for the quality of the workforce at Rubis. He tipped his hat to his predecessor David Rose “who brought together a great team. That's made the transition easier”.