Truck-Stop Pilot Flying J Expands Into Energy Market

Catherine Ngai

24 Jan 2020, 06:05 AM IST

(Bloomberg) -- America’s largest truck-stop company is rebranding as it grows its market share in both retail fuel and energy divisions.

Pilot Flying J is changing its corporate name and structure to be called Pilot Company after a two-year push into the energy business, a growth area that’s included building out a Houston office, acquiring pipeline and storage assets and buying fuel from across the world.

“We had to change and evolve with the times,” Pilot Company Chief Executive Jimmy Haslam said in an interview. “We got to the point where we started looking around and saying, what could be the next growth vehicle? We didn’t want to do something that was totally different. So we took a step back and and thought, what could we do to leverage our current platform?”

The solution was an expansion into the energy sector, increasing its so-called vertical integration. Under the leadership of Chief Strategy Officer Shameek Konar -- an alum of Castleton Commodities International LLC, Mercuria Energy Trading SA and Goldman Sachs Group Inc. -- Pilot has shifted from solely focusing on its travel centers and retail fuel sales to also snatching up midstream infrastructure and expanding into water disposal, blending, crude hauling and other business segments.

Energy Footprint

The moves come after Warren Buffett’s Berkshire Hathaway Inc. paid $2.76 billion for a 38.6% stake in the Knoxville, Tennessee-based firm in 2017, with plans to increase that stake to 80% by 2023. Last year, Forbes ranked Pilot as the No. 10 largest private company in the U.S.

The firm, which operates more than 750 travel centers across the U.S. and Canada, already supplies about one-sixth of the nation’s diesel consumption. Now, it’s focused on widening its footprint. Last year, it acquired NGL Energy Partners LP’s TransMontaigne Products Services, giving Pilot an increased presence on the the Colonial Pipeline, a vital conduit connecting the Gulf Coast and East Coast. The firm can access 21 terminals along the pipeline, shipping some 80,000 barrels a day.

Pilot also took a majority stake in Pro Petroleum a year prior, giving the company access to the West Coast as well as Arizona, Nevada and West Texas markets. The firm has the third-largest tanker fleet in North America with more than 1,500 trucks able to move energy products including diesel, gasoline, diesel exhaust fluid, biodiesel, crude, water and sand.

For now, the company’s expansion plans don’t include operating a refinery, but Pilot’s evaluating options for protecting its fuel margins, including an equity interest, said Konar.

Other Company Facts:
Pilot is the biggest blender of biodiesel in the country at about 300-450 million gallons a year The company has about 11 million barrels of storage in the U.S. and can source product at 800 terminals in North America Its trucking fleet can dispose of 500,000 barrels a day of water Pilot’s third-party crude trucking business has about 200,000 barrels a day in capacity and hauls crude in the Permian, Eagle Ford, Oklahoma’s SCOOP/STACK plays and Wyoming

Other Company Facts:

Pilot is the biggest blender of biodiesel in the country at about 300-450 million gallons a year
The company has about 11 million barrels of storage in the U.S. and can source product at 800 terminals in North America
Its trucking fleet can dispose of 500,000 barrels a day of water
Pilot’s third-party crude trucking business has about 200,000 barrels a day in capacity and hauls crude in the Permian, Eagle Ford, Oklahoma’s SCOOP/STACK plays and Wyoming

To contact the reporter on this story: Catherine Ngai in New York at cngai16@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine Traywick, Jessica Summers