Fort Worth Business Press
By Troy Sifford
July 31, 2016 – Direct Fuels in Euless is sitting on a mixed river of fuels, and its status as the No. 6 private company in Tarrant County based on 2005 sales has been reached with new owners perfecting the careful separation, storage and dissemination of the stream.
Insight Equity in Southlake purchased the company in May 2003, and Direct Fuels has since leapt from about $220 million in revenue to over $475 million in just three years.
“Direct Fuels was doing OK before we came in,” said Victor Vescovo, managing director and partner. “We were able to recognize ways to improve the operation and pursue progressive growth.”
The company’s major advantage is its location. It operates the only refinery in the Metroplex and the plant is placed strategically over the Explorer pipeline that continuously pumps independent streams of assorted fuels from the Gulf Coast through North Texas and on to the Northeast. If that’s not enough of a proximity boon, critical bulk chemicals used to separate the gasoline and diesel, for example, are delivered by a rail line that stretches in front of the Direct Fuels Euless plant.
As the energetic and soft-spoken Vescovo arrives at the refinery, the exec purposefully walks down the hall, greeting plant administrators and asking about the price of gas. In the conference room, the Stanford grad, with a master’s from MIT and an MBA from Harvard, pours a teaspoon of Diet Coke on his conference room table to illustrate the basic chemistry of what the company is able to do.“A liquid will not easily separate. If I pour 7-Up right next to this Coke, it will touch, but it will not mix,” Vescovo said. The same is true with the fuels that are running through the pipeline. “Where the fuels do touch and slightly mix, it is called transmix,” Vescovo said. “We are able to very effectively separate the transmix back into its respective fuels. This is a specialty refinery, and we’re dedicated to doing this operation perfectly.
“Trust is [a] very important factor to our customers. Before we bought the operation, there were some distributors who were shipping their transmix back to southern refineries or putting it back into the pipeline, which was very inefficient.” In addition to refining transmix, Direct Fuels stores up to 420,000 barrels of refined petroleum, sells it, and delivers it by truck to unbranded fuel providers, like Wal-Mart, RaceTrac and QuikTrip.
“We operate on a thin margin because we are a middleman,” Vescovo said. “We buy and sell, so we’re beholden to the cost per barrel, as fuel is pumped through the line. Right now, the price has gone up, so if we buy now, we run the risk that the price will go down next week and we will have lost money. Likewise, if the price goes up again, and we don’t buy now, then we’ve missed out on an opportunity.”
The dust scatters as a tanker trucks pulls off Calloway Cemetery Road in Euless to drive onto the approximately 30 acres owned by Direct Fuels. It pulls beneath the roof of a loading dock to fill up on purified fuel. Just feet away, combined streams of fuel pulsate through an underground 24-inch diameter pipe, likely originating hundreds of miles away at a Houston refinery. The subterranean flow of fuel is tapped by Direct Fuels, measured precisely and directed into one of two refinery towers, heated and naturally separated by virtue of its reaction. The pristine liquid then streams into enormous, circular white tanks and waits for another truck to come.
Some of those trucks, about 20 a day, are owned by Fort Worth-based Lucky Lady Oil Company, a vendor for Direct Fuels. “They are our biggest customer,” said Lucky Lady Oil Co. President Rick Canady. “And we like the way they do business. If test situations come up, they handle it well. That means a lot to me.”
Vescovo says the details make the difference in this business, helping Direct Fuels to be successful. “This is a very complex system,” said Vescovo. “Everything must be very carefully controlled. These fuels must be handled carefully, and with great respect.”
The company isn’t stopping with its current services. It has purchased neighboring land and is preparing to store biodiesel from a Cleburne refinery to distribute throughout the Metroplex. Biodiesel is a clean-burning alternative fuel, produced from domestic, renewable resources.
“We believe in [alternative fuels] personally,” Vescovo said. “It’s good economically, for national security, morally and we’re glad we can be a part of it.” Direct Fuels will be one of only two biodiesel terminals in the Metroplex, according to Vescovo. The other is owned by Motiva.
Insight Equity is managed by three partners, Ted Beneski, Victor Vescovo and Ross Gatlin. The investment fund also has portfolio management of Vision-Ease, a lens manufacturer in Ramsey, Minn., and Hirschfeld Steel Co. Inc., a manufacturer of structural steel in San Angelo.