Shortly after Alliance Pipeline celebrated its 10th anniversary, company President and CEO, Murray Birch, and Bob Blattler, Manager, Supply Development, took time to respond to P&GJ’s questions regarding the company’s recent milestone, safety strategy, training methods, near-term challenges and a move toward becoming a multi-service pipeline.
The executives also provided insight into the company’s business strategy as it relates to the shale plays being developed around the country.
Here’s what they had to say:
P&GJ:. Can you briefly tell us about your role at Alliance and your background?
Birch: I have been Alliance’s president and CEO since March 2005. Essentially, I came out of retirement to take the job – I knew what an excellent company Alliance is and thought I could make a contribution to that continuing.
Before that, I had a career of over 30 years in the energy industry, both in North America and abroad, most recently as the senior vice president, Business Development with Duke Energy (formerly Westcoast Energy).
I also previously served as co-chief executive officer of Foothills Pipelines and on the Executive Committee for Vector Pipelines, as well as on the board of the Calpine Power Income Fund, Alliance Pipeline and Aux Sable Liquids Products Limited. Of course, those positions gave me a good amount of insight and understanding into Alliance Pipeline’s history and business. My earlier experience also included a stint as a commissioner at the B.C. Utilities Commission.
I am also a board member and past chairman of the Canadian Energy Pipeline Association (CEPA), and serve on the board of the Interstate Natural Gas Association of America (INGAA). I am also co-chair of the INGAA Board Pipeline Safety Task Force.
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Blattler: My role at Alliance is as manager, Supply Development, where I lead a business development team focused on new opportunities in natural gas and natural gas liquids. I provide management to new projects and services, and lead customer relations in new supply basins in Canada and the United States.
My position’s key focus relates to Alliance’s move from a single-service, single-toll ‘bullet’ pipeline to a multi-service pipeline offering customers a suite of transportation services and contract tenures from which to choose.
My career spans more than 20 years in the pipeline and energy industry. Prior to joining Alliance in 2008, I spent 14 years with TransCanada Pipelines in the areas of gas control, customer service, and commercial supply development. In the latter capacity, I worked to identify and pursue growth and optimization initiatives, and was responsible for various contract negotiations and managing a myriad of stakeholder relationships. Prior to TransCanada, I spent a decade with Nova Chemicals Ltd. in a variety of roles, including operations.
P&GJ: Alliance is celebrating its 10th year anniversary. What can you tell us about that and how the industry has changed since the Alliance Pipeline began operations?
Birch: Industry has changed in a number of ways since the Alliance Pipeline began operations in 2000. At that time, the Western Canadian Sedimentary Basin was awash in natural gas production, much of which was constrained to the local market. The customer base at the time was predominantly producers, and they were looking for a competitive means to reach more favorable markets, to bring a better natural gas net back to the WCSB.
Today, the market dynamics have changed considerably as a result of a low-price gas, high-value liquids environment, combined with the significant development of liquids-rich unconventional shale plays on both sides of the Canada/U.S. border.
The fundamentals of downstream markets are also changing. With industrial growth in certain areas, and a transition from coal-fired power in some markets, particularly in the U.S., the customer base is expanding to include industrials, LDCs, and gas marketers.
Blattler: The supply markets are changing. While natural gas export deliveries and conventional supply from the Western Canadian Sedimentary Basin has been declining in recent years, supply in Alliance’s primary receipt area is actually increasing due to unconventional production.
At the same time, the emergence of the Bakken has been a game-changer. This is an extremely prolific resource play, and while production is primarily oil, there’s a significant amount of natural gas being produced in association, without the required infrastructure in place for transport. This gas tends to be highly liquids- rich and today’s liquids value makes this a very strategic resource. While infrastructure providers scramble to keep pace, Alliance is well-positioned with our mainline running right through the Bakken.
P&GJ: Alliance has operated for 10 years accident/ incident free. How did your company begin stressing employee safety and why?
Birch: Safety has been a core focus for Alliance since the beginning. Our founders set out to build a different kind of company, and in doing so built the company from the ground up with safety being an intrinsic part of our design, operations, and culture. As president and CEO, I believe that safety is one of our greatest responsibilities as a company, and it’s one that we take very seriously.
It’s what I call the ‘implicit promise’, which is to say that, in operating 2,311 miles of high-pressure pipeline, it is our inherent promise and responsibility to keep those who live and work around our pipeline safe. How we achieve this is through a culture of safety and a rigorous platform of plans, practices and measures, that all work together to keep our people and our pipeline safe. We’re extremely proud of our safety record.
Blattler: At Alliance, we go above and beyond to ensure the safety and integrity of our system. For example, while most pipeline companies go decades between interior inspections, we have already inspected our system twice in only ten years of operation, using advanced inline inspection technology.
Actions like this are costly, but they allow us to be proactive and preventative, which pays off in the long run. This is a big part of how we are able to maintain an industry-leading level of reliability. In fact, safety and reliability have become part of Alliance’s competitive advantage.
P&GJ: Can you describe some of your training methods used to ensure employee safety?
Birch: Within our robust training program we have a number of methods in place to ensure the safety of our employees. Employees undergo safety orientation when they begin their employment, and annual refreshers ensure that employees are familiar with safety policies, such as required use of safety gear. Also, every employee that works for Alliance has an annual training plan in place that is tailored to the requirements of his or her position. This includes hands-on training, e-courses, and face-to-face training. We also do fit testing to ensure that field employees know how to do their jobs safely and know how to effectively operate safety equipment.
We also work to ensure that safety stays top of mind for everyone, at all times. I, along with our chief operations officer, routinely travel to field locations to remind employees of the importance of safety. And, our field teams all discuss safety topics regularly as part of team meetings.
Blattler: Alliance’s culture of safety is something that really permeates all that we do. It’s a commitment that goes beyond what we do in the field; it’s evident at all levels of the organization. We regularly feature safety information on internal bulletins and on the company intranet, which includes information on non-work related safety topics. In addition, our executives make safety a priority in employee town halls and presentations.
What else sets us apart is our safety expectations when it comes to working with contractors. Any contractor that works for Alliance must meet our safety standards, and whether on-site in the field or in an office, our contractors are oriented to our safety procedures, expectations, and standards. We have high safety standards in place and we expect our contractors to adhere to them
P&GJ: What do you consider the biggest challenge facing Alliance in the near-term?
Birch: Our biggest challenge is to effectively respond to the significant opportunities that changing market dynamics have created for Alliance. Our proximity to key shale plays and favorable markets, combined with our unique ability to ship liquids-rich natural gas, have sparked a multitude of opportunities for us. To capitalize on these opportunities, and to be responsive to our customers’ needs, we must transition from our current model of being a single-service, single-toll “bullet line” to a multi-service pipeline.
We plan to offer incremental receipt and delivery services, as well as hub services. We’ll be introducing short-haul services and we’re working to enhance our operating envelope, so as to further capitalize on our system’s ability to ship NGLs entrained in the gas stream. All of this is going to mean big changes – to our operations, to our gas management system, and to the way that we do business.
By leveraging the advanced design of our system and industry-leading optimization efforts, we’ll be able to deliver on this while reducing our tolls beyond the very competitive rates that we already offer today.
Within the next few years, Alliance will become a more mature, integrated, full-service pipeline, which will, in turn, provide our shippers with greater delivery options and will attract a more diverse customer base.
Blattler: In the past, Alliance has been known as a “bullet” line, but as we transition to a new business model, we’re going to have to change that perception in the marketplace. We’ve had very positive discussions with both current and potential new shippers, and have plans well under way to offer incremental receipt services so as to be even better able to meet the evolving needs of customers.
We’re also planning for new delivery services to serve multiple end markets including industrials and local distribution companies. At the Chicago hub, we’re preparing to launch the Alliance Chicago Exchange (ACE) which will offer a new suite of commercial services that will enhance our customers’ ability to benefit from the opportunities associated with this strategic market. ACE will serve to leverage interconnections to downstream markets and other pipelines with services like wheeling, park and loan.
P&GJ: What drove your decision to build the Tioga natural gas lateral in North Dakota?
Birch: The proposed Tioga Lateral Pipeline project ties into our strategy to move to a multi-service pipeline. By leveraging our existing mainline assets in North Dakota, Alliance is well-positioned to transport natural gas being produced in the state. The introduction of short-haul services and development of potential new markets upstream of North Dakota create new capacity on the Alliance mainline which already runs right through the Williston basin. This positions Alliance to easily provide economical transport for natural gas being produced in the state – a significant percentage of which is currently being flared, due to a lack of infrastructure.
The Williston formation and Bakken field are key resource plays for many of our customers. As shale development in the region progresses, so will the need to safely and efficiently move this product to market. The Prairie Rose pipeline in North Dakota was connected to the Alliance system in 2010; the proposed Tioga lateral is the next step in our strategy to provide value-added transportation to shippers operating in the area.
Blattler: With the surge in shale development in North Dakota, transportation infrastructure has not kept pace. Our mainline runs near the heart of activity and so Alliance has an advantage in already having infrastructure in place that can easily be leveraged. This means we can provide transportation service sooner and more economically than many others.
At the same time, we have a unique advantage in being able to ship NGLs within the gas stream. This is made possible by the world-scale Aux Sable NGL fractionation and processing facility located at the terminus of the mainline. This allows producers to avoid capital-intensive field-processing facilities, which is a particular benefit in North Dakota.
P&GJ: What is your company’s business strategy insofar as it relates to the shale plays that are being developed around the country?
Birch: Alliance is situated in close proximity to key shale plays in British Columbia, Alberta, and North Dakota. We are a company that is growing and on the move, and are open to a variety of opportunities. Our key focus right now, though, remains on maximizing the value that we can provide to customers in the plays where we already operate.
Blattler: Right now, our primary focus is on the development in BC’s Montney shale play in the Septimus/Sunrise areas south of Fort St. John as well as north toward Aitken Creek and we’re also active in the U.S. North Dakota Bakken shale play. We are pursuing incremental receipt services to serve each of these areas. Commercial development for our Tioga lateral in the Bakken is well under way. We have a committed anchor shipper and are in discussions with a number of other interested parties.
P&GJ: What are some of the important lessons you’ve learned that you could share with our readers?
Birch: The vital importance of energy infrastructure connections. However the energy is generated – whether by wind, sun, oil and gas or coal – the infrastructure needed to connect an energy source with the market or end user is fundamental. Pipelines and power transmission lines – both those existing and those still to be built – are the energy highways we all depend on so that we can fill up at the gas pumps, that our lights go on when we flip the switch and that the furnace kicks in when the weather is cold. For natural gas, the buried pipeline network is the safest and most efficient method of transport.