Sheehan Touts 110 Years Of Success In Pipeline Construction

June 2013, Vol. 240, No. 6

By Kate Permenter, Pipeline News Editor

Sheehan Pipe Line Construction Co. (SPLCC), started in 1903, is the oldest pipeline construction company in the U.S. and is celebrating 110 years in business in 2013. The Tulsa, OK-based company has designed a new logo to commemorate the anniversary and will be creating collector items and memorabilia to celebrate their success.

John Sheehan, born in 1852, started SPLCC. In 1903, he and his team laid some of the first pipelines in the rugged, developing oil fields of Indian Territory, working for industry leaders such as Josh Cosden and Harry Sinclair. He was succeeded by his two sons, Ray and John B. Sheehan. They carried the company through the growth years of the pipeline grid.

Robert D. Sheehan, the son of John B. Sheehan, managed the company for more thanr 52 years. He made the company a truly national contractor, working for almost every major oil and gas transporter across the country. The ’50s and ’60s saw the installation of most of the nation’s grid of cross-country pipelines. He took his company from the deserts of the Southwest to the mountains of the East, participating in all aspects of this pipeline expansion.

R. David Sheehan, Jr., chairman of the board, carried forward the family tradition of company management. In the ’70s and the ’80s, he began assisting his father in running the company. Although this was certainly not a boom period in the industry, Sheehan began a long period of growth. The company took on bigger and bigger projects and entered the new century as one of the nation’s largest and most diverse pipeline contractors.

Robert A. Riess, Sr., president and CEO of SPLCC, has worked 12 years at SPLCC. He started as a project manager overseeing various pipeline construction projects. In 2004, he rejoined Sheehan as president. In December 2011, he assumed the role of president and CEO after also becoming an owner in the company.

Riess began his career in the natural gas energy business with Texas Eastern Transmission Corp. During his 12 years with Texas Eastern, he held various positions within the construction divisions, including manager of construction. His final years with Texas Eastern were spent managing environmental issues as general manager of Environmental Services.
Riess also held the position of vice president of ARB Inc. where he was responsible for the Underground Division which consisted primarily of pipeline construction east of the Rocky Mountains. He also managed the company’s Horizontal Directional Drilling Division and its international operations. Projects ranged from HDD activities in Alaska, India, Uzbekistan, Taiwan, Argentina, Peru, Colombia, Guam and the Lower 48 and pipeline projects in Chile, Mexico, Ecuador, Philippines and the U.S.

2.	Sheehan Pipe Line has built pipelines in nearly every imaginable terrain in the U.S.

Sheehan and Riess are looking forward to what the future holds for the thriving company.
“We are the nation’s oldest pipeline construction company and a leader in the truest sense of the word. A company that has been guided through more than 110 years of successful, innovative and continuous operation by four generations of the Sheehan family. Although our years of experience make us unique to the industry, it is not just years alone on which we have built our reputation. The secret is in our ability to adapt to continuing changes in all areas of pipeline construction that sets us apart,” Sheehan said, in marking the anniversary.

In an interview with P&GJ, Sheehan and Riess shared their methods for success, present industry hurdles and long-term goals.

P&GJ: What projects are you now involved in?

Riess: Right now, we’ve got three jobs logged for 2013. One of them is the ATEX Express Pipeline project for Enterprise, which is a 20-inch pipeline transporting shale gas liquids over to Seymour, IN out of the Marcellus region that starts in Washington, PA, runs across the panhandle of West Virginia and into Ohio. We’ve got the first two spreads, which is about 120 miles and $170 million worth of work. Then, we’ve got another project by Piedmont Natural Gas in Nashville, TN worth $60 million for 12.5 miles of 20-inch pipeline and 1.5 miles of 12-inch pipeline through some affluent neighborhoods.

There’s the Keystone XL Phase 4 contract, which President Obama has not approved, but we’ve been awarded for the better part of two years. If the permit goes through, we can do some work at the end of 2013. If not, it will be 2014 or 2015. We continue to bid on quite a bit of work. In fact, there are two jobs that we have been shortlisted on that we hope to have some resolution on shortly.

P&GJ: How are the various shale plays affecting pipeline construction? Are you finding yourselves in more difficult terrain?

Sheehan: Shale plays are generating lots of activity but are smaller-sized projects instead of the mega projects of 2008-10. The Marcellus Shale does present some challenging terrain situations.

Riess: It’s a more difficult terrain but standard for that region of the country. There is a tremendous amount of pipelines in the Northeast that has been built over the years. We’ve done a significant amount of work in the Northeast, in fact, the company started in 1903 in Bradford, PA, so it’s not an area that we aren’t comfortable with. As far as Sheehan Pipe Line working in the Marcellus and the Utica versus someone working down in the Eagle Ford in South Texas, there are some tougher terrains and bigger challenges, no doubt.

1.	Safety has long been a core at Sheehan Pipe Line.

P&GJ: What are some of the challenges and changes involved in pipeline construction today as compared to five or 10 years ago?

Sheehan: Because of the challenges in training a new generation of workers, the emphasis on working safely requires a more concentrated effort. Nothing takes precedence over protecting our workers and the general public. A great deal of preparation and teamwork is required to accomplish a safe work environment.

Riess: One of the biggest changes from our perspective is that our traditional transmission pipeline clients, i.e., El Paso (now part of Kinder Morgan), Kinder Morgan, Energy Transfer Partners and Spectra Energy, are still out there, and there’s still work to be done for them. There are midstream operators that have been there for years but may not have been people that we, as union contractors, traditionally worked for, because they were working in the panhandle of Oklahoma, South Texas or West Texas, where the work was predominately done by non-union contractors.

We have a different owner-operator base than we had before, which is operated and regulated a little differently. The big transmission companies are regulated by the Federal Energy Regulatory Commission, and you have to get a permit that takes nine to 15 months; that takes a significant amount of planning and effort. However, the midstream guys will send you a bid package Monday, let you look at it Wednesday and then want your number Thursday, which is different than what we’re used to.

P&GJ: What will be driving the construction market for the next few years?

Sheehan: An increased use of natural gas in the marketplace and rehabilitation of the existing infrastructure system will be key construction drivers.

Riess:
The shale gas plays have had a tremendous impact on our industry, which can be traced from early 2006 and 2007 when we were moving a lot of the shale gas out of the Rockies and Barnett Shale (North Texas). Right now, the shale plays have a huge impact on our industry as a whole, which is triggering getting the shale gas into the pipeline systems and expanding the pipeline systems to take care of all of the gas that we are ultimately going to move. That’s been the recipe for the last five or six years, and I don’t see that changing anytime soon.

P&GJ: Are contractors getting more involved in dealing with stakeholders such as local communities or are they leaving that up to the operators?

Sheehan: Contractors are always involved with the local community. A large percentage of our workforce is local. The permits and easements required to build a cross-country pipeline may be acquired by the operator but are implemented by the contractor. It is just good business to be involved with all the local stakeholders. Communication in that area is one of our highest priorities.

P&GJ: Is it difficult today to find qualified workers for the various spreads? How have manpower requirements per spread changed through the years?

Sheehan: Like most cyclical industries, keeping people working is a big challenge. Most of our experienced workers started in the ’60s and ’70s and are beginning to retire. With the help of our pipeline unions, we are training a new generation of pipeliners, but that takes time and a consistent workload to continue to provide work for them. Manpower requirements vary by pipe diameter, the size of the project and location. In general, the manpower requirements have remained fairly constant except that environmental work has added somewhat to the numbers required.

Riess: Are we encountering any difficulties? No. We’ve got ample workforce. We are a union contractor so about 50% of our workforce is dispatched to the local union halls in the regions of the country that we are working in. I know there are plenty of people concerned that there’s going to be a workforce shortage; however, with the unemployment rate, I think there are plenty of good opportunities.

The real question becomes, can you train these people and get them to operate and work in a safe and productive manner to produce quality work? We ran about 2,000 people last year and didn’t have a problem hiring people or getting people to come out to the jobsite, and I’m not aware of anyone (other companies) who really did. There’s been a lot of rumbling about it because of the amount of work that’s going on, but I think work is still available, and I don’t envision a problem in 2013 or the foreseeable future.

In the case of our association, the union contractors, we’ve got some substantial training programs in place for the four crafts: laborers, operators, Teamsters and welders. And they’re committed to continue to grow their industry as well.

P&GJ: What made you decide you wanted to get back into the pipeline business?

Sheehan: I never really got out of the pipeline business. Previously, I was on the board of IPS, a holding company for Sheehan, and had reinvested a considerable amount of Sheehan’s proceeds back into IPS. After a couple years, the primary owner of IPS and I decided on a course of action that involved Rob Riess and me buying back Sheehan and liquidating our shares of IPS’ other interests.

P&GJ: Quality work is an integral part of your company. How do you feel your strong work ethic sets your team apart from competitors?

Sheehan: Sheehan has been in business for 110 years. You can’t accomplish that without constantly paying attention to the needs of your clients. Years of repeat business for the same clients demonstrates our commitment to doing quality work. Only safe work and quality work earn that kind of trust.

P&GJ: You are working with the INGAA Foundation to develop a Quality Management Program. What do you strive for the program to accomplish? How is it progressing?

Riess: The INGAA Foundation is conducting a study to develop an industry standard Quality Management System. The Foundation, as well as SPLCC, is actively pursuing the completion and implementation of this system. The study is progressing very well and will be a great benefit to the industry and responsive to the request of regulators to ensure quality pipeline installations and the proper documentation of these installations.

P&GJ: Safety is a core value for your company. How does your team try to implement an incident and hazard-free work environment?

Riess: Safety is not only a core value at SPLCC, it is a culture that the highest levels of management discuss on a regular basis at various forms of company meetings. Senior management leads its safety culture by example and continuous communication. Safety is a core value, and we discuss being your brothers’ keeper, speaking out if you see a potential unsafe act and continuously implementing a “lessons learned” attitude! We evaluate all safety incidents, perform Root Cause Analysis and, most importantly, review this analysis with the entire company. Safety at SPLCC starts at the highest level of the company, all the way down to the worker in the field.

P&GJ: What are your future visions and goals for the company?

Sheehan:
Rob and I wouldn’t have reinvested our money if we didn’t believe in the men and women who have made Sheehan what it is today and all that it has stood for over the years. We want to be the best contractor in the country, not just the oldest. We believe what Sheehan has been able to achieve speaks for itself, but we have to go out and prove that each and every day on our projects. Our goal is to continue to enable those men and women of Sheehan the opportunity to do that by providing the capital, the leadership and the skills to accomplish that.

By Kate Permenter, Pipeline News Editor

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