UPI’S Luna Welcomes Shale Challenge

November 2013, Vol. 240 No. 11

Jeff Share, Editor

Philip Luna is a man on the go, and if you work for him at Houston-based UniversalPegasus International (UPI), you’d better be as well, even if it means getting to work for the 7 a.m. team meeting.

Luna was named CEO of UPI, the largest pipeline engineering, procurement and construction management company in North America last year after a successful career managing a number of other energy services companies.

His enthusiasm for his work and his industry is infectious. If this interview is any indication of what he has in store for UPI, it’s obvious that no challenge will seem too large to overcome.

P&GJ: You’ve had a lengthy and successful career in the energy industry. What prompted you to get into the business?

Luna: This industry is quite literally in my blood – Dad was in the energy industry, other family members had long, productive careers here. I grew up in Houston. I saw our industry as one where smart people with a passion for fueling the world’s economy could make a difference. I believed it then and today I am still drawn by our impact on a global scale.

P&GJ: What were your interests as a young man?

Luna: I can think of two interests that brought me to the industry. First of all, I’ve always been interested in building things and that’s continued through my career. I became an engineer and still enjoy seeing things get built — whether it’s pipelines, gas facilities, terminals or other developments — it’s always very satisfying and gratifying to see something take shape.

The second thing is I have always been interested in business. I had several businesses over the years starting quite humbly by mowing lawns and delivering newspapers as a kid. The complexity of leading a global energy services company is thrilling and still taps into that interest in business that started so long ago. The skills of engineering combined with the entrepreneurial nature of business have drawn me to the energy industry.

P&GJ: What led you to take the position at UPI?

Luna: The combination of the company’s potential for growth plus the expertise of the UPI team. Building on 50 years of proven success, UPI is well-respected and known in the industry as the “go to” partner that solves our toughest challenges.

UPI was and remains a wonderful opportunity for me, personally. UPI has a great place in the industry with experience, capabilities, all of the qualities that make a company successful. The industry needs innovation, experience and technical competence. UPI has a tradition of providing this and I feel that my unique experience will help us build on our past success toward an even brighter future. I am very excited to be a part of that brighter tomorrow!

P&GJ: How would you define your business strategy, and is it different at UPI than your previous companies?

Our strategy at UPI is to grow the business through diversification and to continue providing unparalleled value to our clients. We will continue building strong relationships, but also add adjacent services through the entire energy value chain. Historically, UPI was successful in its traditional markets but did not recognize the industry’s need for a wider service offering. This business strategy has been defined, tested and reinforced as we connect with our clients. They are the reason we exist and serving them in a deeper and more valuable way is the cornerstone for this enhanced business strategy.

Today, we are very interested in expanding into different markets. For example, we have historically been a pipeline and facility company. Looking forward, along with pipelines and facilities, we’re also getting into gas processing, CO-2 recovery, enhanced oil recovery (EOR) projects, and liquids processing. These additional areas are adjacent to current projects and part of the energy industry UPI didn’t traditionally target.

P&GJ: It has been a year since you started with UPI; what are some of the major changes that you’ve begun?

We have been successful getting into the CO-2 market in the Permian Basin. We’ve been successful doing gas plant and facilities work in Canada. Those are all areas we defined as business targets and were successful within a year.

We have several more targets on the list. For example, we are working on expanding our full service spectrum — all the services we provide — into each of our offices.

I also have to bring up our phenomenal safety performance. We are on the brink of achieving one year without a recordable incident. This is a clear outcome of our number one goal – no one gets hurt. It sounds easy but when you have nearly 1,500 families that are relying on us to provide a safe working environment when most of our team is field-based, we take this quite seriously and it underscores every decision we make.

P&GJ: What type of culture are you trying to create at UPI?

Luna: In short, we are building a home where the BEST belong. We believe the key is to create a culture of recognition and value creation. When people passionately create value for our clients and we recognize and reward each of them when we succeed, then we’ll have a culture that’s innovative, respectful and magnetic.

Building a compelling culture is one of many initiatives that help us differentiate ourselves to both clients but also our workforce. We’re working in an environment where our clients are buying expertise and culture. Because we provide both at higher levels than the competition, we are the contractor of choice.

P&GJ: What makes the company unique in the pipeline and energy engineering business?

Luna: That’s a great question – while tempted to say it’s our people, our track record or our processes, I think what truly differentiates UPI is our full spectrum of services. We are the only company that offers everything from initial studies, engineering, procurement, inspection, survey and construction management and we have access to land right-of-way acquisition. We also have operations and maintenance professionals to provide ongoing support to existing facilities.

So when you look at a pipeline, we offer all the professional services available while most of our competitors can’t. They focus on just survey or just inspection or just engineering. To offer the full suite, you need a long positive track record, financial resources and the tools and processes to seamlessly provide full project delivery. We’re one of the few that has a full service offering and the only company with the full scope that is historically focused exclusively on pipelines.

P&GJ: How would you describe your management or leadership style, and have you ever found it necessary to change your approach?

I would say my style is inclusive. We have a senior management team that really runs the business and we meet every morning – at 7 a.m.! Yeah, that’s pretty early but we feel that starting the day with each other and tackling the day’s issues bright and early is a way to stay connected, provide decisions with velocity and demonstrate our commitment to UPI. Our meetings are always a discussion, not direction. The best solutions come from a diverse group that puts the goals of UPI at the forefront of decision-making.

That sense of inclusiveness permeates out to the entire company. Our senior management team does the same with their teams and so you have an entire organization where everyone feels relevant and respected.

You asked if I have had to change my approach – I see learning as a continual process. So I would say yes, I continue to develop and adapt in order to be successful dealing with people, clients and business.

P&GJ: In your past jobs, what are your proudest accomplishments in terms of company performance?

Luna: For me, it’s about growth. When I look back at my history, the teams I’ve been part of have been successful in growing the business and that makes me very proud. Several times we’ve achieved double-digit annual growth and that’s our target at UPI. We’ve been able to succeed in that in my first year and I am looking forward to more.

P&GJ: During your years in the industry, does any event or person stand out in your memory?

Luna: I’ve been very fortunate in my career, every step of the way, to have mentorship from someone who helped me develop and I think that is extremely important for me and our business to continue. As I gain experience and as people in the industry age we have a responsibility to those following us to spend time mentoring and developing their careers. It’s extremely important to me and to UPI that we focus on the method, results and benefits of mentorship.

UPI has a formal mentoring program and we do a lot of recruiting on college campuses. We make sure to match up those new engineers and designers with more experienced people in our industry to help them develop their careers. We see mentoring as serving both sides of the mentoring equation, creating a true win-win.

P&GJ: When you talk to clients today, what do they say are their most pressing needs, and what kinds of innovative approaches have your teams devised to help them?

Luna: I’m pretty unique in that I spend a significant amount of my time meeting with and truly listening to our clients. Everyone has needs and their projects are unique, but there are a few threads that are pretty consistent. First and foremost is compliance and that covers a lot of ground in terms of environmental permitting, land right-of-way and compliance with state and local authorities.

Helping them meet those objectives is a differentiator for us. We cover everything from permitting, to surveying in the right place, working with land owners and working with local entities. We help meet their needs, and stay ahead of the changing regulations that apply to their projects.

The second is automation — by that I mean leveraging technology to automate a historically manual process. When we talk about pipelines, and the upstream business, it’s traditionally been a fairly manual or less-automated business. We’re bringing ideas, tools and critical thought leadership to the forefront where we partner with our clients in terms of the technology, the tools and the ability to retain records electronically.

We have a CARDS system, which is a proprietary tool we deploy in the field during construction. In working with our clients, we saw a need for a single source of truth on complex projects – we developed a multi-layer application to provide transparency, collaboration and accuracy to the decision process as a project evolves. This is a great example of where a pipeline-focused company can identify challenges unique to the industry and develop industry-leading tools to address our most pressing needs.

P&GJ: How do you view business opportunities today for UPI in view of the shale revolution?

Luna: We are the undisputed leaders in the shale market – providing a comprehensive suite of services in all of the shale basins for the most technically challenging problems. We continue to see opportunities in shale as our clients tap us to provide site-specific separation and transportation solutions.

For UPI, the shale projects are part of our Midstream group where we’ve grown quite dramatically over the last two to three years. Our shale experience covers the whole spectrum from site logistics and layout to the engineering survey, and inspection for shale developments. It’s clear the shale resources will positively impact the long-term goal of American energy independence.

P&GJ: How much of UPI’s business is overseas and offshore?

Luna: We have talked about broadening the UPI service offering, but a second area of corporate growth is increasing our global footprint. Currently, about 60% of our work is for projects based in the U.S. We have been asked by several of our long-term clients to support them on projects outside the U.S. We are discussing several large international projects with key clients which would shift some of our efforts outside the U.S. and that’s very exciting.

As for the offshore part of our business, the “Pegasus” part of our past was a leader in offshore projects. All of our current international offices are fully dedicated to serving the offshore industry and we have a strong, cohesive and impressive offshore group that is working on some of the most challenging offshore pipeline projects.

P&GJ: What are some of the major projects that UPI is involved in?

Luna: The one that seems to get a lot of press is TransCanada’s Keystone XL oil pipeline project from Alberta, Canada to Texas. Keystone is actually four phases; we worked on all three of the current phases and are slated to work on the fourth phase when it gets final permit approval. In the U.S., you would be hard-pressed to identify any significant project over the past 30 years where UPI has not been involved. We’re involved in a lot of the liquids and gas pipelines going from Alberta east and west. We do work for IPF, TransCanada, Enbridge, Spectra, and Kinder Morgan in the Canadian markets.

P&GJ: The Calgary office is undergoing a name change from Integrated Pipeline Projects (IPP) to UPI – what prompted this change and what does this mean for the company?

Luna: UPI acquired IPP a little over four years ago and for the first several years the company operated independently. But in the last year or two, clients have told us there is a value to integrating our U.S. and Canadian operations more closely and operate under a single name.

The majority of our clients cross the border and work in a number of different geographies. They want to connect with a single contractor that has common tools, common processes, and common people. Putting the two operations under one banner makes sense to serve our clients.

We’ve been deliberate in staging this transition over time so as to identify and resolve potential integration issues. Our operating systems are fully aligned and we expect this to be a fully positive experience for our clients and employees. We absolutely look forward to serving the Canadian market as well as other parts of the world with a consistent delivery across a broad spectrum under the UPI brand. We believe it will benefit our clients, partners, vendors and our people.

P&GJ: What are you most looking forward to in the upcoming year?

Luna: In the next year, we will be offering additional client-focused services in our regional offices. For example, right now we don’t offer field services in the Canadian market but we will start to over the coming year. That’s a big, but natural, shift for us to expand our footprint in that market.

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