The energy consulting business is going great guns these days and little wonder, with the shale revolution continuing to change the way oil and natural gas are viewed and used in North America, and eventually the rest of the world.
HSB Solomon Associates of Dallas is a steadily growing consulting company ready to carve out a name for itself as one of the leading energy consulting firms in North America. Last summer its reputation took a major step forward with the acquisition of Ziff Energy Group of Calgary.
Ziff Energy Group, founded in 1982 by Paul Ziff, is known for specializing in upstream research and is a perfect complement for Solomon, which is known for its midstream and downstream consulting. With the 30 Ziff employees in the Calgary and Houston offices added to Solomon’s staff of 70 that works in more than 70 other countries, Solomon is becoming the go-to firm for consulting and benchmarking services.
In this interview, Dale Emanuel, president and CEO of Solomon, discusses the Ziff acquisition, the competitive consulting business, and his perspective of the petroleum industry.
P&GJ: What trends are we seeing regarding energy consulting firms today?
Emanuel: Energy consulting firms need to have a worldwide reach and view in order to succeed. Larger companies are gradually acquiring companies with a purely North-America-centric organization that can’t transition to a more worldwide approach. There are very few smaller firms like Solomon that possess that worldwide view.
P&GJ: The business seems to be more competitive, and at the same time, more specialized. Is this an accurate depiction?
Emanuel: It is definitely very competitive on what I would call commodity consulting work that any number of companies can perform. A company has to specialize or find a way to differentiate itself from others in order to survive.
P&GJ: What is the history of Solomon Associates, and what makes it unique as a consulting company?
Emanuel: Solomon was established in the early 1980s, so the company has been in business for more than 30 years. Solomon provides performance-improvement consulting in more than 70 countries. We are unique in that we developed a proprietary methodology that allows us to perform Comparative Performance Analysis™ (CPA™) work (benchmarking) on incredibly complex, capital-intensive manufacturing complexes, including refineries, petrochemical plants, power plants, pipelines and other complex facilities.
P&GJ: Previously, Solomon Associates was known for its work in the downstream sector, particularly refining; does the acquisition of Ziff Energy Group, well-known for its benchmark studies of oil and gas production, now put you into the upstream sector?
Emanuel: The acquisition of Ziff Energy Group was a very strategic purchase for Solomon. We are positioned to help companies improve performance from the wellhead to specialty chemicals. It is very important for us to be able to provide consistent CPA services for integrated companies across the entire energy supply chain, including upstream. Now our clients will see the same key performance indicators (KPIs) in all areas of their energy supply chain.
P&GJ: You recently launched a Natural Gas Transmission Performance Analysis study. How are you going about this project, and how can pipeline operators expect to benefit from the results?
Emanuel: Solomon’s Worldwide Natural Gas Transmission System Performance Analysis (NGTS Study) is modeled after all of our other CPA studies. Solomon always designs a study with performance improvement in mind. We have designed this study using our proprietary normalization techniques that allow us to compare any natural gas pipeline in the world with a set of peers. It is an extremely powerful tool that shows operators how they can improve their performance in all areas of operating cost and reliability.
P&GJ: The NGTS obviously seems to indicate a significant move into the pipeline sector. Will this focus primarily on large transmission carriers and will it be global?
Emanuel: Solomon has been involved in the pipeline area since early 2000 with the launch of our Worldwide Liquid Pipeline Performance Analysis (WWLP Study). The NGTS Study is a natural continuation of our move into pipeline systems. This particular study is also considered a global study.
P&GJ: You are also involved with a liquid pipeline study and one for liquid terminals. Have you done these in the past, and if so, do they provide a model for the NGTS?
Emanuel: Solomon has been performing liquid pipeline and liquid terminal studies since early 2000 and is considered the leader in this area. The WWLP Study did indeed provide a model for the NTGS Study.
P&GJ: With the nation so absorbed in the shale revolution, can we expect to see Solomon Associates be more active in the midstream?
Emanuel: Yes, we are active in the midstream sector, and our involvement will continue to grow. With the acquisition of Ziff Energy, it is even more natural for us to create the bridge between upstream and downstream. Our activity in the midstream sector includes worldwide benchmarking studies in natural gas processing plants, natural gas pipelines, liquid pipelines, underground storage and terminals.
P&GJ: Your bio mentions that you are responsible for “overseeing all four verticals.” Can you explain what those verticals are?
Emanuel: The four existing verticals or major product lines within Solomon are Refining/Midstream, Petrochemicals, Power Generation, as well as Consulting services. With the acquisition of Ziff Energy, we now have six verticals with the addition of Exploration & Production (E&P) and Natural Gas.
P&GJ: What prompted you to seek a career in the energy industry, and what brought you to Solomon Associates?
Emanuel: I grew up in West Texas and my father was a petroleum engineer, so I naturally gravitated toward the energy business. I have a chemical engineering degree from the University of Texas, but I moved more to the refining and petrochemical side of the energy world. I finished a wonderful career with the French oil company (Total) when I was 55 years old, but really wanted to do something a little different. I had used Solomon’s benchmarking studies during my refining and petrochemical career, so it was just a natural fit for me to join the company.
P&GJ: What is your perspective of the opportunities and challenges facing the oil and gas business today, perhaps looking separately at upstream, midstream and downstream?
Emanuel: The upstream business is truly being transformed by the revolution in the ability to produce oil and gas from shale formations. Of course, in any transformation, there are winners and losers. The winners are in the U.S., where the technology was developed, and we, as a nation, are increasing our oil and gas production, thus decreasing our dependence on foreign oil. The losers in the long run will be the countries that have dominated traditional oil production.
The midstream business in the U.S. is under unbelievable transformation as it attempts to get all of the new gas and oil to the marketplace. In some areas, pipelines and traditional infrastructure cannot be built quickly enough so rail is filling the gap. I see a continued boom in infrastructure growth in the U.S. to be able to process all of this newfound natural resource. Midstream developments in the Middle East and the former Soviet Union continue to be important for the growth of those regions. Midstream developments in the Middle East tend to be enormous compared to North America’s standards. I see that type of development continuing.
Downstream is very dynamic depending upon where you are in the world. Refining is shrinking in the U.S. and Europe due to declining demand, while it is growing rapidly in the Middle East, India and Asia. I see that trend continuing into the near future just due to economic growth patterns. Refineries will continue to shut down in Europe, but I believe the worst of the shutdowns in the U.S. are over.
We now see U.S. refineries beginning to export product because U.S. demand has fallen. Refining capacity is available and we have an abundance of cheap energy (i.e., natural gas). The petrochemical business in the U.S. has also seen a major awakening due the cheap energy afforded by the new shale natural gas.