May 2011, Vol. 238 No. 5

Features

Carl Porter An Expert On Both Sides Of Natural Gas Business

During his lengthy executive career, Carl W. Porter has worked on both sides of the natural gas aisle – as a pipeline operator delivering product to consumers and on the service side providing operating companies with the latest tools designed to make their companies more efficient and ultimately leading to better-served customers.

There are few people who have such intimate knowledge of the natural gas business as Porter, now vice president of gas sales and marketing for Itron Inc., an industry leader in the manufacture of advanced metering systems for the gas, electric and water business. The Michigan native joined Itron in 2008, just as the Spokane, WA-based company began a determined march to increase its presence in the natural gas industry with the development of several new products.

His career also includes stints as president and chief operating officer for SEMCO Energy Inc., senior vice president of operations for New Jersey Natural Gas, and vice president of operations for Western Resources.

In an interview with P&GJ, the avuncular Porter talked about his work and changes he has watched move the natural gas business to the forefront of the nation’s energy picture today.

P&GJ: What made you decide to get into the energy industry and what was the career path that led to your current position?

Porter: When I graduated from college, I was fortunate to be hired directly into a two-year management trainee program at MichCon (now DTE). In the first two years of the program, I worked in every department at the utility. You never forget the basics of every department and that helped me throughout my career. I later focused on the business side of the utility to eventually become director of operations.

After 17 years with MichCon, I was fortunate to work at Kansas Power & Light (now Westar) and New Jersey Natural Gas. I ended my utility career at Semco, where I served as the company’s president and CEO. Nine years ago, I made the switch from the utility side to the vendor side.

As the VP of Gas Sales and Marketing at Itron, I enjoy the opportunities to develop new products and solutions for an industry where I have served my entire career. Transitioning from the utility industry to the entrepreneurial world has been very satisfying. I couldn’t be happier.

P&GJ: How have you seen the gas industry change since you began your career -both from utility and service-side perspectives?

Porter: The biggest changes I’ve seen have been greater focus on gas safety and tighter policies and standards. As consumption of natural gas continues to increase, we are always looking for ways to improve delivery reliability and safety. Tighter policies have led to programs such as Operator Qualification (OC) that ensures the natural gas work force is properly trained.

P&GJ: What are some of the biggest challenges that operators and service providers face today?

Porter: Gas utilities are always looking for the highest quality products at low prices. Today, advanced technologies offer benefits unheard of in the gas industry just a few years ago and at lower price points than gas utilities are accustomed to. Balancing current business needs against future perceived value can be tricky. My combined experience as the utility buyer and as a vendor has allowed me to understand the pull for new innovations, yet the restraint for tangible returns. This is a balance both utilities and service providers must understand to ensure the industry is taking advantage of new products.

P&GJ: How has the relationship between operators and service providers evolved through the years, do you see it continuing to evolve, and what would you like it to be?

Porter: A big change has been the range of products and services a service provider now offers its customers. It wasn’t long ago that the meter vendor had a relationship with the meter shop. Now that same vendor needs to develop a relationship across the utility from customer service and asset management to the IT department, for example.

Some of this change has been due to merger activities of service providers, and the development of new technologies and services.
Take Itron. We have always offered meter-reading systems, but now we’re developing advanced gas meters and remote-monitoring solutions to improve system integrity. The breadth of our offerings means we are forming relationships throughout the gas utility. I don’t see that slowing down and welcome the level of engagement with customers today.

P&GJ: What were some of the more difficult or challenging decisions you had to make when you led utility companies?

Porter: My most challenging decision was when I joined Kansas Power & Lighting in an officer position. The utility had been served mandates from the state utility commission on its yard line replacement program. The first day on the job I found out we had 50,000 pending leaks with 100 construction contractors managing the repairs. I changed to a one-contactor responsibility to control costs and the quality of the repair work.

You can imagine the heat I took making those decisions. But I realized that no one could manage that many contractors. It’s never easy letting people go; having to let people go the first day on the job was even harder. The jump to officer is about a lot more than title and salary; it is about new levels of responsibility and accountability. To this day, that incident has followed me with a sense of admiration and trepidation from those in the industry.

P&GJ: In recent months there has been a rash of serious pipeline incidents around the country. Do you feel aging infrastructure is one of the major causes? Where do you think we’ll see increased governmental legislation?

Porter: It is seldom the case that a series of pipeline incidents have a single cause. Typically, incidents are caused by third parties. For example, a backhoe operator accidently nicks a pipeline and over time the nick corrodes to the point of becoming a leak. The American Gas Association (AGA) represents the industry in legislative matters and in providing an effective model for pipeline inspection and maintenance for the industry to follow. It is in the industry’s best interest to adopt AGA models and recommendations and avoid federal legislation.

P&GJ: What would you like to see utilities do to make their pipeline systems safer? Are too many executives overly concerned with the bottom line?

Porter: Pipeline safety has always been a critical issue for gas utilities. Advanced communications are transforming how utilities improve system safety. At Itron, we have developed our gas advanced metering infrastructure (AMI) solution that offers utilities the ability to remotely monitor key performance indicators along their distribution lines. We believe this solution enables utilities to proactively maintain their pipelines for avoidance of potential events. If a utility can monitor cathodic protection, line pressure and temperature and methane leaks on a daily basis, then they can better manage their system’s integrity.

P&GJ: When you were CEO, did you and your staff institute any particular programs that helped make your systems safer?

Porter: My tenure at Kansas Power & Light increased my awareness on safety. The magnitude of leaks we had forced me to institute tough measures to avoid a potential event or penalty. We eventually eliminated all the leaks because of the quality assurance program we initiated. We trained our employees to work toward a higher standard and ended up with a more reliable delivery system.

Improvements in technologies and the industry workforce will increase system safety. The AGA is benchmarking best practices for safety improvements and many other key operations to help all utilities work smarter.

P&GJ: In terms of natural gas, how bright do you think its future is, and what role would you like to see it play in an overall energy strategy?

Porter: The future of natural gas is very bright. New extraction methods and discoveries have identified proven reserves in North America to last the next 100 years. That’s a phenomenal increase over figures from just a few years ago. These reserves have confirmed natural gas as a strategic resource for the energy future, for both electricity generation and direct customer use. The nuclear incident in Japan may pause nuclear generation efforts and I would expect natural gas generation to gain even more attention as a result.

One thing to note – with the increased reserves and the subsequent increases in gas usage – the duration of the reserves will have to be closely examined to take into account a huge spike in demand.

P&GJ: In recent years, the industry has expressed a need for younger people to replace an aging workforce. Is this still the case?

Porter: The aging workforce has been an issue for all utilities as the advent of the Internet and other “hot” new industries attracted college graduates and utilities were considered old and stodgy. There are universities working with utilities to develop programs targeting the work required in the industry, such as line schools or meter schools. AMI and smart grid are increasing the awareness among the country’s workforce as utilities seek out employees with advanced communications and IT experience.

P&GJ: What are some of the new technological advances we can expect to benefit the gas industry in the next few years?

Porter: Advanced two-way communication is changing everything. Utilities will leverage communications to actively monitor their entire system and be more proactive in system performance and maintenance. Remotely shutting off service at the meter will offer greater confidence to customers and utility employees in the case of a premise leak.

Real-time usage data will increase operational efficiency and empower the customer to make informed decisions about their consumption behaviors. While these capabilities are all available now, once they are fully implemented, utilities will uncover ways to leverage their communications network and engage with their customers in ways that haven’t been considered yet. The floodgates of advanced automation and communication technologies are about to open.

P&GJ: Is there a need for increased investment in R&D?

Porter: As a service provider, Itron’s life blood is innovation and innovation comes from R&D investment. Last year we committed $140 million dollars to R&D to help ensure that our energy and water customers benefit from new technologies. Our customers are always looking for ways to improve their business operations and with our focus on changing markets and state-of-art technology we are always there to answer their call.

P&GJ: Why did you decide to join Itron and what are your responsibilities?

Porter: In my experience as a utility executive, I found that Itron really listened to us, my peers and the marketplace, about what we needed. After 30 years of being an operations guy at various gas utilities, and keeping a running wish list of future gas technology, I am now with a company and in a position to create the products on my list and the lists of many other executives at gas utilities across the country.

As the VP of the Gas Sales and Marketing for Itron, I oversee the strategic vision for our gas products, such as our remote meter shut-off valve and real-time monitoring of pipeline sensor technology. I love the feel of the utility business. The level of service and commitment to customers is phenomenal. I think I have one of the best jobs in the industry and am having a ball.

P&GJ: Lastly, what do you think the public should know about the natural gas industry?

Porter: The general public doesn’t really think of natural gas very much. They turn on a stove burner and the flame comes on. Often times the public only thinks about natural gas when an event like San Bruno happens. We, as an industry, can do a better job of highlighting the role that natural gas plays in society’s day-to-day life, of what a clean source of energy gas offers and how it leads to a cleaner environment.

We also need to emphasize what we’re doing to ensure the reliable delivery of natural gas to build up the public’s trust. I recently saw an ad on TV about natural gas safety that I thought was exceptionally well done. We could use more of that approach in trying to explain how we do our jobs.