May 2013, Vol. 240, No. 5


The New Willbros Ready For Any Challenge

Jeff Share, Editor

Even a company that has successfully been building pipelines and other infrastructure for more than 100 years knows when it’s time to modernize to meet the fast-paced challenges of the 21st century energy business.

The dawning of that new era arrived at Willbros, renowned as an innovative pipeline builder for a century, in 2006, heralded by the arrival of a new CEO, Robert R. Harl. Harl, known as Randy, had spent 30 years at Kellogg, Brown & Root, began to reorganize the company – not just by bringing in a new management team – but by retaining those who had keen knowledge of Willbros and were well-grounded in the global energy industry.

Move ahead to 2013. We are in the midst, some might say the beginning, of an unprecedented energy shift that has changed the way industry operates from the wellhead to the midstream. Responding to that altered landscape, Willbros has repositioned itself as a leading service provider – they will say the leading service provider – focused on oil and natural gas infrastructure engineering, integrity management, field services, land acquisition and survey, procurement and construction (EPC). That also includes an increasing portfolio of activity in the petrochemicals, refineries, terminals, tanks and gas processing businesses.

Perhaps the biggest change in Willbros is that it is now capable of applying its specialized skills to electric power transmission and distribution operators. It is a good place to be, reflecting the growing movement toward electric generation/natural gas integration – a priority issue for both the natural gas and electric generation industries. Upgrading and increasing the power grid has become a national priority in the United States.


Let’s break it down even further because this is a most complex business to structure, or in Willbros’ case, restructure. They work with: natural gas and oil producers; gas storage; pipeline integrity management; natural gas and crude oil transmission pipelines; compressor/pump stations; loading terminals; separating/treating plants; refinery turnarounds, flow lines; electrical transmission and distribution systems; substations; refining and petrochemicals; EPC (individually or combined); and state-of-the-art GIS (geographic information services) consulting. It’s quite a combination of services for any company to provide; for one steeped in the tradition of pipelines, it would seem a natural occurrence, especially if one expects to profit in today’s energy world.

P&GJ interviewed at length two executives leading the new version of Willbros at the independent contractor’s corporate headquarters near Houston’s Galleria district: Edward Wiegele, president of newly formed Willbros Professional Services, which includes Upstream, Midstream and Downstream Engineering, Integrity Management, Field Services, Land and Survey; and Michael Collier, vice president of Investor Relations for Willbros Group. They are an interesting pair – helping to combine the latest technologies with good ol’-fashioned boots-on-the-ground pipelining. Together, drawing on their 70 years of combined pipeline experience, they have helped devise a strategy that is creating more opportunities, jobs, and profits while remaking Willbros into an industry services powerhouse.

Wiegele is widely recognized as one of the foremost experts in pipeline integrity and GIS. He was hired by Willbros in 2007 after successful management stints with Panhandle Eastern Pipeline/Trunkline Gas, GE Oil & Gas PII which specialized in pipeline inspections, and M.J. Harden Associates, Inc. in Kansas City, MO, a technology-based firm that specialized in GIS which has become one of the pipeline industry’s most important tools. Wiegele joined GE Oil & Gas PII after it acquired Harden in 2003.

Collier, a second-generation pipeliner, has worked for Willbros since 1994, an opportunity he compares to being signed by the New York Yankees. His experience includes project services work for Bechtel, Williams Brothers Engineering (this entity ended up in the hands of Fluor and was absorbed into the Fluor organization) and Brown & Root. He is a wealth of information about Willbros, the pipeline business and the energy industry itself, for that matter. The need to reposition Willbros and the actions subsequently required were not easy, and required significant guidance from Harl and his entire management team.

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Collier clearly recalls what happened when the new management arrived in 2006.
“When Randy (Harl) and his team came in what they saw was a one-trick pony that engineered and built pipelines. They felt it was not just in the best interest of the shareholders, but also the employees, who would have better growth opportunities if we had broader end markets to address. What needed to be done was to stabilize the business model and put a floor under it. We’ve been hard at work doing that for the last six years, and we’re not by any means done,” said Collier.

“We’ve seen significant improvements in the outlook for the company and I expect we’ll continue to stay the course for more intellectual components, engineering and program management as well as EPC and recurring services,” said Collier, offering a view of how the company traditionally operated.

“Willbros’ model for almost 100 years was to gather up a large pool of resources in equipment and personnel, build something, hand it off to the owner and ask them to call us when they have another job. Now, we believe there’s a lot of value in staying with the project, helping the owner to manage and maintain it for the life of that facility, whether it’s a compressor station, pipeline or terminal. In many instances, the owner wants to do that himself, but in some instances, we’re finding that they see value in engaging us to provide those services,” he said.

Adding GIS To The Mix
Part of their plan involved incorporating new technologies that would not only enhance the existing business model, but also provide an entry into new business opportunities such as electric power distribution and integrity management. So among those they reached out for was Wiegele, then a well-known executive with GE Oil & Gas and an early proponent of GIS, a tool that provides pipeliners with essential data for operations and construction, while coordinating perimeter and route surveys. It is also helping companies meet state and federal mandates for better record-keeping.

What it boils down to is that the new technologies such as GIS enable companies to prove that what they have in the ground is actually where they say it is, explained Wiegele, who broke into the pipeline business with Panhandle Eastern Pipeline Co. after his 1982 graduation from Iowa State University where he received a degree in civil engineering.


His mission has this key focus: “We are working to take that technology group that’s really been focused the last 20 years on the tail end of the operations of pipeline companies and drive the technology into our engineering, mapping, and survey and land acquisition. This fundamentally improves the overall process and makes everyone more efficient. It also gives the operator data that fits seamlessly into their core integrity and GIS systems.”

For instance, they want to make it simpler for energy companies to run risk assessments, make maps of existing infrastructure and integrate multiple types of data, which provide a greater knowledge of what their assets are and where they are located.

“We’re taking the technology infrastructure already in place and linking it to the processes we’ve developed to use on preliminary and as-built surveys, engineering, land acquisition completion packages, and those issues involved with engineering projects, driving the information into a real-time consumable technology,” Wiegele said.

As part of its restructuring process, Willbros made some additional key moves that further enhanced its future plans. In 2009, it acquired Wink Engineering, LLC, a Louisiana company supplying engineering services to the downstream oil and gas industry. This gave Willbros a firm foothold in Baton Rouge and New Orleans. Shortly afterward, Willbros entered into its first of several alliance-type arrangements with pipeline operators to deploy capital, maintenance, GIS and integrity programs. Then in 2010, Willbros acquired Infrastrux Group, an electric and natural gas transmission and distribution contractor in more than 100 locations in the U.S.


Experts In Technology

Wiegele established the Willbros technology office in Kansas City, where he and his team have spent years building up M.J. Harden. Pipeline work was nothing new to that staff, having worked with software-based data and other technologies used in the pipeline business for the past 20 years. In fact, they liked the opportunity to meld their intimate knowledge into creating the data models used by Willbros today. So successful has the group been that the Kansas City group numbering 80 has outgrown its space, while another 130 work in Houston.

Though the demand for highly skilled technology experts is high, Wiegele said Willbros has been able to attract what he described as “exceptionally talented and well-educated young men and women who understand the pipeline industry and the technologies that we’re using and are capable of integrating the two on pipeline projects.”

One factor in Willbros’ favor in attracting talent is that the Willbros direction and leadership has been stable and growth-oriented, even with all of the ups and downs the industry is known for.

“Our business gives people an opportunity to see many different aspects of the energy industry and how technology is applied to create solutions. We also have an ability to attract talented folks, because we are working only in the latest technologies that are available. Being experts within the industry, they want to understand, learn and become part of the Willbros solution. Ultimately, it’s created a tremendous amount of excitement around this part of our business,” Wiegele said.

Here, Willbros believes it has a competitive advantage because within its ranks are experts in one form or another who, when combined, can provide an expansive array of services, be it technology-based, field work, pipeline integrity or engineering. That doesn’t mean there haven’t been challenges in melding the old with the new, in this case technology and traditional pipeline projects, or to simplify things, software and hardware.

“Changing the traditional methods in any industry is difficult initially and we live in one that says ‘it all sounds good but show me how it works.’ For the past five years we’ve focused on proving that the technology, the processes and the methods will work in this environment. Another advantage is that we provide services in all of the areas that these technologies touch: surveys, land acquisition, engineering, mapping, construction, etc. Therefore, we can make incremental changes to our internal processes with the technology that ultimately makes a better delivered product for the customer,” Wiegele said.

He and Collier said the new Willbros is the result of customer feedback but even more so its own recognition that it needed a better way of looking at how it could not only improve many of its essential functions such as integrity, construction, engineering and mapping, but develop that into a continuous improvement process. Turning that data-driven knowledge into useful system management solutions is critically important today to operators dealing with older pipeline assets.

“We don’t want to be just a commodity service provider,” Wiegele said. “We want to bring improvements to clients that will make for a better project and a better way to do things. We also instilled that mindset within our organization. We’re not looking at ourselves as another engineering firm, but as the engineering firm that understands the process, the technology, and we feel we can deliver that like no one else can.”

For example, how do you determine whether your new work processes are effective? By evaluating at the end of the day what went right vs. what didn’t and figuring out how to make it better from the next day forward. If data is gathered more efficiently by the surveyors could they improve their production rate and use a two-man instead of three-man crew? Should the crew be changed out to another that might be more effective? What data is collected when? Should processes be changed to improve the time it takes to get all of the information to the owner’s operations staff?

Willbros was wise to begin adapting to the changing times when it did. Five years ago, its customer base was almost exclusively comprised of long-haul natural gas transporters. Today, the changing landscape has Willbros providing five major services that employ about 4,700 people specifically for its expanded oil and gas clientele. This is how they define that work:
1. Engineering encompassing natural gas, crude oil, refined products pipelines, pump stations, compressor facilities, terminals, tanks, as well as in refining, petrochemicals, gas processing.
2. Integrity management and field services (nearly 900 workers in the field dealing with preconstruction, construction and post-construction issues, gas detection, leak detection, stray voltage survey and line locates. In addition, Willbros handles over 3 million one-calls in 16 states annually.
3. Construction including stand-alone facilities or combined EPC .
4. Facility management of newly constructed or existing infrastructure.
5. Right-of-way acquisition and survey. Includes dealing with landowner issues for new construction and integrity work.

What Willbros hopes to accomplish is to offer clients the option that they can handle all of their work, rather than parceling it out to multiple subcontractors, a one-stop-shop of sorts that delivers a well-managed end-to-end solution.

Expanded Horizons In Power
These past five years of internal change have also paralleled nicely with the upsurge in activity led by the midstream sector. Collier said Willbros quickly saw the potential in leveraging the “smart side” of the business and incorporating that with what it has done for a century.

“The pipeline business has always been very cyclical,” Collier said. ‘We’ve seen big build-outs – some before and after World War II, the most recent peaking in 2007-08 before tapering off in 2009. We’re a public company and investors don’t like that cyclicality. The new management was looking for more recurring services to put a floor under the business.”

“The strategic direction we took was to leverage that business that Ed now leads – engineering to expand the end markets – but stay in a base that is familiar to us. Oil and gas remains our biggest business but we also saw energy infrastructure as offering more opportunities. Now we are in the (power) transmission and distribution construction business where we rank twelfth, according to some surveys, and do about $500-600 million worth of business. We expect that business to grow rapidly,” Collier said.

It hasn’t been a difficult transition, one reason being that Willbros already had some electrical transmission and substation capability and experience, particularly from a large downstream business in Baton Rouge.

“Transmission is very similar to pipeline construction. It’s linear – you start here and end up 100 or 200 miles away. It requires critical skills; in transmission its linemen, in pipelines its welders, and a lot of guys travel with the work. We have management tools developed for our pipeline construction that are easily transferable to the electric transmission part of the business,” Collier said.

He took a long-range perspective on how these business components will blend over time.

“There will be significant opportunities as available low-priced natural gas drives replacement of coal-fired plants with combined-cycle generation. We’ve already made a good business for years building fuel pipelines. Now we can do the takeaway transmission lines to hook new facilities into the grid. If you think about combined-cycle generation, the turbine side of it is not unfamiliar to us, because we’ve done a lot of very large compressor station work with big gas turbines,” he said.

The Shale Opportunity
The energy revolution came at just the right time for Willbros and brought with it a significant change in its customer base along with new geographical terrain to work in. Both would bring a need for a more enlightened workforce and smarter tools.
Development of the Barnett Shale in North Texas was just starting in 2006 while Harl and his new team were working to extricate Willbros from some international businesses that had gone off-track, primarily in Nigeria.

At that point, the company aggressively began to push its ability to do large-diameter cross country natural gas pipelines and along the way began using automatic welding, which Collier said was a “real success for us and CRC Evans” (a major provider of welding services). That led to a record year in 2008, generating a record profit and $183 million in EBITDA.

Company planners were savvy enough to recognize they faced another cyclical infrastructure build-out with its finite life. So they studied where the drilling rigs were headed and found rig counts were rising in South Texas – now the center of the enormous Eagle Ford play, the Permian Basin and the Bakken play in North Dakota and Montana. In 2009, Willbros had no offices on a regional basis. Now they have 23. Engineering services were almost exclusively provided from Tulsa; now the staff has grown and almost half of the engineering is handled in regional offices, including Kansas City, Denver, Dallas-Ft. Worth, Houston, Baton Rouge, New Orleans, San Antonio and Pittsburgh where Willbros was among the first to establish a presence in the Marcellus Shale.

Today’s midstream operators might be from the old school, but as service customers they are increasingly sophisticated and quite determined to ensure work is done quickly and correctly. They have a good understanding of what technology can provide as well as ongoing developments in the industry, including what increasingly strict regulators want. So they demand more of those services from providers such as Willbros.

Nor are any two customers alike, particularly in the vaguely defined midstream sector.
The midstream operators’ range of services and products can change from day to day, but their bottom line is that they need to be up and running quickly in order to produce the vast amounts of revenue needed to sustain their operations and provide profit. Wiegele said Willbros’ technological capabilities are designed to help operators speed up their production process. If they like how Willbros handles the engineering and construction phase of a project, in all likelihood they will want those efforts to blend into activities involving the future work on the transmission system and large-diameter pipelines.

“New customers have their particular drivers as to what makes them tick: it could be speed or technology; others may want regulatory-type compliance. This challenges convention in a way which is good for us as an industry. Continuous improvement really means defining what we can do better. New customers bring those new ideas and methods,” Wiegele said.

These operators also want a local presence – people on the ground who can move quickly and handle whatever job needs to be done, perhaps tying in a well and figuring out what the flow rates will be so that a pipeline can be sized properly.

Today, Willbros can respond with a pipe yard in Oklahoma and can organize and manage getting that well on stream as quickly as possible. They also have offices ranging from Watford City, ND (Bakken) to George West in South Texas (Eagle Ford) that Collier said were not even a gleam in anyone’s eyes five years ago. Now those service centers comprise a $300 million-a-year business.

“We’re able to provide customers with solutions that incorporate best practices that we’ve gleaned from all of these different projects, regions, terrains and issues that we’ve had to deal with,” Collier said, adding, “it gives us a very robust palate of solutions that we can offer to our clients. “

Aging Infrastructure & Pipeline Integrity

The growing number of pipeline integrity mandates to deal with an aging pipeline transmission system is also a good business opportunity for Willbros.

“It appears to us there is quite a bit of work to be done,” Collier understated. Willbros hired outside experts to study that market several years ago while Wiegele was assembling his integrity group. At that time, Collier said the amount of work needed to be done was estimated at $3-5 billion annually. That figure might be double today, and not necessarily because pipelines are starting to age any faster.

“There is an acute awareness in the industry that there is a lot of value in ensuring the integrity of these systems,” said the veteran industry observer.

Maximum allowable operating pressure (MAOP) validation efforts are requiring more investigative work by pipelines. They realize they may have to test their line or make it piggable. This requires a considerable effort to locate and maintain the right operating records and being able to blend it with the new information being obtained from field investigations.

“You have to know more about your pipeline system, interact more with the public and all the other governmental entities that you have to deal with. The need for accurate information and record-keeping has gone up tremendously,” Wiegele pointed out.

Business Opportunities
Willbros is no longer a major player internationally, nor does it need to be with the huge surge of work in North America. Its last major international project was the 663-mile Chad-Cameroon crude oil pipeline for ExxonMobil completed in 2003. Earlier this year, Willbros sold its last remaining international operation in Oman.

“We look at the risk-adjusted returns we can generate and the three markets that we’ve talked about: the shale plays and the conventional oil and gas pipeline work we do; the oil sands in Canada, and the expansion and repair of the electrical infrastructure in North America. It looks to us like the three best markets in the world. You deal with solid customers, good payment terms, low political risk, and a very safe working environment,” Collier said.

Canadian activity, in fact, looks especially promising because of the oil sands and the huge amount of capital it has attracted.

“We’re in our 12th year up there and our business has grown from $12 million in 2001 to a little over $200 million in 2012 and will probably be over $300 million in 2013,” Collier said.

Willbros crews are now working on building NGL lines crossing the Houston Ship Channel and as well as lines into the Mont Belvieu area. Both jobs are especially challenging since crews have to work in extremely congested areas that already house highly built-out pipeline corridors. Crews had to cross the Houston Ship Channel three times last year.

Willbros also is working throughout South Texas for multiple customers in the Eagle Ford Shale. One of its most recently completed jobs was the Red River natural gas pipeline from North Texas into Oklahoma.

There is considerable engineering activity in the Northeast where a variety of projects are planned or underway to leverage the expansion of Marcellus gas into the Northeast and then back into the Gulf Coast. The Texas Express and Seaway pipelines are two projects that Willbros engineers are dealing with.

The Northeast offers a unique set of challenges for pipeliners who normally work in less populated areas such as South Texas. The terrain is often hilly and environmental issues involving routing and/or landowners are challenges requiring careful attention and responses. Add to that the public sentiment fed by the rapid expansion of the Marcellus area and the resulting production increases create even more challenges. But these are manageable, providing operators maintain up-to-date records and efficient communications. That again spells technology.

How do you as an operator or a service company make sure that you are able to respond to that regulatory environment, whatever and wherever it is?

This is Wiegele’s answer:
“Our major concern is to ensure we have what we need or the operator has what they need when we finish a project. Take a new pipeline construction project: before you bury that pipe, what do you know about it? What do your records look like and where are they? How well is your survey information tied to your material records, installation and X-ray records?
“What we’ve been working on is making sure that no stone is left unturned in that process so that regardless of what the regulation is, the work that we’re doing today doesn’t have to be redone and is not subject to second-guessing. It means we need to be in sync with the operators, know what that regulatory environment could be, and provide them with the level of service that gives them what they need at the end of the day, if or when that regulation changes.”


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