Business Unit Management For Midstream Energy

The Midstream Business

Let’s decide to talk about the midstream energy operators – not the service companies or contractors in this industry. It's known that such companies depend on fee-based North American pipe assets for their revenue – these include mostly pipes carrying natural gas, liquids and other drawn compounds. Does business unit management have a place here? How could such companies apply the fittest overall plan and seize their chances for growth?


The Growth

The midstream business today has to get ready for 

  • Gas export from North America because of excess shale gas
  • Creating new service maintenance and upgrades through fee-based pipe assets
  • Foreseeing amount of produced gas using automation and preparing for transport 
  • Increasing Liquefied Natural Gas (LNG) assets to match rising gas demand in Asia

The Need

These growth areas draw you to carry out projects – on time and on budget – while delivering gas safely to end customers. It’s all about service. Now, you’ll need to become nimble and steer people to do the “right” projects, do them “right” while using 100% of your people. This calls for project portfolios. People need to rank their work. Value-driven plan needs to align with the skills to innovate. The business could have various parts. For example, the company could have different business units - one for natural gas pipelines, one for liquefied natural gas, terminal storage, carbon dioxide (CO2) etc. Now, you need to align the value-driven plan to the layout and culture. 

Overall View

Considering the threats to this industry, such companies need to develop a new overall vision and plan. Some programs could include carrying out actions from a central Program Office or Group such as

  • Risk review programs
  • Project skills training
  • Critical project rescue 
  • Business unit performance measures
  • Contracts training
  • Safety and quality programs

Risk review programs could lessen booking bad projects. Project skills training could keep long-term customers. Rescuing bad projects could minimize damage or erase it fully. Measuring business unit results could raise the bar on profits, cash flows and revenues. Contracts training could steer better buys of other companies and lower front-end loading costs. Pipeline integrity and safety could become a necessary part of quality programs. With strong backing from investors and the top executive, a business leader could drive such programs while increasing shareholder value. The manufacturing industry has recorded success using them. Why reinvent the wheel? Try it. Shareholders would never leave knowing how you strengthened the company using these measures.

Written by Suresh Iyengar, P.E., President, Business Unit Execution LLC––“Explosive Business Coaching Houston Results For Small Business”. Want even faster results? Are you ready to learn? Call 281.410.5375 and speak to your Profitability Coach Houston today!

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