October 2010 Vol. 237 No. 10

Q&A

SSOE Group No Stranger To Pipelines Or Terminals

Being in Houston, one would rightfully assume that we are in the heart of the oil and gas industry. While that is true, that should not imply that all of the business is centered here. A case in point is SSOE Group, a engineering conglomerate based in – of all places – Toledo, OH. Founded in 1948, SSOE has carved a wide niche in international architecture, engineering and construction management and ranks as the 11th-largest such firm in the U.S.

It is the pipeline-related work that we are interested in here and SSOE, despite its Toledo address, is no stranger to the industry. Tim Lajiness is Pipeline Business Leader and Senior Project Manager at SSOE Group and discussed the company’s pipeline-related history.

P&GJ: What is the history behind SSOE Group, particularly in becoming involved in the pipeline/terminal business?
Lajiness: SSOE began providing engineering and design services to pipeline and terminal companies in the early 1990s. It started with smaller projects such as motor control center upgrades and meter station modifications. Over time, the size and complexity of the projects that we were involved with began to increase. We’ve recently added a group of engineers and designers experienced in distribution design, particularly in the area of cast iron and bare steel replacement.

P&GJ: What are some of the more recent and challenging pipeline projects SSOE has worked on?
Lajiness: A recent and challenging project in the Midwest involved the addition of two gas turbine/compressor packages into an existing storage field compressor station. Like many of the facilities in our industry, some units had reached their useful life span and were in need of being replaced. The existing units needed to be removed along with the existing foundations. As it turned out, the existing foundations were much larger than anticipated. A unique aspect of this project, compared to the typical use of a storage field, was that the compressors were actually used for withdrawal and not injection.

SSOE has also been deeply involved in the compression and transportation of CO-2 primarily for enhanced oil recovery (EOR). Injecting CO-2 into under-producing wells can greatly increase the quantities of recoverable oil, condensate, and NGLs, and significantly extend the useful life of the reservoir.

P&GJ: What is the company’s strongest focus in pipeline activity – engineering and design, construction, etc.?
Lajiness: SSOE provides all of the standard engineering and design disciplines of a full service design firm – that is what our company was founded on over 60 years ago. However, as a result of our growth, and in an effort to provide our clients additional services in other areas, SSOE now offers clients services such as environmental compliance, construction management, program management, project control, and start-up support.

P&GJ: Where is most of the company’s work focused geographically?
Lajiness: While most of our company’s energy work is performed in the Midwest, we are well-positioned geographically to support projects both domestically and internationally. We have 21 office locations. 19 of those are located within the U.S. and two are in China. Internationally.
our energy group is targeting growth in Canada — especially in Calgary and the Canadian Oil Patch – along with our Canadian–based partner, Morrison-Hershfield.

We recently opened our second China office in Beijing and our Shanghai location has now grown to become our second-largest office. SSOE also has plans to expand our coverage for clients with operations in India.

P&GJ: How large is pipeline and energy-related work in SSOE’s overall business portfolio and what is the company’s strategy to increase its footprint in this sector?
Lajiness: SSOE’s energy sector makes up a significant proportion of SSOE’s portfolio — especially when you take into account the large number of power-related work we’re performing for private sector clients with large-scale power needs. Over the next few years, we anticipate 30-50% percent growth in our energy-related work.

The alliance with Canadian-based partner Morrison-Hershfield will also help increase our footprint in these industries. Each partner in this alliance brings its own unique strengths to the table and by integrating them, we are able to deliver comprehensive project solutions on all project phases which is key to our clients.

In addition to our international growth targets, M&A has been a small, but important part of SSOE’s competitive strategy — focusing on firms with specializations in high growth potential sectors. In late 2009, we acquired a small but specialized leader in the energy industry —specifically in biomass, landfill gas, and waste energy products.

P&GJ: What makes SSOE unique among energy service providers?
Lajiness: SSOE is a firm of nearly 900 professionals. The experiences of our employees are extremely diverse. Some have been in the engineering firm world for their entire careers, some are young and just starting their careers, some are from the operating companies and others have taken early retirement packages and are not ready to stop working.

SSOE is the size of company that is nimble enough to support the smaller everyday O&M type project, yet large enough to provide engineering and design services for major projects such as pipeline expansions, compressor station additions and system upgrades. We pride ourselves on our ability to provide proven value to our clients and last year documented savings for our clients equaling one-third of our revenue.

P&GJ: How has the company managed to survive the extended business downturn and help its clients during this period?
Lajiness: Fortunately, SSOE is a very diverse organization. This has helped us weather the economic downturn by being able to shift resources from areas that are seeing reductions or slowdowns to areas that are experiencing growth. This maintains our staff levels as well as provides our colleagues with the opportunity to expand their knowledge base by taking on different projects types.

In fact, SSOE has actually completed acquisitions this past year that have allowed us to expand the services that we offer to our energy clients. We added a power group that engineers and designs power plants and other facilities associated with electrical production and delivery. Many power plants that are being considered are driven by natural gas and the combination of the power group and the pipeline group provides electric companies a “one stop shop” for engineering.

In terms of how we’ve helped our clients during the downturn, it all comes back to how we approach a project. We aren’t order takers — if we see a better way to approach a project than what we’re asked to do — we suggest it. If we can save money through an upgrade and avoid new equipment – we do it. If we can suggest to the client a more significant investment up front that will result in long-term operational savings —we’ll do it. All of these approaches contribute to the documented savings we aim to provide our clients on their overall project cost.

P&GJ: How do you view the energy and pipeline construction market for the next few years?
Lajiness: This is going to be a very dynamic market for the foreseeable future. In the short term, most operating companies, as well as most companies across all business sectors, appear to be waiting to see what types of regulation will be imposed upon them by the federal government. This could affect the power generation companies as well as the pipeline companies.

Approximately 50% of the power produced in the United States is coal-based. In order to meet emission requirements, many smaller generation facilities are being mandated to either shut their units down or convert to natural gas. Some of the larger generation facilities could be subject to the conversion as well. As a result, a significant expansion of the natural gas pipeline infrastructure system is entirely possible.

P&GJ: For the last two years, the company was cited as one of the fastest growing private companies in the U.S. What led to this success?
Lajiness: The Inc. 500|5000 ranks companies by overall revenue growth over a three-year period. There are several contributing factors for this growth. Our 85% client retention rate provides a strong base for us to work from; in fact, 125 of our clients have been with us for 20 years or more. Our diversity, both in terms of the markets we serve as well as the services we provide, has been a tremendous benefit. Global expansion into high-growth markets like China — as well as India and Canada moving forward – add to our diversity in down markets as well as expose us to niche pockets of growth.

P&GJ: What are some of the issues involving pipelines in the Ohio region?
Lajiness: The Ohio region will play a very integral role in development of the natural gas and petroleum product pipelines over the next few years. Ohio has seen the REX Pipeline traverse the state and the development of the Marcellus Shale will provide a vehicle for pipeline companies to get their product efficiently to the market place.

It appears the Utica Shale in Michigan has potential for significant production. With the amount of storage available in Michigan and southern Ontario and the desire to move natural gas to the East Coast, SSOE is well-positioned geographically to support these expansions.

P&GJ: Your website notes that SSOE has worked on about 1,000 gas pipeline projects over the past 20 years. Being located in Toledo, OH, how has the company managed to market itself to operators?
Lasiness: SSOE is fortunate to be located in an area that is pivotal for the flow of natural gas and petroleum products. We have numerous transmission companies and local distribution companies that are located in our immediate area that we support. There have also been times that we have located our personnel directly in client’s offices to provide engineering and design services for large-scale programs comprising multiple projects.

P&GJ: How did you get into the energy industry and what career path did you take to your current position?
Lajiness: Totally by accident! Since I was small boy, all I wanted to work on was jet engines. I tried to get into the Air Force Academy but my eyes were not good enough. Out of college a few years, I interviewed with a company in a small town in central Ohio that manufactured large natural gas centrifugal compressors driven by gas turbines. I was sold! The designs I worked on were installed by operating companies primarily in the United States and Canada. However, some were installed in the North Atlantic and Southeast Asia.

In order to get a broader view of the industry and to move my young family closer to their grandparents, I decided to take a position with an operating company as part of their compressor station design group. When the company moved their engineering functions to Houston, my family and I decided to stay in the Midwest. Since that time, I have been working on the A/E/C side of the aisle. It has been exciting to view this industry from many different angles.