December 2013, Vol. 240 No. 12

Features

At Northern Natural Gas, Communications Is Their Business, Too

It’s been a long road to the top for Northern Natural Gas, which sits at the apex of the latest Mastio survey of top customer value rankings in both the overall legacy category, and among top mega and major pipelines.

In fact, as recently as 2003, Northern ranked dead last in the rankings.

“This level of customer satisfaction improvement resulted from a concerted effort to better relationships and service to all customers,” said Kent Miller, Northern vice president of Customer Service and Business Development. “It’s more about providing excellent service to customers than it is about scoring high on a survey. However, the survey results do validate Northern’s efforts.”

Judging from the Mastio results, the company has made better than steady progress in recent years, finishing among the overall top five pipelines in the last six surveys and placing second on the legacy list for the three years prior to 2013. Northern has finished atop both the separate mega and major pipeline satisfaction lists in recent years as well.

According to Miller, who joined the company in 1981, the quest for quality begins with Northern measuring a variety of customer interface events, including billing accuracy, availability of online systems, facility reliability, response times to customers and turnaround on project estimates.

After that, the results are reported to senior and executive managers on a weekly basis, prior to the metrics and the results being distributed to all Northern employees – not just those who are directly affected. Each employee then is asked to commit to a higher standard of customer service and problem response.

“Northern stresses with its customers its desire for transparent and candid communication. We solicited their input on problems, too,” he said.

Mastio’s Kevin Huntsman, who directed the study, said like the other companies that fair best in the survey, Northern has distinguished itself by paying close attention to small things and providing excellence in “soft skills” – those involving people.

“It’s the same things that you and I like when we do business,” Huntsman said. “They’ve created a culture of wanting to provide a good customer experience, and it obviously starts at the top.”

Northern, which is based in Omaha, NB, operates an interstate natural gas pipeline system, extending from the Permian Basin in Texas to the Upper Midwest. It accesses supply from every major Mid-Continent basin, as well as the Rocky Mountain and Western Canadian basins. This supply is ultimately delivered to end-use customers located in Minnesota, Iowa, Kansas, Nebraska, South Dakota, Wisconsin, Illinois and the Upper Peninsula of Michigan.

The Northern system includes 14,900 miles of natural gas pipeline and 5.5 Bcf/d of market area design capacity, along with 2.0 Bcf/d of field area capacity. The company’s five natural gas storage facilities have a firm and operational capacity of 73 Bcf, including 4.0 Bcf of LNG.

While Northern’s physical footprint in the market is distinctive, Miller said what makes the company itself unique is the owners’ perspective that “our relationship with our customers is on a permanent basis.”

This means making decisions based on “balanced outcomes” that take into consideration what is in the best interest of the company’s numerous constituents. These areas of concern extend to customer service, employee commitment, regulatory integrity, environmental respect, financial strength and operational excellence.

“We focus on open communication, engagement with customers, the responsiveness of our account representatives and senior management,” Miller said. “Our goal is to make it easy for shippers to do business on Northern’s pipeline.”

While price seems to always emerge as a basic concern, the shippers are asked what factors are most important to them in selecting one pipeline over another. Because they usually employ more than one pipeline, they are also asked by the Mastio survey to identify the biggest disappointment they have experienced with each of their pipelines during the past year.

Gratifyingly, you can probably throw a blanket over the pipelines that exceed or at least meet the industry standards. After all, if operators can’t provide reliable transportation, how could they possibly stay in business. That’s why it boils down to the so-called “soft issues,” such as communications in determining what pipeline companies really stand out among their peers.

Or, as Huntsman put it, “A lot of what I call the operational engineering stuff, that’s not where you differentiate yourself – you differentiate yourself with the people, and that’s what these pipelines [with the highest scores] have done.”
Based on the study responses, Mastio listed the top three shipper needs as highly reliable firm gas transportation, accuracy of scheduled gas volumes and accuracy in invoicing. For Northern, this is achieved by establishing a proper mindset, Miller said.

While Mastio has seen shippers remain consistent in what they consider the most desirable attributes among the pipelines they do business with, Huntsman said in recent years there has been a little more interest in the transparency of the process, or the desire “to make sure everybody is on the same page.”

This year, Northern’s toughest competition for the top spot among mega-pipelines came from Texas Gas Transmission, Southern Natural Gas Co., Williams Gas Pipeline-Northwest, Williams Gas Pipeline-Transco, Texas Eastern Transmission Corp. and Dominion Transmission, Inc., respectively.

Among major pipelines (formerly the long haul pipeline category) Northern beat out Southern Star Central, Texas Gas Transmission, Southern Natural Gas Co., Williams Gas Pipeline-Northwest, Williams Gas Pipeline-Transco and CenterPoint Energy Gas Transmission Co., in that order.

Despite being such a large company, Miller said Northern, which employees about 850 people, stresses to its representatives that clear, frequent communications with customers are essential to maintain both dependability and the company motto of “no surprises.” To this end, customers are encouraged to ask questions of customer service and account representatives and the senior management team is trained to be accessible.

Changing Customer Base
Over the last decade, Northern has seen the level of the demand for direct deliveries for industrial use increase significantly, and that segment now represents close to 20% of the company’s overall business. This increase primarily consists of gas used for ethanol production, gas-fired electric generation and the production of agricultural products. However, the largest portion of Northern’s load is still delivered to upper Midwest local distribution companies.

Northern also has benefited from the positive effect the shale boom has had on the customer base, providing it with relatively low, stable natural gas prices and a healthy business environment.

Additionally, the company’s Field Area pipeline sits atop the Granite Wash tight sands play in western Oklahoma and the Texas Panhandle, and the Wolfberry oil shale play in West Texas – two highly active production areas. The added supply has increased transportation opportunities for Northern and offers an abundant gas supply its customers. Recent interconnections have expanded Northern’s access to supply by about 1.5 Bcf/d.

Kern River, MidAmerican Tops Lists, Too
Among regional pipelines – those with less than 3,500 miles of pipeline or which serve fewer than three states – Kern River Gas Transmission Co., headquartered in Salt Lake City, Utah led the pack.

Kern’s pipeline provides a major conduit of natural gas from southwestern Wyoming into Utah, Arizona, Nevada and California, terminating in the Bakersfield, CA area. The 1.7 MMcf/d capacity system serves a broadly diversified range of shippers, including considerable end-user volume, particularly electric power generators.

Fellow regional pipelines Carolina Gas Transmission, CenterPoint Energy-MRT, Iroquois Gas Transmission System L.P., Northern Border Pipeline Co., Union Gas Ltd. and Vector Pipeline all exceeded the industry benchmark for the category, as well.

In the major pipeline group, which includes pipelines owned and operated by the parent company, MidAmerican Energy Pipeline Group came out on top. Headquartered in Des Moines, IA, the company provides service to customers in a 10,600-square mile area in Iowa, Illinois, South Dakota and Nebraska. MidAmerican transmits about 7.7 Bcf/d of natural and operates 39,000 miles of transmission and distribution pipeline.

Also exceeded the industry benchmark in category were Boardwalk Pipeline Group, CenterPoint Energy Group, Spectra Energy Group and Williams Group.

In the intrastate pipeline category California Gas Transmission, the northern California-based business unit of utility Pacific Gas and Electric Co., received the top customer satisfaction score, followed in order by Enogex, Inc., ONEOK Gas Transportation Co. and Southern California Gas Co.

Among Canadian pipelines, Ontario-based Union Gas Ltd, a Spectra Energy company, set the benchmark for customer satisfaction followed by TransCanada Pipelines-Alberta System, BC Pipeline, TransCanada Pipelines-Mainline System and Alliance Pipeline Ltd., respectively.

The Mastio study is based on interviews with industrials, local distribution companies, independent power producers, gas producers and marketers. They rate pipelines on 30 attributes such as: representatives who listen well, effective after-hours support, firm gas transportation is highly reliable, timely resolution of problems plus overall company performance.

Customer Needs Prompt Northern Expansion

Northern’s West Leg expansion, expected to be in service Nov. 1, 2014, came about in large part to support a $1.7 billion expansion of CF Industries, which will use natural gas as a raw material and energy source to expand its ammonia and granular urea production plant in the northwest Iowa county of Woodbury.

“The expansion is a demonstration of Northern’s willingness to meet the needs of our market area customers,” said Kent Miller, Northern vice president of Customer Service and Business Development.

CF Industries has contracted capacity for the project of 88,000 Dth/d. The project, which will break ground next year, will include two new compression stations with a combined 14,200 hp and about 7 miles of 20-inch greenfield pipeline. A new meter station will also be located in Woodbury County.

Although the total pipeline is relatively small, the project is expected to cost $76 million.