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Interview

with Mark Greene, Managing Director, GD Pipelines

18.11.2010 / Energyboardroom

GD Pipelines is a fairly young company. What was the vision behind the creation of the company in 2006, and why was the time right to start a pipeline business in Queensland?

The Greene Group is the parent company of GD Pipelines, involved in construction and project management. In 2004, the group was overseeing and constructing a pipeline in northern Queensland. They found that in the segment of pipeline construction of projects costing between $5 and $15 million AUD, there seemed to be a large gap in contractors with systems and processes in place to be able to fit into a ‘Tier 1’ management constructor, namely having embedded safety, cost control management and ability to deliver to schedule.

Therefore, in order to fill the contract the Greene Group put the pieces of a company together by contracting a local earthworks company, a pipeline welder, and then putting our own management team together. The project was a success. Why was there a gap in the ‘Tier 2’ area of pipeline construction and in a project cost band of $5-15 million AUD? We researched the issue and found is that the larger players that had previously occupied the space had moved on to $50-100 million AUD projects as industry had grown with the need for larger pipeline projects. The people that had moved into the ‘Tier 2’ segment had once been very small players and had developed from the ground up without necessarily having the requisite systems and processes knowledge in place. By creating GD Pipelines we successfully filled that gap in the market, which allowed us to go from project to project delivering what our clients need.

A year ago GD Pipelines accounted for 50% of the revenue of the Greene Group, but looking forward it should be around about 80% of the group, because of the large number of projects that we have secured and are in detailed discussions to negotiate.

Who are your customers today? Where are you focusing to bring business in?

GD Pipelines’ traditional business has been with the large water and wastewater projects on mine sites. This has mainly been focused in the north of Queensland, as we have extensive experience in the gulf region and good approaches to overcoming and managing risks in remote locations.

Today the company has two major areas of business: to continue in this traditional area, but also to focus on supporting our prime objective, which is to be a significant player in the gas gathering business. All of our traditional core skills of constructing HDPE (High Density Polyethylene) pipelines can be used in this new business area of gas gathering. We predict that we will see our largest growth coming as a result of our work in the oil and gas sector.

Two years ago GD Pipelines entered into a five-year contract with Eastern Star Gas as their gas-gathering contractor. The company has now had two years’ experience in supplying and constructing gas gathering with them. We have secured a contract with Arrow Energy, and we have mobilised and commenced work. Recently we completed a gas-gathering contract with Molopo Energy Ltd. As a contractor to Laing O’Rourke, and we are preparing and setting up for the construction of a large bore waste water pipeline project in Central Queensland.

In the future, do you envisage that more projects will come from work as a sub-contractor or will you be working directly with E&P companies?

GD Pipelines has the wherewithal to contract directly to client or are equally as comfortable to fit underneath a tier 1 contractor. GD Pipelines point of difference is that there is no need to put a lot of overheads above our company because we have embedded the practices of safety, quality, cost management and reporting into the way we work every day.

Clients that we have worked directly for include BHP, Rio Tinto Alcan, Bechtel, Worley and Hatch amongst others. We have found that wherever we have worked, we are praised for being a self-directed pipeline constructor.

I imagine with some of these projects, you are potentially looking at years of future business with the clients if all goes well. What are your strategies for approaching these long-term contracts?

The key is demonstrated performance, clearly understanding the requirements and objectives of the client and ensuring that GD Pipelines has strategies to deal with them. One of Molopo’s key requirements, for example, was landowner management, and we needed a complete strategy on how deal with the landowner to ensure that we met this requirement, which we did.

With our larger clients, GD Pipelines needs to ensure that we are providing them with a contractor with whom they can work closely, that understands their needs and can be reactive to those needs, that is looking for innovation to save money, and I believe that we have started in that vein with larger gas companies such as Arrow Energy. We won that project in a competitive bid across the industry, and they indicated that what impressed them was our systems processes, and past and recent performance with clients.

This is not a market space where companies can quickly appear and simply perform. In the five years that GD Pipelines has been around, including the time it was operating as a joint venture under the Greene Group, we have continued to evolve our systems to make them more appropriate for the local regions. Even though it seems like an uncomplicated process, it doesn’t come overnight. GD Pipelines has built up a lot of experience, and we have developed pictorials of those processes. This is how we then introduce new people into this industry and practices. This is one of our current challenges: we have a lot of new people coming into the business and they need to immediately work to the high standards our clients have come to expect.

How much of a challenge is it to find the right staff and make sure that they integrate well into the culture of the company? Do you feel as though you are the employer of choice in this particular segment?

Attracting people to the company has actually been a very simple process. The Greene Group has been managing large projects for a number of years; one in particular where they had to attract some 900 people for a project over a short period of time, and have had twelve years of creating databases of personnel. When the time came to put GD Pipelines together, a number of those personnel were attracted to the company.

We have found that we have been and are employer of choice. There is a general market price that people are paid, and so once they are paid that and their working conditions are equal, it is then about the processes and frustrations of the day, how you remove them from the equation. We have contacted people recently due to the fact that we have secured a lot of work for the next twelve months, and we are in the fortunate situation of having more interested and qualified people than we have available positions.

How are you planning to grow the company to respond to developing gas industry in Queensland? What do you see in the next few years for the company?

GD Pipelines has moved into new premises in Queensland with 750m2 of office (of which we are currently using one third), 2000m2 of undercover factory and 2000m2 of hardstand. The company has looked ahead for the next four years and secured premises that will cater for its growth.

In the next twelve months, the turnover of GD Pipelines will be in the order of about $25 million AUD, and we hope to double our growth each year for the next couple of years. The Greene Group has been managing projects worth as much as $150 million AUD, so GD Pipelines is aware of and prepared for the different dynamics of a company’s needs as it grows, including capital funding for both cash flow and equipment purchase. The global financial crisis has shown everyone in the industry how important it is to make sure that in the quieter times the company can sustain itself.

In the past there has been sufficient competition for the level of work that there has been. During the financial crisis there was next to no work: there was a complete shutdown of capital projects, and it was only those companies that had maintenance contracts and other forms of diversification that managed to survive well. Today, there are sufficient suppliers to handle the current demand; that will not be the case in twelve months’ time, as the expected projects are awarded.

This gives GD Pipelines a lot of room for growth. It is going to be easier for those companies that are already established in the market to expand and fill that demand, and better for the client than new players entering the marketplace that don’t yet have the core skills and expertise to handle a project in Queensland well.

A big advantage for GD Pipelines is that the company can say that it has had five years of experience as a professional pipeline constructor, and more recently has worked to gain the core skills and practices of gas gathering, which is the segment where we see the most potential as a company.

When you started the company in 2004, what were your key aspirations for the company, and how far have you come towards reaching those goals?

The key aspiration was to become Australia’s leading end-to-end pipeline constructor. That doesn’t mean being the biggest, but it means that being the best at planning the execution of projects in the front end by working closely with designers and owners to establish an efficient execution strategy, undertake that execution and deliver the core goals – safety, schedule, budget, specification, and developing strong working relationships and finally leaving a well-documented record of construction that is valued by the client’s operating team.

Today, GD Pipelines has a very clear three-year plan, which includes continuing that mission of being the leading Australian end-to-end pipeline supplier. I believe we have achieved this performance on singular projects and our challenge going forward is to replicate this performance across multiply projects simultaneously.

The company focus now is on the projects that we have secured: to deliver them, and achieve a strong relationship with these clients that leads to repeat business. We have and will continue to partner with a number of Australia’s leading companies. We will continue to systemize our practices and processes through effective database tools, to assess the most appropriate, safe and cost effective equipment, and to continue our strong relationship with our financiers to support this growth.

Do you have a final message that you would like to send to our readers about your company?

We are striving for leadership status in efficient project management systems and processes that deliver a safe project to spec, within price, having secured ongoing healthy relationships with our key stakeholders.

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