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Interview

with Steve Dropulich, Vice-President and Managing Director, AustralAsia, Enerflex Australasia

28.06.2010 / Energyboardroom

What is the role and significance of Australasia within the global portfolio of Enerflex’s operations?

Australasia is Enerflex’s largest trading region outside of the Americas and has given the Group an opportunity to provide a differentiator to our clients. The emergence of coal seam gas (CSG) in the Region is an area that aligns well with our core competencies and our integrated range of Products and Services.

This integration capability is Enerflex’s true value proposition for Australasia and even wider international markets. Our Clients now have a real opportunity to deal with a key Supplier early on in their Project development phase who can add value to their design and development objectives as well as provide budget and pricing surety for their finance and approvals process.

Rather than just pick up a catalogue and choose a product, they can work with us in developing what their purpose built solution will look like. With our engineering, construction, and service capability, what was just initially a product selection choice, now can become a total cost of ownership decision supported by over 20 years of on the ground experience.

The combination of our construction and product offering enables Clients to access a custom built package with a superior schedule at a competitive rate, all the while eliminating the various interfacing issues and risks that Clients would experience with a standalone product purchase.

For Enerflex globally, we are now capable of further developing this integrated philosophy across all product offerings.

The Enerflex market positioning within its Industry focuses on the delivery of all Products and Services “between the wellhead and the pipeline.” Clients continue to embrace this offering because they do not want any interface excuses. They want solutions. Enerflex will continue to work to provide them with these solutions.

Enerflex not being alone in the integrated solutions industry and with most competitors priding themselves on innovative thinking, what do you constitute as being the “Enerflex edge?”

A client will typically provide us with their Project objectives with minimal or detailed parameters, including their desired processing and flow capacities. Our scope is to provide them with their black box solution; tell them how we would approach the challenge and how we think they should do it; make sure they we have consistency of flows and maximum uptime; ensure their risks are minimized; and really configure something for them that will work and fit into their technical reviews.

It is that ability to look at the whole project and not just offer a “one size fits all” product solution that really is the “Enerflex edge.”

It is about how the Client’s new Plant looks and operates; what strategies need to be employed to maximize uptime; what it will cost the client over its total life; and making sure the initial investment for the Client is competitive.

Enerflex is as close to a vertically integrated model as you can see in this industry. We engage all of our various disciplines – process, civil, mechanical, electrical – in our construction process and we run our own in-house engineering team supplemented by outside skill sets as required.

Integration capability is there to mitigate interface risk, eliminate margin on margin contracting and improve schedule however the key differentiator for Enerflex is accountability to the Client over the whole Project. This is the true edge.

The downtime of a recession is often seen as an opportunity for companies to re-strategize their R&D priorities. But as a company servicing the resources industry in Australia the recession was short lived and the rebound prompt. What has been Enerflex’s approach to assessing and strengthening R&D?

When we talk R&D within our group we look at the opportunity to tailor what is normally done by our Competitors within the Industry and draw on our experience to build a better solution. We also talk to our clients to find out what we want – allowing us to prepare the best solution.

One of our Core Values within the Group is Creativity – “Lead with Innovation”. It is really this philosophy that drives our employees in delivering the optimal solution for our Clients. Whilst we can deliver the out of the box solution as well, why shouldn’t the Client benefit from our experience and learnings to achieve a Project that delivers more of their Project objectives.

R&D has also assisted Enerflex to be ahead of the curve in providing “green” solutions in its traditional industries.

Our Environmental Solutions business unit has led its market for the past 22 years in the supply of environmentally friendly technology, helping clients to minimize the impact of mining, oil and natural gas production on the environment by treating air and noise in a variety of applications.

More recently, Enerflex is now also actively involved in development and tailoring of CO2 capture, compression and Sequestration applications.

While there is a proliferation of unconventional gas exploration in Australia – coal seam in the east, tight and shale in the west – they are still nascent industries in this country. Oil and gas companies are learning about unconventional exploration and production and I imagine Enerflex is learning too in its service and solution provision. How has been Enerflex’s experience in climbing the learning curve?

Our learnings in this area are a bit more advanced that our peers in Australia as unconventional gas plays are not new to our Parent Entity and North America in general. The Americas have experienced the oil sands boom, and CSG and shale gas plays there are already a mature Industry.

We have therefore dealt very closely with our Group’s expertise of that side of the world which has given us our edge in this area.
Testament to this experience is the feedback received from a number of our Clients in the region. We have heard of sub-suppliers approaching our Clients looking to get involved on their future projects and then being told to talk to Enerflex. It is definitely a good position to be in when your Clients appreciate the expertise and niche that we can bring to their supply chain.

Even if you do not get awarded the contract it must be very reassuring to know Enerflex’s high reputation amongst the industry.

Absolutely. That is critical. Contract or no Contract, an open and honest feedback loop is critical to prolonged Client relationships.
We understand however that we can not be all things to everybody – we do not bet outside of our game. We know where we sit.
Our key product ranges for example – the niche screw and reciprocating compression and power generation markets is a space we focus on to ensure we do it well.

We have also spent a lot of time and energy on employee training and developing our our service and support footprint in the Region. When something goes “bang in the night” clients want to look beyond the 24/7 phone calls at who they can actually rely on to be on the ground as soon as possible. Our people are there.

This is the value proposition I spoke about previously – we do not just put ourselves out as a products and solutions provider, we are a partner there through the good and bad times. It is about the quality of our brand and that for us covers everything from design, installation, product, service capability, and the quality and availability of our people.

Is the CSG sector a core component of future company growth?

From a product-led growth model, absolutely. The coal seam sector lends itself beautifully to our product offering. Another area that is fast emerging for us is power generation – packaging our own power solutions for clients. Our Power solutions offering developed through our EPC and packaging capabilities are also starting to attract a lot of interest from Clients in their CSG upstream development activities. The CSG sector will also provide our Service and support network with additional opportunities as we are already seeing, but it will also drive our future business models as we expand the range of our market offerings and footprint.

The Australian CSG sector is however only one component of our target market. As I mentioned previously, Enerflex offers all the products and services between the hydrocarbon wellhead and the pipeline, specialising in EPC and turnkey construction, services and maintenance of natural gas compressor stations, metering and pressure reduction, gas processing plants, gas fired power stations, oil and gas pipeline facilities, LNG and LPG gas plants, onshore facilities, offshore works, gas turbine power augmentation, including full in-house civil, structural, mechanical, piping and electrical/instrumentation construction capabilities.

Our growth model will most definitely factor in Australian CSG, but also looks beyond the binds of this sector into other areas and within other countries. i.e Asia and Middle East/North African nations.

Looking at the map of Enerflex Australasia, the company lacks a presence in China. Given the strong trade and energy relations between China and Australia does Enerflex plan on entering the world’s soon-to-be second largest economy?

We are currently seeing increased interest in our Compression offering in China.

Globalisation will see more and more enquiries coming from this area as International companies want familiar products and solutions on their Projects.

Certainly China is exciting from a product standpoint. Our approach overall however will be from a value added standpoint and in the short term, not from a greenfields/new competitor perspective. China for us will be about where we can add value in terms of knowledge, construction management, compression supply and design and associated plant and product supply and in this area, we are absolutely interested.

What type of company identity – global, Canadian, or Australian for example – do you want to brand Enerflex with when further expanding into Asia and other regional markets?

We are a Global organization and therefore will retain the global trademark and identity.

Our Clients want to know where our solutions have been tested and tried before. They want to see existing footprints, installations etc. Locally, it then allows tour Team to harness our learnings from all over the world.

It is important to note that our Parent Entity has been the go-to source for producers seeking to optimize their energy production from oil and natural gas fields around the world for over the 30 years and our Regional growth model will always respect this.

Australasia is about bringing this IP and solution capability closer to the client. Our new facility in Brisbane, Queensland will enable this to occur.

Pre-2007 you were the general manager for finance and administration with Enerflex Australasia. What has been the biggest difference in your role as managing director?

There have been quite a few differences, but the key ones for me being greater emphasis on our Core Values, people management and an increased line of sight on respecting and sustaining our Client relationships.

People management is about understanding the breadth of people we have working for this organization. Without a doubt the majority of my time is spent thinking about our people and making them comfortable in what my senior management team is asking them to do.

Our people put a lot of trust in our organization and a lot of trust in myself and my managers. From where I sit in the Organisation it is all about respecting that trust. What does that mean? We have to give them that security of tenure that they are looking for and make sure we challenge them through their work processes. Promoting innovation, creativity, and the need to build better solutions is all about challenging our employees in a way that keeps them hungry and excited.

Put simply, we work on the premise that adherence to our core Values by all our People will drive Success and champion the sustained relationships with all our stakeholders.

What would be your final message to the readers of this publication about Enerflex Australasia?

The Toromont Industries Ltd acquisition of Enerflex Systems Income Fund in January 2010 now positions the combined Group with approximately twice the resources of its predecessor companies.

With its additional EPC and Service footprint, Enerflex Australasia is well placed to provide a value proposition to clients that they have never had before.

We are about providing a value engineered solution to Client projects and being flexible enough to accommodate ALL of their Project drivers where we can.

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