The Pros and Cons of Gas Product Standardization Issues, Benefits, and Roadblocks

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The Pros and Cons of Gas Product
StandardizationIssues, Benefits, and Roadblocks
K.C. Yost, Jr., P.E.Manager of Pipeline
EngineeringMustang Engineering, L.P.Houston,
Texas
Southern Gas Association Supply Chain
Conference March 8, 2007
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The Pros and Cons of Gas Product Standardization
The History of Pipelining
Early 20th Century
Mid 20th Century
Today
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The Pros and Cons of Gas Product Standardization
1924
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The Pros and Cons of Gas Product Standardization
Mergers AcquisitionsWho are they now?
2000s
Kinder Morgan
Cross Country Energy/Southern Union Company
El Paso Corp.
NiSource, Inc.
Dominion Resources
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The Pros and Cons of Gas Product Standardization
Mergers AcquisitionsPurpose

• Synergies (increase revenue and/or decrease
• expenses)
• Competitive Advantages (supply, transport, or
• market niches)

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The Pros and Cons of Gas Product Standardization
Mergers AcquisitionsIssues

• Different Design Specifications
• Different Material Equipment Specifications
• Different Construction Standards
• Different Operating Maintenance Procedures

Question
Should Design Specifications, Material/Equipment
Specifications, Construction Standards, and OM
Procedures be standardized or remain different
for each pipeline system?
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The Pros and Cons of Gas Product Standardization
StandardizationBenefits

• Cost Savings (Synergies Economics of Scale)
• Consistency (Design, Purchases, Construction,
• OM) (Regulatory compliance documentation)

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The Pros and Cons of Gas Product Standardization
StandardizationRoadblocks

• Time (consolidation, rollout, and implementation
  
• periods)
• Effort (internal resources and/or outside
  consultant)
• Cost (tangible and intangible)
• Resistance (employees)

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The Pros and Cons of Gas Product Standardization
StandardizationConclusion
Is the ultimate time, effort, and money saved
(along with the value of consistency) by
standardizing a greater value than the cost of
time, effort, money, and initial inefficiencies
through the standardization process?