In The Gas Pipeline Business, It All Comes Down To Communications

So, in a highly competitive business, what is the one factor that customers, or in this case, shippers, require from their service provider, the natural gas transmission pipelines?

In a word, communication.

That’s what MASTIO learned in the 2009 industry-wide Natural Gas Pipeline Customer Value/Loyalty Benchmarking Study.

The first-place winners were Northern Natural Gas Co., in the mega pipeline category (at least 3,500 miles of transportation and delivers of at least 1 Tcf); Southern Star Central, in the major pipeline category (at least 3,500 miles of transportation pipe and serving at least three states); Kern River Gas Transmission Co., in the regional pipeline category (less than 3,500 miles of transportation pipe and serving less than three states); and MidAmerican Energy Pipeline Group in the major pipeline group category, which includes the pipelines that the parent company owns and operates.

In winning the overall major pipeline group category, MidAmerican Energy Pipeline Group edged Boardwalk Pipeline Group; CenterPoint Energy Groupo; El Paso Energy Group; TransCanada Group and Williams Group.

Northern Natural was once the prize jewel of Enron’s profitable pipeline network, later sold to Dynegy and finally to MidAmerican Energy Holdings Company; Kern River, originally owned and operated by Williams, is also owned by MidAmerican. Is it just a coincidence that both pipeline companies bested their competition in the MASTIO study?

Perhaps not, says MASTIO study director Kevin Huntsman. While Kern River has enjoyed high marks in the study for the past decade, this marked the first time they were accorded top honors. For Northern Natural, the award was the culmination of a lengthy and determined effort.

“Over the past few years, Northern Natural Gas has been on a very straight trajectory to the top,” said Huntsman. “It’s a huge issue with MidAmerican Energy that Northern Natural and Kern River take care of the customers and they have really migrated toward the top.”

Added another industry observer about Northern Natural’s progress: “They took the bull by the horns and made a concerted effort to change the mindset in the performance of that company when it comes to customer service.”

Even Warren Buffett, chairman of Berkshire Hathaway Corp., which owns 87.4% of MidAmerican Energy Holdings Company, couldn’t resist boasting about the utilities’ progression. He noted that when they were purchased in 2002, Kern River ranked 9th and Northern Natural 39th out of 44 pipelines that were rated. “There was work to do,” Buffett wrote in a recent financial report, adding, “I couldn’t be more proud of this performance.”

But then, maybe their customers know best: