June 2013, Vol. 240, No. 6

Features

STV In Right Place At Right Time

A hundred years encompasses a lot of history; if you’re talking about the energy industry and pipeline infrastructure, then you’re really including almost the entire history of the business.

STV, based in Douglassville, PA, is an energy services provider that not only has a formidable stake in engineering and construction services, but one that is strongly positioned to grow and prosper as the Shale Revolution continues through Pennsylvania’s (and Ohio’s and West Virginia’s and someday New York’s) Marcellus Shale and other plays that are reshaping our energy world.

The privately owned company has about 1,500 employees, located in 30 offices throughout the U.S. Promoted to executive vice president recently was Gerald Donnelly, P.E. In 2011, he was named to head STV’s newly created Energy Services Division. Over the past decade, the energy practice has more than tripled in employee size and revenues generated.

As for STV, the name originated when one of the company’s predecessor firms, Sanders & Thomas, a Pennsylvania-based engineering firm, merged in 1968 with Voss Engineering, a producer of steel mill equipment, and formed STV, Inc., the management holding company that evolved into STV Group, which is what the parent firm is named today. Voss is no longer part of STV, but the name remained.

A 29-year veteran of the company, Donnelly earned his bachelor’s degree in civil engineering from Paisley College of Technology in Scotland. In this interview, Donnelly discusses his career, his company and his industry. He comes across as man of considerable thought, one who has never regretted his choice of profession along with its challenges and opportunities.

P&GJ: What made you decide on a career in the energy industry?

Donnelly: I was introduced to the natural gas and petroleum pipeline transportation industry early in my career and developed a strong interest in the market. With increased exposure to this market, the realization of the magnitude of the energy industry as a whole began to set in. The type of work fit my style, and I felt a sense of accomplishment working on these projects. The variety and number of moving parts and the logistical elements of this business became very attractive to me.

P&GJ: Where did you grow up and what were your interests as a young man?

Donnelly: I grew up near Glasgow in Scotland, and my primary interests were playing football (soccer), athletics (track and field), and working part-time jobs delivering milk and working at an automotive garage. I enjoyed math and other technically oriented subjects at school, and when I was introduced to civil engineering by a career counselor, I thought it might be a good fit.

P&GJ: How do you describe your leadership style and has it changed through the years?

Donnelly: My leadership style has definitely changed through experience and training. I would describe my style as driven but inclusive and leading by example. I have respect and gratitude for my staff and co-workers. I am not afraid to make decisions based on the information available at the time, and right or wrong I accept responsibility for the decisions made. I prefer to obtain consensus, and I am willing to listen to alternate ideas and may alter course, given more sound reason or argument.

I believe I am known to shoot straight, tell it like it is and reside in a “black and white” world, no gray areas. Earlier in my career, I was more timid, more of a listener than a driver, and tended to hold on to too much rather than delegate. Leadership training and coaching made a significant difference. It allowed me to trust others more and realize that delegating, when done properly, benefits the growth and empowerment of my staff.

P&GJ: Can you provide some history on STV and its growing role in the oil and gas business?

Donnelly: STV has a long and proud history from its beginnings in 1912. The firm has grown to become a leader in providing architectural, engineering, planning, environmental, and construction management services for energy, buildings and facilities, and transportation systems and infrastructure. The Energy Services Division provides services for linear and related facility projects that transport crude oil, refined petroleum products, natural gas and electricity, along with the firm’s associated environmental practice.

Over the years, the firm shifted its focus to serve different markets that were beneficial to STV’s growth and provided more opportunities for its employees. For almost 25 years, STV has invested in the creation and expansion of its energy practice, predominantly serving the petroleum and gas pipeline transportation markets.

The firm strategically changed its focus from the Northeast to a national presence with the support of our key long-term client relationships. As we have gained traction nationally, it has become apparent that this was an industry that demanded more focus. We work for some of the largest petroleum, natural gas, specialty gas and electric companies/utilities in the nation.

P&GJ: What was your role in creating the Energy Services Division, and what do your responsibilities now include?

Donnelly: I had the opportunity to provide site and route planning and permitting services to two new clients (PECO and Sun Pipe Line) in the mid-’80s for natural gas and refined petroleum products pipeline systems. It became clear this was a fairly robust industry, and I enjoyed the variety of the work and the logistics component of this business and pursued it further.

Together with my counterpart in the environmental group and with the support and guidance of one of STV’s business development managers, we pursued a major assignment with Sun Pipe Line (now Sunoco Logistics Partners). We were successful in winning the project, and this launched the beginnings of the group, which started with six people.

My role as executive vice president of the Energy Services Division (STV Energy Services, Inc.) involves overall management of the business, business development, maintaining client relationships, strategic planning, growth, personnel development and representing the division on STV’s operating committee.

P&GJ: What particular professional accomplishments are you most proud of, and what are some of the major energy-related projects you’ve worked on?

Donnelly: Being named “Engineering Manager of the Year” in 2004 by the Philadelphia section of the American Society of Civil Engineers was a proud moment for me; however, successfully creating and growing the energy practice within STV is what I am most proud of achieving.

The major energy-related projects I’ve worked on over the years include: Delaware County Resource Recovery Facility, Chester, PA (client is American Ref-Fuel Company); Sunoco Logistics Inter-refinery Connection, Philadelphia, PA and Paulsboro, NJ; PECO Eddystone Generating Station Interconnection, Ridley Park, PA; Sunoco-Motiva Crude Oil Delivery System, Port Arthur, TX; Buckeye Partners – Monee Propane Pipeline System, IL; BGE Southern Reinforcement Project, Howard County, MD; ExxonMobil PMSIP System Integrity Project, Pennsylvania and New Jersey; Colonial Pipeline Company Selma & Roanoke Capacity Expansion Project, North Carolina and Virginia; PVR Midstream, LLC Natural Gas Gathering System, Pennsylvania; Sunoco Logistics Allegheny Access Pipeline, Ohio and Pennsylvania.

Although my response to the question is primarily a listing of individual projects, we have been able to satisfy the capital investment, maintenance, integrity management, business development and third-party encroachment needs of our long-term clients continuously for decades. I measure our success by the longevity of our relationships and by the number of completed projects, exceeding hundreds of assignments, which meet our clients’ missions over the ever-changing market and regulatory climate in the energy industry.

P&GJ How competitive is STV the energy services sector, and what do you think makes STV unique in its field?

Donnelly: STV is more than a traditional pipeline engineering firm. We have the ability to provide a greater breadth and depth of services in support of the industry due to our broad diversity. The other STV divisions provide support services to the Energy Services Division’s projects with expertise in rail, highways and bridges, infrastructure, land development and building design. STV’s relationships and knowledge in the various highway DOTs, freight and passenger rail companies and municipal government entities have proved to be advantageous in our pipeline projects. We find these full-service and multi-discipline capabilities differentiate us in the market, which enables us to effectively manage very logistically challenging projects in difficult urban and rural environments.

STV is highly competitive in the pipeline transportation (midstream) sector of the oil and gas market. We have developed strong skills in a well-defined area of the overall market and have a focused and dedicated management and technical staff. As a firm, we have a strong client focus, and we pursue and maintain long-term relationships with a limited number of clients versus just pursuing individual one-time projects.

Our philosophy is to provide the quality and responsive support our clients need, regardless of the project or program size. In this way, we become familiar with our clients’ standards and requirements, and they become familiar and comfortable with our team. We maintain a high level of responsiveness with our clients, and our goal is to help them achieve success.

P&GJ: Is most of your work centered on the Marcellus, and what is your perspective of that play? Are low prices for natural gas and/or lack of pipeline infrastructure having an impact on production?

Donnelly: Actually, most of our work is in the liquids sectors: crude, LPGs and refined products. We are, however, very involved in the Marcellus Shale play with pipeline transportation and gathering systems in north central Pennsylvania and Ohio, and this is becoming an ever-increasing part of our business moving forward.

This shale play has spurred business growth in many market sectors, including engineering and environmental services, legal services, construction, retail, real estate and housing, hospitality, rail transportation, water supply, highway improvements, trucking, drilling, etc. It has helped the resurgence of the industrial and manufacturing industries, and local employment has grown.

The level of natural gas prices has had mixed effects. Well development and gas production was reduced as a result of the low gas price and the lack of pipeline infrastructure. However, the development and installation of gathering systems and pipeline infrastructure has progressed to catch up with the prior drilling activity.

The low price of gas has spurred a movement toward conversion of power generation from coal to gas and for development of campus-type cogeneration plants for heat and power at universities, hospitals and other campus-style facilities. With gas prices beginning to rise, well development and production will increase to meet the demand for natural gas.

Ultimately, I believe the market – assuming increased demand by the power industry, manufacturing, transportation and residential consumption industries – will lead to a sweet-spot price. This will lead to the proper balance of domestic and export use that contributes positively to the nation’s economy, employment, environmental protection and overall standard of living.

P&GJ: When you talk to clients, pipeline operators among others, what do they say are their biggest needs or priorities?

Donnelly: It varies considerably from client to client. Some need help with project management, because their resources are stretched too far. A lot of engineering support is required for new business development project studies.

Overall, the most common priorities we are hearing from our clients are flexibility and speed to market. This industry is highly competitive and fast-moving, and to be a player our clients need to act quickly and take greater risks to ensure market share. Likewise, they need their service providers to be flexible and responsive.

Without exception, all of the clients we work for demand their supply chain vendors to perform work safely and in an environmentally sensitive manner. This is a non-negotiable, high-priority initiative with a “zero tolerance for non-compliance.”

P&GJ: What challenges do you see facing the oil and gas industry as we move forward?

Donnelly: Overall, the abundance of affordable energy, whether shale gas, oil, or other traditional fuels such as coal, nuclear and renewable industry (wind, solar, hydropower) is a determining factor in maintaining our standard of living. We are potentially entering into a transformational period of time, where the advantages to our nation of developing cleaner, close-to-market demand, and cost-effective source of fuel provides a strategic advantage in reviving our economy.

Alignment of local, state and federal government policies and regulations and a uniform message that properly balances environmental protection, economic development and national security interests continue to challenge the industry to reaching its fullest potential.

P&GJ : One central issue is the integration of natural gas with electric power generation. What needs to happen to make this viable?

Donnelly: Actually, I believe power generation using a natural gas fuel source is already happening. There are new plants on the books and in development with many more still possible. The industry, private as well as utilities, must do a better job promoting the benefits of reduced energy generation costs and the environmental benefits of using natural gas.

There is a misconception that those benefiting from the shale gas industry are only those sitting on the reserves. Residential energy costs are more affordable today, dropping in some areas, and lower electricity costs across the nation will spur secondary manufacturing and transportation-related industries, regardless of where a person or company decides to locate. This industry is a national positive success story, not only regional.

In addition, the perception on the clean and renewable energy generation side is similarly misunderstood by the general population and some portions of our government. Whether wind, solar, hydro or biomass, this generation is not without environmental challenges, including biological (bird and bat impact, fisheries, land fragmentation, etc.). In most instances, generating power through alternative sources is a shift of environmental impact from one set of issues to another.

P&GJ: Is there any particular individual who was instrumental in your career that you would like to mention?

Donnelly: There have been several people that have influenced my career development, all for different reasons and at different times. The support from my family is a significant influence on my ability to succeed and continue to develop my career. Certain supervisors/managers have positively influenced my choices of career path and ultimate advancement. My management team has had a significant influence on my leadership development from their constructive feedback. Certain client representatives have also influenced my career.