A robust business model for disruptive times

Trinidad and Tobago

Dominic Rampersad, president of Phoenix Park Gas Processors Limited (PPGPL), talks to The Energy Year about trends in local and regional demand for LPG and the importance of change management in the face of disruptive events in the industry. National Gas Company subsidiary PPGPL is among the largest gas processing facilities in Latin America.

What trends did you observe in the demand for LPG in 2021 and 2022?
We divide the LPG market into two segments: the local market and the regional market. The local market has remained consistent – demand hasn’t necessarily increased, with the exception of a brief uptick in LPG demand during the pandemic, when most people were staying home. The demand is now back to the normal level, which is 1,800-2,000 bpd. We saw a similar trend in our regional markets, particularly in the other Caribbean islands.
During the pandemic, there was an uptick in demand from Caribbean territories – not necessarily because of increased usage, but because some of those countries were stockpiling as a reaction to the pandemic. A similar trend occurred with our North American subsidiary, particularly with the Mexican market. The difference is that Mexico and North America were more heavily impacted by Covid-19 than the Caribbean.

How has the Russia-Ukraine crisis impacted the local and regional market for LPG?
Due to the uncertainty in the market caused by the war in Ukraine, prices are higher than normal. However, because the product is primarily used for cooking in all markets, we’ve still seen a steady demand. In Eastern Caribbean markets, the price of the product has gone up due to the increase in the base Mont Belvieu price.

Does the increase in The NGC Group’s revenues reflect an increase in natural gas production and supply?
T&T’s natural gas production is driven by the country’s consumption. The country’s gas consumption has been very stable for the past three years. In Point Lisas, it currently averages around 1 bcf-1.1 bcf [28.3 mcm-31.2 mcm] per day. Atlantic LNG has three trains running, with one of those at partial capacity. The revenues increased because of growth in product prices – particularly ammonia, methanol and LNG. This increase in revenue is very much price driven, and not volume driven.
We are looking forward to the gas now coming from BP’s Cassia-C platform, as well as from Touchstone, expected in 2023. In the global supply chain, the price of ammonia and methanol have increased so NGC’s price of gas, which is tied to those, has increased as well, and therefore the price we pay has risen. Those types of situations are disruptive events, and we must make sure that our organisation can withstand such events.

What are the most important factors to consider when handling disruptive events in industry?
It’s important to make sure that your business model is robust, so it can withstand the shocks during disruptive times. As a commodity business, it’s important to have a business model that can adapt to disruption.
Recently, we created a new approach in the organisation called Corporate Innovation and Agility. It builds on a concept developed by a Harvard Business School professor named Clayton Christensen. Based on his research, he showed that if you want to create change, you have to create a parallel process, develop it and then use change management to integrate that process.
As a leadership team, we felt that to create a business model that can function in a period of disruption, we must be prepared to disrupt ourselves with change management. We are focusing on integrating change management more fully by equipping staff with the requisite skills and training to effectively manage change across the organisation.

What impetus and first steps were involved in your January 2022 acquisition of the NGL terminal in Hull, Texas?
We employ a concept in our business where we ask the customer to describe for us the problem they would like us to solve, and we build our service and customer culture around that. With the Phoenix Park Hull Terminal we can look at our key markets and customers in the southern United States and northern Mexico, and understand what their critical needs are now and in the future.
Our customers want a reliable, regular and cost-effective gas supply from a supplier who is willing to partner with them. We looked at the construct of the North American business, where most of the product was coming out of Canada, and found that if we were to create a supply network where the product originates out of the US Gulf Coast, which geographically is much closer to northern Mexico than Canada, then we could create a cost advantage for our customers.

How is this acquisition significant for serving or expanding your markets?
It plays a significant part in our markets, particularly in Mexico, while giving us a segue into the Canadian market. It also brings us back to our value chain strategy. We acquired a terminal in Hull, but our value chain can extend all the way into the northern territories in Mexico and into Canada.
We had one customer whose contract was expiring, and they decided to lock in supply from us for the next five years. The vice-president of operations and some of our employees visited the terminal and examined its safety hazard analysis and bottlenecks. Within a period of three weeks, the terminal went from operating at around 30-35% capacity to operating at 130% of its previous capacity.
As you move further away from Trinidad, the shipping costs become greater, so the supply becomes less economical. Therefore, we intend to utilise our North American business to complement our Trinidad-based business to meet the demand of our customers in selected markets.

What key steps has PPGPL taken towards decarbonisation?
Internally, we have been investing in training our employees and encouraging their education around energy management, sustainability and renewables. Over the years, we have invested in tertiary programmes all the way up to MBA and MSc degrees for people in that space. We funded many employees until we had a good enough foundation to establish our Sustainability Committee.
The Sustainability Committee has more than just an environmental focus: it applies a whole-company approach in terms of mindset and strategy to every arm of the business on how we can move forward as a company towards sustainability work.
We built the community within the organisation, and then we started to look at the carbon emissions in our plants. Other than the flare, which burns methane, we don’t have many other carbon emitters. However, for the ones we have, we’ve managed to reduce our emissions by close to 40% in the past three years, and we are continuing to reduce them.
We’ve also committed our resources within The NGC Group – working together with the other executives of the NGC subsidiaries – to create a very strong green platform. Internationally, some of our growth projects have also focused on ESG. For example, our Hull terminal sits on about 40 acres [161,874 square metres] of land, but the real estate we acquired spans around 350 acres [1.42 square kilometres].

How are data analytics and the advent of digitisation a key factor in business sustainability?
For the past year and a half, all our administrative functions have been going through a process of retooling and upskilling in the areas of business and data analytics. All our administrators did a three-month programme at Harvard Business School in data analytics.
We are creating a data analytics mindset in the organisation because no matter how much new technology or data capture you invest in, if that data is not being analysed, it is of no value. Analytics is what provides insight and allows you to see something you didn’t see before.
What we found with digitisation is that the best people to create that change are the people who live in it every day. The millennial generation are the ones that will get to a digitised culture in the shortest timeframe. The key to this is the speed at which you create that insight because if you sit on your data for more than a day, your competitors who are using that data will have the advantage to pick up the good business opportunities. Therefore, having the right mix of skills and talents enhances the agility of the organisation to maximise the value from our data sets.

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