Shell Gas CEO: Assets Not Enough

The natural gas business of the future is tied to three things: assets, knowledge and its customers, and the companies that know how to merge the three successfully will rise above the crowd, Linda Cook, CEO of Shell Gas and Power, told delegates yesterday at the GasTech 2000 conference in Houston.

Historically, said Cook, natural gas companies have been asset-based. However, the value of knowledge has increased, along with the needs of the customers. None of the three operate alone, and without all of them, a company will not succeed.

"Asset success was an early driver, and the asset game is still fundamental," said Cook. "It takes substantial capital, an impressive entrepreneur and leadership to do something like bring Arctic gas to the Lower 48."

But three drivers --- technological, political and societal --- are necessitating changes in the asset-based system. "Technology changes are accelerating," said Cook, who cited the fact that more scientists are alive today than at anytime in history, and are exchanging information at a break-neck pace. "That's how we got the hydrogen fuel cell. Who knows what's next?"

Another driver is the political changes that she said are "sweeping" the globe making the free market more the norm than not. Finally, there is social change, which gives information access to everyone.

"A strategic question a natural gas marketer has to ask is 'how close to the customer do I need to get,'" said Cook. With so many options available to the customer, and the industry becoming more efficient, she advised delegates to consider tailoring their projects to fit the individual needs."Integrating other types of knowledge opens opportunities."

For instance 'product development' is not a term usually associated with natural gas. However, Cook stressed that the new technology requires leaders to rethink what they already know. "As an example, consider gas-to-liquids technology. That's product development. And new products access totally different markets."

A key competitive differentiation is to become a one-stop shop, she said, offering market knowledge and the ability to be flexible. Most important in the equation are the people.

"Quality of people is critical. It's becoming increasingly difficult without having the ability to leverage the Internet. There's a period of experimentation that eventually will end, and the winners will emerge. People play an ever more important role in this."

Pointing to Shell's ventures with several Internet exchanges, including the InterContinental Exchange and HoustonStreet, Cook emphasized that companies have to be part of the program and keep up with the changes, or they will not last.

"Clearly, we're no longer purely an asset game. The natural gas business is more complicated than ever before, and the successful companies will pursue new markets with new products," said Cook. "And all of this is tied to a global vision," which she said will require corporate goals to be merged with sustainability goals.

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