In the aftermath of a continuing string of natural gas pipeline/infrastructure failures, the pressure from federal and state regulators will grow and so too will the capital expenditures (capex) among utilities and large transmission pipeline operators, according to Southwest Gas Corp. CEO Jeffrey Shaw. He made the observations earlier in August in response to questions from financial analysts.
Shaw’s Las Vegas, NV-based gas-only utility distribution company has attempted a modest diversification program offering distribution pipeline construction services to other utilities in about 18 different markets under its NPL Construction Co., a full service gas pipeline distribution system contractor. And the business is taking off in these times of heightened concerns about pipeline safety and maintenance, Shaw said.
“I think as long as we continue to see the current movement for more gas pipeline safety regulations in this nation — and that appears to be the case — I think NPL is going to be very busy bidding on new work.”
Working mostly under competitive contracts bid on from year to year, NPL does not go into a market “until they have scale that makes sense,” Shaw said. “They are very selective about where they go, and then they are very aggressive and competitive. When they get into a market, they will generally work very hard to nurture a relationship with the utility they serve, and generally it is a very long-term relationship.”
NPL still has to compete for new contracts on a frequent basis, Shaw said. “Once in awhile they get a longer-term contract, but I expect the trend we see to continue for some time, just because of all the replacement and maintenance work that needs to be done throughout the country.”
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