ONE Gas CEO offers insight on company's evolution and future of natural gas
ONE Gas has about 2.3 million customers in Oklahoma, Kansas and Texas. ONE Gas, one of Tulsa's largest employers and a major player in the U.S. natural gas industry, is celebrating its double anniversary, marking 10 years since it separated from ONEOK. The company is also celebrating 118 years of Oklahoma Natural Gas, which it owns. CEO Sid McAnnally said the company's unique history and strong relationships with customers have allowed it to adopt new technology to replace gas pipes, which allows it to be more efficient and environmentally friendly. Mc Annally also praised the company’s safety record and reliability during recent cold blasts, which saw fewer than 800 outages or about 0.0347% of its customers.
Published : 3 months ago by Michael Dekker Tulsa World, stephen pingry, michael dekker, mike simons in Business Environment
One of Tulsa’s largest employers and a major player in the U.S. natural gas industry is marking a double anniversary.
ONE Gas this week is marking 10 years since it separated from ONEOK, another Tulsa energy giant.
It is also marking 118 years of Oklahoma Natural Gas, which it owns. It also owns Kansas Gas Service, and Texas Gas Service.
“It’s really unique to have a company that’s both and 118 years old and 10 years old,” said ONE Gas CEO Sid McAnnally. “Because (118 years) gives you the benefit of a very stable history and a very strong legacy, especially in a business like this, where you have such strong relationships with your customers.
“The 10-year part ... as a business we really had a chance to step back and look at what’s best in class for technology or practices, or a chance to really think about how we do business.”
For example, he said, the company early on embraced a new technology to help it replace gas pipes.
“We have 65,000 miles of pipe broken into a million segments and we, every year, look at every one of those segments to see which segments need to be replaced, and that’s how we make that decision, and it’s through a very sophisticated algorithm that didn’t exist much more than 10 years ago,” he explained. “When we acquired it, it was cutting-edge technology and now it’s still state of the art, but we’ve got a long runway with it compared with other people who are just now adopting it.”
The technology allows ONE Gas to systematically upgrade its infrastructure, without having to dig holes at random locations to check the condition of pipes.
“The added benefit for us is not only does that make the system safer and more efficient, but it also makes it more environmentally friendly because you’re taking out pipe that might have a higher leak profile.”
ONE Gas has about 2.3 million customers in Oklahoma, Kansas and Texas. Its major markets include Tulsa, Oklahoma City, Wichita and Topeka, Kansas; and parts of Kansas City, Austin and El Paso.
The company employs about 1,000 in Tulsa, 1,800 in Oklahoma and 3,800 total. Some have been with the company as long as 50 years, ONE Gas officials said.
Its gross revenue last year was about $2.4 billion, but that figure also includes the cost of natural gas the company purchased for its customers.
McAnnally touted the company’s safety record and reliability.
During the bitter cold blast in February 2021, called “Uri” by the Weather Channel, ONE Gas had fewer than 800 outages, or about 0.0347% of its customers, he said.
During the most recent winter blast earlier this month with subzero temperatures, snow and ice, ONE Gas had fewer than 200 customer outages, he said.
“Those investments that we made in our system allowed us to provide energy to people in a life-threatening situation, and very few customer losses,” McAnnally said.
“Those investments that you make are what allow you to have the kind of system reliability that customers expect. Everybody in the energy business is concerned about reliability.”
McAnnally joined the company in 2015 as senior vice president of operations, was promoted to chief operating officer in 2020, and was named chief executive officer in June 2021.
He serves on the board of directors and the executive committee of the American Gas Association and is a past chair of the board of trustees of the American Gas Foundation. Additionally, he is a member of the National Petroleum Council, an advisory organization to the Secretary of Energy in Washington, D.C.
He lauded those who work on the front lines to make sure people have reliable utility service.
“Everybody who is a utility worker deserves respect, whether its the electric side or the municipal water side or the gas side — these people do heroic work under very, very difficult circumstances,” he said.
“Of course I’m partial to the folks who work at our company because I know them and I know what their work ethic is like, but I really applaud everybody in the utility sector because they do incredible work, especially in the environment that we live in, which is so dynamic from a weather standpoint.”
As for the future in natural gas, he said, “There are two emerging ... products, as much as technology.”
The first is renewable nature gas, which is the gas that comes from decaying biological material, as opposed to thermogenic gas, which is created by pressure from under ground, he said.
“Biogenic gas has just vented into the atmosphere, and now there’s an effort to try to capture that. There are projects all over the country to generate more RNG.”
The second is hydrogen. “While RNG is still pretty much a methane molecule ... hydrogen can be manufactured in any number of ways. You have to have an energy source to start ... the manufacturing process for hydrogen.
“But hydrogen is also a very small molecule, so that makes it difficult to compress and that makes it difficult to move over long expanses.
“So what we’re going to see is a hydrogen economy that springs up where you’ll have hydrogen manufacturing facilities that could be powered by stranded electrons from a wind (turbine) that can’t get grid access, or from another manufacturing facility, or from the refineries across the country. There’s just a lot of ways you can generate hydrogen.”
He said his company is participating in a project right now with the U.S. Department of Energy, UT Austin and the Gas Technology Institute.
“We’re looking at sort of a closed system — if you take hydrogen in ... How can you use it? How efficient is it? What are the implications of using it? We’re on the edge of understanding ... the applications for hydrogen.”
A key he said, will be “How much energy does it take to generate either the molecule or the electron, how much energy do you use to move it from point A to point B and how much energy do you have to utilize it? And that’s something we’ll pursue when it meets that test of safe, reliable and affordable, because that really has to be what drives the work we do to support our customers.”
When ONE Gas spun off from ONEOK 10 years ago, McAnnally said, it was during a time when some investors were buying ONEOK stock for its midstream (storing and transporting) liquid natural gas operations, and others were buying for the utility side, which eventually became ONE Gas.
“Investors really wanted a cleaner story. They were saying ‘I want to buy the thing I want to buy and not have to buy both.’” he said. “The other advantage is, when you spin out a utility, it can grow in a way that’s different than it can as a subsidiary of another business that may be growing faster.”
McAnnally said last year’s purchase by ONEOK of Tulsa’s Magellan Midstream Partners for $18.8 billion — believed to be the largest private transaction in state history — “it made sense to us.
“You’ve got two businesses that do pipeline business, that do things that are complimentary. My initial reaction is that it was good for Tulsa. Anytime you can keep public company headquarters in your town, that’s good for the town.”
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