Bob Browning joined Alinta as CEO in March 2001, and has overseen the expansion of the company from a WA-based gas retailer and distributor into a national energy infrastructure company managing assets worth more than $7.5 billion. The acquisition in March last year of Duke Energy’s Australian assets – including the Eastern Gas Pipeline, Tasmanian Gas Pipeline and Queensland Gas Pipeline – moved the company into the transmission business for the first time.

This move into gas transmission continued when Alinta joined the DUET-Alcoa consortium, which purchased the Dampier-Bunbury Natural Gas Pipeline (DBNGP).

Integration is the challenge that faces all companies after an acquisition. At Alinta, integration is all about optimising their core business and ensuring the reliability of the assets. They have developed an approach to integration that allows operational staff to concentrate on their jobs – running the assets – whilst ensuring Alinta is operating as efficiently as possible in other areas.

Mr Browning confirmed that Alinta is ahead of schedule with the Duke integration. He said that because the Duke staff know their assets well, the main focus for Alinta has been to educate Duke staff on their new company’s business model.

Alinta was involved in another major acquisition last year - as a member of the winning consortium in the sales process of the Dampier to Bunbury Natural Gas Pipeline.

Mr Browning said that since the sale became final in October 2004, Alinta and its consortium partners Diversified Utility & Energy Trust (DUET) and Alcoa have been actively working on the pipeline’s much-needed expansion program, with a minimum of $400 million to be spent.

The expansion will be a combination of looping and increased compression, with compression to be the first step in the process.

The expansion of the DBNGP will be done over the next four-five years, so that by late-2009 the pipeline will be capable of transporting another 100 terajoules per day.

In terms of the integration of the DBNGP operations into Alinta, the situation is unique because the DBNGP business is being separated from the rest of Epic’s former assets, which were acquired by the Westpac Hastings Group in June 2004. Mr Browning said that Alinta is continuing to work through the process with Hastings and that it was likely that employees of Epic Energy Corporate Shared Services (EECSS), which is currently responsible for running the assets, would be given a choice of who to continue with. The process will most likely take until April at which point ESS will either become part of Alinta or Hastings or be split.

Given the dramatic shift in size of operations for Alinta, we asked Mr Browning to reflect on the differences between running distribution and transmission assets.

“There are things that are similar, and things that are slightly different. Both are focused on the reliable and low cost delivery of a product. The things that are unique about owning transmission systems are that owners are pretty active in building throughput,” said Mr Browning.

Also a key concern for transmission owners is the reliability of the asset with Mr Browning noting that an active relationship with suppliers and customers is necessary.

“There’s also the question of competing transmission assets - for example, the Alinta-owned Eastern Gas Pipeline is in competition with the Australian Pipeline Trust-owned Moomba to Sydney gas pipeline. Alinta therefore has to look and work towards providing customers with access to gas with the same level of reliability, but at a lower cost.”

The need to train and develop a new generation of skilled workers in the pipeline, and wider oil and gas industry, has also been a focus for Alinta.

“Training is an issue across the whole energy industry, you feel it in networks as well. For example, the average linesman in Victoria is 40 years old, which means there is a significant lack of new blood entering the energy industry.”

In addressing this issue, Alinta is currently working with unions to develop apprenticeship schemes, and the company is looking to have apprentices making up a significant proportion of its staff.

Mr Browning is also on the Board of the Chamber of Commerce and Industry in WA, which is currently involved in apprenticeships. He intends to present the idea of training consortiums to this forum, as he believes efficiencies can be gained by bringing industry players together to address training needs. Mr Browning believes such an initiative could significantly reduce the training cost of companies such as Alinta.

Mr Browning noted that while generally the engineering field is not undersupplied, many engineers are not drawn to, or even aware of the possibility of working as a pipeline engineer. He also emphasised that Alinta is putting a lot of effort into the development of talent, from the apprenticeship level to management level.

Regulation of the energy industry was a major issue facing energy groups in 2004, and Alinta was no different.

Mr Browning was quick to point out that everything is relative - in the US regulation is quite heavy handed, so the regime in Australia is comparatively light.

However, Mr Browning did say that he hoped over time Australian regulators would become more commercial in their thinking, and realise that to get investment in infrastructure assets such as pipelines, they have to take a commercial view on the assets.

“We were quite successful with our network assets, meaning they were operating more efficiently and more reliably than ever. However, if the regulator comes along and takes that saving, there’s less incentive to work efficiently.

“Regulators across the country have to think about more of a win-win outcome, so that owners are looking to operate their assets better, investors in assets are going to know what a decent rate of return is and people won’t be afraid to invest in new transmission pipelines.”

The need to address issues at a government level is one of the reasons why Mr Browning is looking forward to Alinta becoming more involved in the national pipeline scene through the company’s involvement in APIA.

Alinta’s size had previously held the company back from an active role nationally, but now, with a suite of assets, the company sees itself getting much more active in APIA – particularly due to the fact that APIA has proven effective in implementing change at a Federal level.

As far as the future for Alinta goes, Mr Browning said that at the senior leadership level, Alinta tries to think in a three to five year time frame while letting managers of business units look after the next one to three years. This way, Alinta is prepared to act when opportunities present themselves, such as partnering with industry in areas like embedded cogeneration facilities.

“We always keep our eyes open for development, and when we talk about development, that covers three broad areas at Alinta – organic growth, that is filling our pipelines, which are currently on average 30 per cent full; acquisitions; and, greenfield development.”

The level of greenfield development could increase next year, with a consortium led by Alinta being one of three groups short-listed for the construction of the Trans - Territory pipeline. Alcan will announce the preferred bidder in the first quarter of 2005, and if successful, this project would represent Alinta’s biggest greenfield investment to date.

Whether or not Alinta is successful with the Trans - Territory bid, Mr Browning said the company will continue to keep a look out for other greenfield developments and acquisitions that will fit the Alinta portfolio.

“All three growth strategies are important collectively, and interact with one another. For example, as organic growth increases, so can acquisitions and greenfield development. But if a company only participates in acquisitions, there’s not much room for organic growth.”

Mr Browning said he believed that the consolidation of assets in industry will slow within the next three years, and after this companies will need to start thinking outside traditional energy infrastructure.

“While there is plenty to do in the next one to three years with energy assets, we will have to start thinking outside the box after that.”

Alinta applies a flexible and broad-minded approach to development opportunities. They recognise opportunities can be secured by building partnerships that leverage the competencies of each party and create a win-win relationship. Mr Browning highlights this via the cogeneration facility at Alcoa’s Pinjarra refinery, 80 kilometres south of Perth, which is due to be commissioned in the second quarter of 2005.

“Our cogeneration partnership with Alcoa is a good example. We have a symbiotic relationship with Alcoa - they need low cost steam, and by building on their site to fulfil that need, we can generate low cost electricity.”

Alinta is also focused on developing mutually beneficial relationships with industry and government in all the States in which they operate.

“We’re building a close relationship with industry in Queensland, particularly Gladstone, and helping them with their energy needs.

“We’ve also spent time in Tasmania with their Premier and Minister building a relationship to look for opportunities to work with Hydro Tasmania. We want to be able underpin our load with Bell Bay by pulling more gas through the Tasmanian Gas Pipeline.”

When asked if Alinta would look to build an international portfolio of assets, Mr Browning said that for the next five years there is plenty to do in Australia.

“It’s a big step to go international…we may keep an eye on New Zealand, but if we did go international we would approach the move with partners rather than trying to go it alone.”