Interview With Robert Skaggs – NiSource President and CEO


NiSourceNatural gas is in the midst of a tremendous resurgence, thanks largely to improvements in our ability to safely and economically extract gas and other petroleum-based materials from extensive shale formations found in many areas across the globe.

Domestically, shale formations underlie much of the United States. However, the most-talked-about new prospects are the Marcellus and Utica shale in Ohio, Pennsylvania, West Virginia and New York. These areas represent a movement of the traditional natural gas supply epicenter from the Southwest to the nation’s energy-consuming hub. The Marcellus and Utica also sit immediately below the core operating footprint of NiSource Inc., of one of North America’s premier natural gas and electric infrastructure companies.

Although NiSource does not drill for or produce natural gas, the company is positioned to be a key player in America’s shale energy development. With a ready path for transporting gas to processing centers and to end-users, NiSource’s vast existing natural gas pipeline and storage system is poised to provide vital links in the energy value chain. In addition, with more than three million residential, commercial, and industrial natural gas customers, NiSource is positioned to help drive growth in the seven eastern and Midwestern states that its local gas distribution utilities serve.

I recently asked Bob Skaggs., NiSource president chief executive officer, to share his thoughts about the game-changing importance of shale energy, as well as the role core energy infrastructure investment can play in building Brand America.

Bob, you refer to NiSource as an “energy infrastructure company.” Tell me more about that mission, and how you see shale energy factoring into your plans.

At NiSource, we have a straightforward business strategy. We believe the best way to meet the needs of our customers and steadily grow our business is through disciplined, long-term investment in the modernizing, enhancing and growing the fundamental integrity of our core natural gas and electric systems .

Now, as you can imagine, one of the centerpieces of our plan is the ongoing development and construction of new pipeline infrastructure projects that capitalize on our unparalleled pipeline assets in the Marcellus and Utica shale production areas.

In fact, since the beginning of 2010, our NiSource Gas Transmission & Storage (NGT&S) unit has completed more than $200 million in infrastructure projects serving the Marcellus and Utica region – in aggregate providing additional market access for more than 1.2 billion cubic feet of natural gas per day.

Overall, for 2012, we are planning a record $1.4 billion capital investment program across NiSource. About $430 million of that investment will be in our gas transmission and storage business, with more than half of that portion dedicated to infrastructure projects in and around the Marcellus and Utica shale plays – primarily, in southwestern Pennsylvania, the upper tier of West Virginia, and eastern Ohio

How can energy companies, community leaders and economic development professionals work together when it comes to energy infrastructure development?

It’s a great question, and speaks to one of the critical elements of our NiSource strategy. We realize that infrastructure programs – particularly those related to energy development and delivery – must be closely aligned with the interests of local stakeholders. That’s why one of our core principles is to engage in early, frequent and ongoing collaboration with individuals and organizations affected by our initiatives.

That starts with our project management approach, which we have designed to include a robust stakeholder outreach and involvement component. For major projects, that work almost always involves local community leaders and economic development teams, as well as regulators, customers and a host of additional stakeholders.

The good news is, when it comes to enhancing our core energy infrastructure, we have a great opportunity to work together for the greater good. Our infrastructure investments translate directly into continued system safety and reliability, affordability and security of energy supply, and improved environmental integrity – not to mention job creation, increased tax revenues and a stronger platform for continued economic development and growth.

In the end, we’re convinced that a strong collaborative approach results in the optimal outcome for all involved.

Looking beyond near-term benefits from infrastructure investments, how can energy companies and communities work together to generate long-term economic growth?

As a business that has operated in many of the same communities for more than a century, that’s something we talk about frequently with our community partners. We have a vested interest in helping ensure the long-term health and well-being of the places where we do business, and where our customers – and employees – live and work.

The resurgence of natural gas is creating significant new revenue and job creation opportunities. A recent study by researchers at Penn State University found that the natural gas industry will create nearly 212,000 new, well-paying jobs through the end of the decade. Local communities have an unprecedented opportunity to benefit from that windfall of investment.

But history has shown that “boom times” can be fleeting if communities don’t follow through with the basic blocking and tackling needed to sustain an economy over the long term. Don’t get me wrong, energy development jobs are great – and we work hard to target local labor pools and diverse suppliers when we build projects – but we would much rather help create sustainable, permanent jobs and long-term economic growth in the communities we serve.

To that point, I believe that providing a secure, clean, and economical supply of energy to our communities will be a key tool in spurring the resurgence of our domestic manufacturing capabilities. It’s a huge competitive advantage for these communities; with a long-term energy “edge”, our capacity for sustainable industrial growth seems real and attainable.

I also believe NiSource’s infrastructure enhancement programs are a great example of how a robust energy network can advance this sustainable agenda. Community by community, we are systematically modernizing and enhancing the core energy delivery systems that are the backbones for enduring economic growth.

We have a lot of work ahead of us – these are 10- to 15-year infrastructure programs – but someday soon, all communities served by NiSource companies will point with pride to their energy infrastructure as a source of true competitive advantage.

When you pair that infrastructure investment commitment with our tradition of providing support for education, community services and cultural enrichment, I think you have the makings of a true win-win economic development partnership.


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