12 Questions we asked... Greg Michaels, Chairman and CEO of SCT&E LNG
In this month’s Construction Global magazine, we spoke to Greg Michaels, Chairman and CEO of SCT&E LNG and the development of a new $6.9 billion Liquefied Natural Gas (LNG) Export Terminal on Monkey Island, Louisiana.
With previous experience of working in telecommunications, real estate development, energy, oil and gas, Michaels is passionate about the work undertaken and is deeply involved in all aspects of the project, which will provide long-term benefits, not just for the local community, but will ensure a clean burning, sustainable energy solution for years to come.
1. What does your role as Chairman and CEO entail?
As a leader, I have always had the mind-set to ask my team to do things that I have either done before or that I’m willing to step in and execute myself. This creates the expectation of our team to pour their hearts and souls into everything we are doing. Because of the amazing team we have, this level of intensity is embraced by all.
I see myself as someone that operates in two swim lanes. First, on a macro level, I steer the company in the direction of my vision to achieve long-term success. In that lane, I think about and set policies with our end goal in mind. In this capacity, my planning involves laying out a long-term road map with a number of smaller objectives that need to be achieved as we continue to move the project forward.
The other swim lane is my “get-in-and-get-it-done” daily outlook. In this lane, everything is a whole lot easier when you surround yourself with the right people whose goals are in alignment with one another. At SCT&E LNG, we operate with a lean team. This is possible because of the loyal, committed, and hardworking people on the team. They believe in my vision and fight side by side with me to make great things happen on a daily basis. What we lack in-house at SCT&E LNG, we acquire through working with the industry’s best consultants and contractors.
Today, my macro swim lane work includes corporate structuring aligned with best governance practices, potential private and/or public structures, the company’s capital stacks, potential exit strategies, and the company’s long-term operational needs.
My daily swim lane includes working closely with and supporting our team on all aspects of the project, from raising early stage project development funds to seeking out and negotiating both natural gas supply opportunities for our customers and offtake contracts for the liquefaction of their natural gas.
I also work with the engineers and EPC team to provide leadership in their negotiations with contractors. I ensure that our engineering choices remain aligned with our ultimate goal of building a safe and commercially sound project with proven choices that can be guaranteed and financially wrapped by the world’s largest EPC contractors and banking institutions.
2. What was the rationale for establishing the LNG facility?
With the success of my telecom utility and my three grown children beginning their lives away from home, I felt a burning desire to build world-scale projects that would have a powerful impact on our fellow man from both an environmental and financial perspective. I saw first-hand the positive impact to the State of California in regards to air quality when the state switched to clean burning natural gas as an alternative to dirty fuels.
Many countries around the world are in roughly the same place environmentally California was 35 years ago. There is a global need for natural gas and I saw the opportunity to fill that need. Many developing countries that rely on dirty fuels, such as oil and coal, have been faced with serious environmental issues that they can no longer ignore. The human cost has greatly outgrown the financial benefits of using dirty energy. Tremendous global pressure, including economic strain, is being placed on countries burning dirty fuels to cut carbon emissions and increase air quality while meeting the energy needs of their growing populations.
This increasing demand for clean, affordable, yet sustainable energy cannot be met with renewables alone. Natural gas is the cleanest burning fossil fuel, is 2/3rds more efficient than other fossil fuels, and the United States is the world’s largest producer of the natural resource. U.S. natural gas is inexpensive with a stable gas market, unlike gas from unpredictable oil-based regions of the world.
Our Monkey Island facility will liquefy U.S. natural gas and export it globally, enabling countries without gas reserves to take advantage of this cheap and abundant natural resource that meets the energy needs and helps the environmental goals of our ever-expanding global population.
3. What excites you most about the establishment of the facility?
There is so much to say about what excites me about the facility. In many ways, what we are building is an “impact investment.” The local community of Cameron Parish, Louisiana, needs the jobs and infrastructure that are a natural by-product of a facility of this size. The residents of Cameron Parish have been very supportive of the project and are an incredible group of people. It will be nice to see the community grow with our project. The local and state governments of Louisiana have also been such a blessing to work with; it will be great to see the positive fiscal impacts the project will bring to them.
The significant environmental impact of delivering clean burning and sustainable energy to developing nations at a price they can afford for their countries is very rewarding. Our facility will have a direct positive impact on the health of tens of thousands of people where our gas will be consumed as well as contribute to the health of the global environment.
The fact that establishing this facility will make a difference in the lives of so many people around the world is what excites me and the entire team the most. Our investors and other project supporters keep us excited and inspired every day to move this project forward.
4. How has your past business expertise within telecommunications, real estate development, energy, oil and gas supported the development of the facility and long-term vision?
Over the past 20 plus years, I have gained tremendous insight into what it takes to be successful and what it takes for a company to win. Every industry carries specific subtleties and the way in which business progresses. Becoming a student of that industry and surrounding yourself with a team of trusted and competent professionals is a successful formula I have used with my other businesses.
I am fortunate to be able to take my years of success as a business developer, investor, owner, and operator and apply the skills I have developed to this project. To support the project further, it was critical that I develop the right team to evaluate and strengthen my original ideas and vision for the project.
As students of the LNG industry, the team took what they knew and applied it to researching and learning from the success and mistakes of our competitors. This frame of mind has allowed SCT&E LNG to efficiently make sound business decisions, has allowed the project to run lean, to focus on areas of innovation that would yield strategic advantages for our company, and, finally, to separate ourselves from other LNG developers. Our 20-year fixed price is an example of the type of innovation we were able to achieve by being efficient in other areas.
5. I understand you are currently at the design stage - how important is communication in the construction of the project?
Communication with our stakeholders is critical during the design and construction phase of our facility. SCT&E LNG is committed to the communities where we live and work. We understand the local citizens and landowners have an interest in the proposed project as it will impact their lands and community. On our website, stakeholders can sign up to receive newsletters and project updates.
SCT&E LNG already has thousands of followers that have registered for either our newsletters and project updates or connected to us via our social media connections. As a company, we encourage participation and collaboration from public stakeholders.
As the project progresses, SCT&E LNG has plans institute a Public Participation Plan for effective two-way communication with the local community through our newsletters, workshops, media outreach, open public meetings, one-on-one meetings and focus groups.
Furthermore, we stay in regular communication with federal, state and local authorities to ensure that we meet or exceed their requirements for this very important energy infrastructure project. Thus far, our project has received widespread support from both the local communities and government officials.
6. How do you ensure positive working relationships with internal and external partners?
Team alignment is about focusing people’s attention and energy on what is really important for that team to succeed. It’s a stepwise process, both internally with the team and inclusive of all key stakeholders, to provide the team with the conditions necessary to execute tasks effectively.
SCT&E LNG incorporates a structured alignment process which has the purpose of ensuring team members progress in an effective mode of operation as quickly as possible, and then develop the team’s capabilities. This process involves:
- Developing a positive project culture.
- Empowering an effective organization through mutual respect.
- Clearly communicating common corporate objectives for the protection of health, safety and the environment; and rewarding great work as quickly as possible, while simultaneously achieving the project goals and the success of individual participants.
SCT&E LNG will spend a significant effort on team building and team alignment at the onset of the project development and then continue through the project’s lifecycle and normal operation.
The quality of your company is directly related to the quality of your working relationships, so we are very selective about the people we hire and those with whom we work with externally in regards to contractors and vendors.
Everyone has to be passionate about the project and highly experienced in the LNG industry. Without either one of those factors, you won’t be successful. However, when you work with people that are both experienced and passionate, anything is possible and positive working relationships ensue. We are all on the same page and inspired for a common goal, so our relationships remain strong.
7. Has there been any current design challenges to overcome?
Fortunately, no. It is not to say that we didn’t look at different designs along the way. Every time we studied different designs and the potential challenges those designs would encounter, we became more deeply rooted in the direction we are taking. I strongly believe that if you want to be successful on a world scale infrastructure project, you should look at other companies who have achieved the results you want and, whenever possible, emulate them in order to achieve their same successes.
We have a team with extensive experience working on other LNG projects, so all of the decisions we make, from design and technology choices to which contractors to use, come from selecting only what has worked successfully for other projects and avoiding anything that has not worked, or that hasn’t been proven yet. This strategy has saved us considerable time and money.
8. How do you plan to ensure the safety of workers?
SCT&E LNG has a corporate commitment and passion for the health, safety and environment for our employees and all participants of the construction of our facility, whether on our construction site, at our corporate office, or at vendor and supplier sites. We will ensure that we work closely with our primary contractors and other project stakeholders to ensure that HSE is the top priority.
We will ensure that our contractors adhere to our HSE policy and procedures, as well as adherence to their own HSE operating system with top management commitment and personal responsibility and accountability from each team member.
SCT&E LNG will ensure continual HSE training of all team members and include monitoring of leading indicators to pre-identify potential risks. Each individual will have authority and the obligation to stop work and immediately address any unsafe situations and behaviours. It is our commitment that each and every worker go home safely to their families every day.
9. How will the facility tie in with the infrastructural needs of the area, in addition to providing long-term benefits?
Development of the facility will bring long term benefit to the local community and the state of Louisiana in the form of jobs and increased tax revenues. During the construction of the facility, over 1,500 annual jobs will be created during the roughly 5 years of construction, in addition to 225 permanent jobs for the long-term operation of the facility.
New ad valorem taxes on the facility paid to the State and local governments amount to millions of dollars per year. Infrastructure upgrades required for the project, such as a new bridge and improved highways, will benefit the community and improve property values for our neighbours on Monkey Island.
10. You have recently gained controlling interest in North Energy Central. How important is sustainability to you with regards to long-term projects?
SCT&E LNG considers sustainable development crucial to our project’s success and will cooperate with authorities, non-government organizations and industry organizations on sustainability improvement initiatives. We create a partnership with the local community and contribute to the wellbeing and development of the area.
SCT&E LNG funds programs for environmental improvement, health and human services, education, and safety. SCT&E LNG understands the importance of balancing a sufficient economy with a nurturing community and a viable natural environment, and we look for high impact areas to support.
The world is moving towards clean burning fuels to support the environment and reduce carbon emissions, so it imperative that the energy solutions being offered are sustainable by being both abundant and clean burning in order to justify the billions of dollars being poured into developing these infrastructure projects around the world.
11. What drives you to succeed and achieve your objectives?
As the founder of SCT&E LNG, it could be what some have deemed “the founders mentality”, which is a love for the company and its people, an obsession with the company’s vision and the major impact it will have on the world, and a commitment to taking personal responsibility for the risk and costs associated with every business decision, especially with regards to how it will affect our employees and shareholders. When you get to be part of something great that will change the world and improve the lives of those around you, you work early mornings and late nights because you want to, not because you have to.
Another thing that drives me is that SCT&E LNG is the new guy, completely self-funded, competing in an arena with industry giants that have been around for ages and usually crush smaller companies. However, despite the odds, SCT&E LNG has been able to make substantial progress and hit the same key milestones as other, more heavily funded projects. It’s a great feeling and our team is very proud, which further motivates us to keep taking massive, determined action every day so that this project will succeed.
12. What does success mean to you?
I believe success means making a contribution to the world that will have a massive, positive impact. As the CEO of SCT&E LNG, success will be delivering an affordable and clean burning energy solution to the world while returning dividends to our shareholders. With our business model, we will be supplying energy to those in need, particularly developing countries, reducing the carbon footprint on the global environment, and creating huge returns on investment for our shareholders and those investors who believed in our vision from the beginning.
Our success is a result of our standards and has not been dependent on how long we have been around in the industry, the size of our team, or how heavily funded we are to begin with. SCT&E LNG has set extremely high standards for itself and is run by an inspired and passionate team.
There are a lot of late nights and early mornings at SCT&E LNG for our tight knit group. However, this is why we have been able to make so much progress with so little money spent, and so much less waste than what the industry has seen with many other projects.
You cannot be great without passion - this is why companies where the founder is still the active CEO prove to be more than 3 times as successful as other companies.