EDITOR'S NOTE:The energy infrastructure arena is thriving as American energy companies upgrade the power grid to an internet of electricity and redesign natural gas arterials to serve the ongoing shale revolution.
To prepare for further growth, Quanta Services in the second half of this year plans to open a new training facility near its Houston headquarters to deal with an anticipated industry-wide surge in skilled laborer retirements.
The Energy Times recently sat down with James O’Neil, Quanta president and chief executive, in his office, to discuss industry trends. O’Neil was a key figure in shaping Quanta’s growth through a series of strategic acquisitions.
ENERGY TIMES: In the four years you have steered Quanta Services, what has been most surprising?
O’NEIL: The pace of change of the industry. We’re in unprecedented times in both the electric power and pipeline sectors of our business. We’ve had significant major transmission infrastructure built in North America. Now, we’ve got a lot of sub-transmission being built as well. I don’t see that slowing down. I see that going on for a decade or more. There’s so much infrastructure that needs to be built.
ENERGY TIMES: So what’s the reason for it? Sales of electricity are flat and demand has not grown.
O’NEIL: We’ve got infrastructure that was built to serve the population centers of the 1950’s and 1960’s, not the population centers of the today. The switch from coal-fired generation to natural gas generation is driving new transmission build. We have new critical infrastructure protection and smart grid technology. You can’t roll that out on an aging system. In 2006 and 2007 two-thirds of our distribution services work was the result of an expanding economy and housing starts. Today, 90 percent of our distribution work is refocused on upgrading the grid. You can’t put intelligent switch gear and wireless apparatuses and other new technology on 50-year-old wood poles, because it won’t handle the weight.
ENERGY TIMES: Where is most of your work originating?
O’NEIL: Everywhere. California is very active. CenterPoint did a smart grid rollout here in Houston and we installed 2.2 million meters. When you look at what’s going on in the northeast, California and Florida, you’re seeing a lot of distributed energy being integrated onto the grid. That requires a grid upgrade. We work for the majority of the investor-owned utilities doing distribution services. Every one of those will increase capital expenditures over the next 5 years. Our distribution service business’ revenue has been growing 10-15 percent every year for the last four years and will continue to do so, I believe, for the unforeseeable future.
ENERGY TIMES: What about transmission services?
O’NEIL: The rate of growth there has been very similar, double digits since the end of 2010. I don’t anticipate that rate slowing down.
ENERGY TIMES: Are you finding the new workers that you need?
O’NEIL: The industry has an aging workforce and that’s been well documented. In the next 10 years, 50 percent of our workforce will be retired or eligible for retirement. We’ve got to have a consistency of work to allow our people to be properly trained. It takes seven years to train a qualified journeyman lineman, and most of that training is on the job. To try to address this issue, we’ve built a 2,200-acre training facility in Texas. We will give our people classroom training and on-the-job training in a controlled environment. We’ll bring in folks from around the country, Canada and from our operating units in Australia and Latin America.
ENERGY TIMES: How many employees do you have now?
O’NEIL: We are at 27,000.
ENERGY TIMES: Is that growing?
O’NEIL: That’s doubled over the last 4 years. And we’re still growing in the next 4 years.