Reliability, safety, and flexibility are key to this company’s success. Blane Bachelor talks to Frank Katulak about strategies.

Executives of many companies have the luxury of knowing that the evening hours and weekends are generally times when business activity can effectively close up shop. With that in mind, it’s hard to grasp the magnitude of challenges for a company that shuts down for just 12 hours a year.

Such is the case for Distrigas, the country’s longest continually operated facility for the offloading and distribution of liquefied natural gas, or LNG. Distrigas, which is based in Everett, Mass., just outside Boston, supplies New England’s six states with approximately 20% of their energy. On cold winter days, that marketshare spikes to 40%, said president and COO Frank Katulak.

To meet such demand, Distrigas adheres to a philosophy that focuses on reliability, safety, and flexibility, Katulak said. He pointed out that while many similar facilities have to shut down a few weeks each year for maintenance, the Everett Marine facility stays online all the time to manage the delicate cycle of supply coming in and gas going out. Hence, the annual 12-hour pause only comes because of government regulations that require it to be shut down and started back up.

Frank Katulak

“It’s not a matter of letting things run themselves. It’s capital intensive, and it requires a small group of knowledgeable people constantly watching and making small adjustments and communicating with each other,” Katulak said of Distrigas’s continuous operations.

Emerging energy source
LNG, which is a growing segment of the natural gas industry, is formed by chilling natural gas to negative 262 degrees Fahrenheit, the temperature at which it cools into a liquid. As such, it can be transported via ship from the liquefaction plant to storage and distribution plants. Distrigas is one of six such facilities in the US.

In the 1990s, the natural gas industry was on the cusp of major changes. The nation’s 1990 Clean Air Act sparked a new drive for clean energy sources, and demand for natural gas began to increase as gas-fired power plants became more widespread. Such industry shifts meant big changes for Distrigas, which also is known as Suez LNG NA, a subsidiary of world energy giant Suez. Opened on the shores of the Mystic River in 1971, Distrigas was built as a peak-shaving supplier, meaning that it filled the LNG tanks that utility companies used only during peak demand times during the winter.

In 1998, the year Katulak joined the company, Distrigas had a record year, with 18 shipments coming into the Everett facility. And, with the increase in demand of natural gas looming on the horizon, the forecast for the company was to nearly triple that workload to about 50 shipments annually.

“We do, on an average year, 50 complete turns of inventory,” Katulak said. “No matter what business you’re in, that’s a lot. Meeting all our timetables is extremely important.”

Enabling efficiency
When Katulak arrived at Distrigas, he discovered a lack of strategy to achieve and maintain those timetables, as well as a lack of overall efficiencies and economies of scale. Instead, the overriding approach when crisis arose was to throw everybody at the process. “The approach was just to get things to run,” he said.

But instead of taking the route that many new management executives choose (starting fresh with widespread personnel changes), Katulak decided to look within the company for solutions. He didn’t even bring aboard outside consultants to tweak organizational processes. Instead, he focused on enhancing communication with and the mindset of the existing employees, who he said have strong collective experience in LNG operations.

“I deliberately decided not to hire consultants,” Katulak said. “The people here knew the process, and because I had a strong background in the field, I felt it would have been the worst thing in the world to bring in people who might have been more organized but did not know the process. Every step of the way, I tried to build on the knowledge of people here.”

Furthermore, Katulak noted, Distrigas relies heavily on constant informal interaction between key personnel to keep systems running smoothly. All operations employees work in Everett, rather than being spread out between different facilities, which enables constant contact and quick decisionmaking.

“The systems we have in place and the way we operate would not work in a 1,000-employee business,” Katulak said. “A lot of this happens through informal communication.”

Big rewards
One of the technological improvements at the Everett facility is automation that enables the system to self-regulate so that gas can be converted and distributed as needed. In addition, a degree of flexibility has been built into delivery schedules. These control systems have replaced what was a manual process of regulating flow rates and other process variables.

Such changes have enabled a more proactive, instead of reactive, approach to various processes. “It used to be that 80% of maintenance was done because of breakdowns and 20% was preventative,” Katulak said. “Today, 70% is preventative, and 30% is breakdown.”

The combined results of the changes in the systems, technological improvements, and the collective mindset of employees have been spectacular, Katulak said. Distrigas has increased its output tenfold while expanding its workforce only modestly. Last year, the company achieved record gas deliveries, totaling 176 billion cubic feet.

Such results should bode well for Distrigas’ secure footing in the marketplace. According to the Energy Information Administration at the US Department of Energy, consumption of natural gas by electric power generation facilities is predicted to double over the next two decades to 9 trillion cubic feet by 2025.

Along with that optimistic forecast is the increased attention directed toward terrorism concerns and the safety issues around natural gas facilities, particularly those like the Everett terminal that are located near heavily populated areas. Of the LNG import facilities in the country, Everett currently is the only one with a proximity to a metropolitan area.

But as aware as Katulak is of such concerns, he’s equally confident of his company’s continued record of excellence when it comes to safety. Furthermore, he noted, meeting the industry’s numerous safety requirements is built into Distrigas’ approach to doing business.

“Operational risk is one that you have to mitigate yourself, by your own work practices,” he said. “You can’t just buy insurance or risk mitigation policies; you have to really watch what you’re doing.”

Blane Bachelor is an Atlanta-based freelance writer who covers travel and business. She can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .