âSweet Spotâ philosophy provides customer, financial focus for unit of largest U.S. infrastructure company
John Schlosser considers himself extremely fortunate to lead a team of approximately 3,500 employees every day at Kinder Morgan Terminals, one of five major businesses within the Kinder Morgan Inc. family of companies. As an Ohio native who saw firsthand the decline of the rubber, steel and auto industries in places like Pittsburgh, Detroit and Akron, Schlosser knows the importance of keeping the city of Houston âthe energy capital of the worldâ and is confident the industry will unite to address any local or national threats to future development.
âRemaining competitive today is dependent on the health and vitality of locations where you have operations, where end users are located, and a conducive regulatory environment with a good degree of economic certainty,â said Schlosser. âHouston is known for being a city where businesses and individuals thrive on the premise that âit can be doneâ and meet and overcome major challenges. As an industry, we need to resist over-regulation and serve as advocates for the entire Port of Houston.â
Expanding infrastructure
Headquartered in Houston, Kinder Morgan is currently the largest energy infrastructure company in America, with approximately 11,000 employees in the U. S. and Canada. Kinder Morgan owns an interest in or operates approximately 84,000 miles of pipelines and approximately 180 terminals. The companyâs pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store and handle a wide variety of liquid and bulk products, such as gasoline, distillate, crude oil, chemicals, ethanol, petcoke and fertilizers.
âIn the past several years, we added another business line and transport capability to our terminals asset base: product tankers in the Jones Act Trade, which enhance our existing terminal connectivity attributes,â Schlosser added. Most recently, Kinder Morganâs American Petroleum Tankers (APT) unit took delivery of the Garden State and Bay State, 50,000-deadweight- ton, ECO-class product tankers. Previous deliveries include the Lone Star State and Magnolia State. Each of these vessels, with cargo capacities of 330,000 barrels and LNG conversion-ready engine capabilities, is fixed under long-term, firm time charters with major energy companies. Five additional vessels are scheduled to be delivered through the end of 2017, bringing APTâs best-in-class fleet to a total of 16 vessels.
âSince its inception, the company has been on a significant growth path to become the premier transporter of energy and numerous forms of raw materials based on a very simple concept: serving customers as an âenergy toll road,â i.e., moving products for our thousands of customers who need to ship their varied products from North American locations to domestic and international end-use markets,â Schlosser explained.
No leaders without teams
Schlosser attributed Kinder Morganâs successes and growth to both his own professional leaders and the team he himself now proudly leads. âKinder Morgan was founded in 1997 by Richard D. Kinder, currently executive chairman and one of the best minds in the energy business,â he said. âRich is unquestionably a tremendous leader and has been a great mentor and example to me and countless others over the years.
âI am also very fortunate to have learned from those around me. No leader can do the job without having a qualified, motivated and dedicated team of knowledgeable individuals to support him or her.â
Schlosserâs past business experience includes holding positions with Consolidated Freightways, SeaLand, CSX and GATX, whose terminals group was acquired by Kinder Morgan in 2001.
âAs I earned my way through college, I was a truck driver and a greens keeper at a golf course, among many other jobs,â Schlosser explained. âThose stints gave me a keen understanding of the value each employee brings to the success of an organization.
âAll of us at Kinder Morgan are heavily involved in the success of the company. Our goal is to run the company as our shareholders would â and many of us are shareholders â continually watching the bottom line at all times and making sure all cylinders are firing correctly, so that our customers receive the benefits of excellent service that meets or exceeds their needs.â
The âSweet Spotâ
Notably, Kinder Morganâs Terminals Group adopted a philosophy several years ago called the âSweet Spot,â and according to Schlosser, it has since proven highly successful. âThis concept is worth mentioning because of its importance to the organization and what can be achieved,â Schlosser said. âEnvision three interlocking circles representing our 1. Customers, 2. Financial performance and 3. Safety, quality and environment (SQE). All decisions we make should be able to have a positive result in the âSweet Spotâ of the interlocking circles; if not, we rethink our approach. It is a great way to think of how we do our business, providing a road map of sorts that helps us keep our eyes on the ball and have a better chance of attaining success.â
A great example of what Schlosserâs team has been able to accomplish with this philosophy can be seen on the Houston Ship Channel. âIn 2001, when Kinder Morgan purchased us [GATX Terminals], we had approximately 16.6 million barrels of storage spread out over two facilities at Galena Park and Pasadena, Texas,â Schlosser recounted. âFast-forward to 2016- 2017, and with $2 billion invested, we now have approximately 43 million barrels of storage, as well as 20 inbound pipelines, 15 outbound pipelines, 14 cross-channel lines, 12 ship docks and 33 barge spots. We have built an integrated complex that offers our customers an unparalleled level of connectivity, optionality and continued growth.â
Overcoming challenges
Although Schlosser sees continued growth on the horizon, he also emphasized the energy industry must focus on addressing issues that adversely impact its business. âAs an industry, we need to collectively fight growing resistance to any type of development,â he argued. âAnyone who has attempted to get a hydrocarbon pipeline or terminal permitted knows how difficult and illogical the process has become.â
Schlosser explained environmental activism has made it almost impossible for the industry to meet the growing demands of customers and end-use markets. âWe are the largest handler of renewables in North America; we understand the potential and value they bring,â he conceded. âBut even the most optimistic projections have renewables growing to 15-20 percent of U.S. total energy consumption within the next two decades. Any reasonable energy policy must include a dialogue on all sources, from natural gas to petroleum to nuclear to renewables, as well as the lowest-cost means of conveyance.â
As for efforts to combat opposition to future infrastructure development, Schlosser highlighted several specific areas the industry should turn its attention to in the coming year. âWe can start in our own backyard by working together to find solutions to issues that have historically hampered the growth of our most valuable asset, the Houston Ship Channel,â he said. âSolutions are needed for dredge spoil disposal costs, emission credit costs and generation, channel congestion and permitting timeliness, just to name a few.
âWe as an industry must be responsive to changing market conditions and adapt accordingly to maintain dynamic transportation and storage platforms for existing and future business. Connectivity and optionality have and will continue to be key to the ship channelâs growth, linking customers to the port and the world efficiently and economically.â
Community involvement
Another way Schlosser and Kinder Morgan advocate for the Houston Ship Channel is by giving back to the local community through charitable organizations. âKinder Morgan supports the United Way and various charitable entities, organizations and trade associations in Houston and elsewhere, and we are actively involved in supporting the Port of Houston,â he noted. âWe are also heavily involved in educational funding of schools in cities and locations where we have operations.â
Schlosser himself serves on the board of directors of the Greater Houston Port Bureau and is chairman of the Houston American Diabetes Association. In discussing his involvement in these organizations, he noted again the importance of continuous learning and improvement. âAt a very basic level, learn from those around you and take advantage of all opportunities for personal growth and development,â he advised. âNever become complacent. Honor your co-workers and they will honor you. Lead through example and never stop learning.â
For more information, visit www.Kindermorgan.com or call (713) 369-9000.