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Ivan Bell, Chief Operating Officer of Phoenix Natural Gas talks to Owen McQuade about the development of the local natural gas industry from a handful of people over 20 years ago to a £1 billion industry employing over 3,000 people in Northern Ireland.
Over the past 20 years or so the natural gas industry has quietly established itself as a major energy utility in Northern Ireland. 2016 was a big year for Phoenix Natural Gas with the company celebrating its 20th anniversary. The local company started in September 1996 with a business plan that was signed off by government and the energy regulator. It stated that the utility would have 175,000 customers by 2016. “That was really the economics of making the thing work,” says Ivan Bell.
By the end of 2016 there were 200,000 customers and natural gas is available to 320,000 properties in the original license area of Greater Belfast. Phoenix has invested £500 million building its network and connecting these customers, achieving a penetration rate of over 60 per cent, impressive for such a greenfield start. “The investment hasn’t stopped there. We are still connecting at a rate of 8,000 to 9,000 new customers each year,” adds Bell.
“The original plan has been delivered and it’s been a success story.”
Analysing Phoenix’s journey over the last two decades, Bell points to some impressive statistics as a measure of their success: Phoenix has connected five new customers every working hour for the past 20 years; and constructed 750 metres of pipeline every day over the same time period. “In 1996, the business was an aspiration with lots of uncertainty. However, it has seen steady growth with around 10,000 connections on average every year. The original plan has been delivered and it has been a success story.”
This has also led to the development of a wider natural gas industry across Northern Ireland over that period. There are now five natural gas companies operating in the Province. Two transmission companies, Mutual Energy Limited and Gas Networks Ireland and three gas distribution companies, Phoenix Natural Gas, firmus and SGN. The industry is maturing and Bell believes that it is now entering a period of stability with all three distribution companies all but having their price controls determined by the Utility Regulator. By the end of the six-year price control period, natural gas will be available to over 500,000 properties in Northern Ireland. “Over a 25-year period that is a considerable advance for a product that was brand new to Northern Ireland. We are well established in the local community and we see our corporate social responsibility programme as an important part of what we do,” adds Bell.
“We are established in the local community and we see our corporate social responsibility programme as an important part of what we do.”
With the Phoenix Natural Gas brand now well established, Bell observes: “Although people see us as a large company, we are not a big company. We have less than 200 employees. We work particularly well with our main contractor McNicholas – which is a solid partnership. Their vehicles have our logo on them and we are very much part of the same team.”
The quality of the work has been recognised by the Sword of Honour Award for the company’s health and safety performance across its operations. This prestigious international award put the local utility alongside many leading international organisations including Aston Martin, Dubai Electricity and Water Authority and Network Rail. “At the core of our company, we resemble a family run business and we all work well together. There are strong relationships within the business and we share the common goal of wanting to do the right thing to get things done. We have managed to retain the same core values from when we started out in 1996 with just a handful of people.”
When asked how the company’s culture has changed as it has grown, Bell replies: “The culture is still genuinely positive. People come to work for Phoenix for a career and they also feel they are leaving a legacy that will be around for years to come. There is a strong sense of duty to deliver a level of customer service that will allow us to grow the business. Our staff will go the extra mile to do this.”
Bell says that as the company passes its 20th anniversary it has entered a new phase in its evolution. The company plans to grow its customer base by a further 8,000 customers annually for the next 15 years. “At the same time we now have assets in the ground that are 20 years old and need managing from a maintenance point of view.” The company operates to the internationally recognised asset management standard ISO5501 and is evolving into a more operational and maintenance-focused business.
East Down extension
A major part of the company’s development phase is the extension of its network to East Down. Bell acknowledges then MLA Margaret Ritchie’s role in first raising the prospect for natural gas to East Down in 2006 and DUP leader Arlene Foster’s role in including the East Down extension in the Executive’s approval of Gas to the West. Bell is quick to point out that the East Down extension requires no subsidies for the project and it is wholly funded by private money. In 2015, Phoenix applied for a licence application to bring natural gas to Downpatrick and this was extended to a total of 13 towns adjacent to its licence area in the Greater Belfast area. The towns include: Annahilt, Ballygowan, Ballynahinch, Castlewellan, Crossgar, Downpatrick, Dromore, Drumaness, Dundrum, Hillsborough, Newcastle, Saintfield and Spa.
“The network extension will run from Hillsborough to Newcastle. This will make natural gas available to an additional 28,000 properties. The £60 million investment commenced in March 2016 and consists of 90km of bulk network, which will take gas to each of the 13 towns and 260km of distribution network that will make gas available to 28,000 properties. The project is front-loaded with £40 million being spent over the next four to five years,” explains Bell.
On the timing of the investment, the remaining section of the bulk pipeline will be built over the next two years to 2018 and the rest of the network will be constructed between now and 2022. As the project is rolled out Phoenix is engaging with communities and local representatives. “During the construction phase we are very much looking to minimise any disruption. We are also working with other utilities including a media company to possibly lay down cable ducting in the same trench as the gas pipelines. We have just started in Hillsborough and Ballygowan is now live with its first customer connected. We will have gas available to over 1,200 properties there by March 2017.”
The project reminds Bell of the early days of the natural gas industry in Northern Ireland when they had to build the brand from scratch. Although they are starting afresh in these new towns, Bell says it helps that many people from the 13 towns work and have family in Greater Belfast, where natural gas is available. “Having said that, it is still a challenge to get the message out. For example, my marketing colleagues tell me that there are over 40 billboards available in Belfast compared to only six in East Down.” This has led to a more “grass roots” approach engaging with communities, local councils, supporting local events and visiting local schools in order to get the message out. Bell says that this has created a good “buzz” in the company and indeed in the wider industry.
“Natural gas is a lifestyle choice. People choose it for its convenience and for its versatility and flexibility.”
Reflecting on the size of the overall industry, Bell sees a maturing industry, which is still growing and with a positive outlook. “We have been through many phases of development over the past 20 years and have seen periods of both high and low oil prices but we have managed to achieve a steady conversion rate of customers to natural gas. Natural gas is a lifestyle choice. People choose it for its convenience and for its versatility and flexibility.”
The natural gas industry in Northern Ireland will see a further £300 million invested over the next six years in constructing and maintaining assets. In addition, customers will be investing themselves with 12,000 connections a year which equates to £30 million invested in appliances. “It is now an important industry with a well-established product. It has been a good story which has not always been recognised.”
Phoenix is looking at more areas for development of its network around its license area but Bell says that these are becoming more challenging. One area singled out by Bell as an example is Whitehead in County Antrim, where both Phoenix and the Utility Regulator are examining the feasibility of extending the network.
Bell concludes by reflecting on a natural gas industry that has developed from a handful of people, introducing a new product to Northern Ireland over 20 years ago, to a £1 billion industry with over 3,000 people employed. “It has been an exciting 20 years and the future promises to be as bright.”
Profile: Ivan Bell, Chief Operating Officer of Phoenix Natural Gas
Ivan Bell spent eight years involved in various aspects of the natural gas industry in Great Britain. In 1998 he returned home to Northern Ireland as Transportation Development Manager for Phoenix before becoming an Executive Director of Phoenix Natural Gas Limited. He has over 26 years’ experience in the natural gas industry in England and Northern Ireland gained in the areas of operations, asset management, construction, health and safety, commercial, business planning, contracts and procurement, customer services, sales, marketing, PR and regulation, of which 16 years have been spent operating at the strategic director level. Founder of the Irish Section of the Institution of Gas Engineers and Managers (IGEM), former Chairman of the Irish Section of IGEM, Trustee and Council Member of IGEM and previously Non-Executive Director of Energy and Utility Skills. Ivan is a Board Director of Phoenix Energy Holdings, Phoenix Finance Ltd and Phoenix Energy Services Ltd. He is also a Board Member of CBI Council Northern Ireland. Ivan is married with two grown-up daughters and enjoys rugby, walking the family’s chocolate brown Labrador, keeping fit and generally any outdoor activities.