PLAINS ALL AMERICAN PIPELINE
WHERE INFORMATION SERVICES MEETS RISK DIGITAL REPORT 2022
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PLAINS ALL AMERICAN PIPELINE
WHERE INFORMATION SERVICES MEETS RISK
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February 2022
PLAINS ALL AMERICAN PIPELINE
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PLAINS ALL AMERICAN PIPELINE
Al Lindseth is SVP at Plains All American Pipeline. He elaborates on the culture and successes that have kept him in the company for 22 years
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n 2019 alone, $1.3tn was spent on transformation initiatives and upwards of 70% of these projects failed or their needs weren’t met. According to Al Lindseth, SVP of Technology, Process and Risk Management at Plains All American Pipeline, this is often due to factors upstream of technology: “Business people can approach transformation as a laundry list of technology projects. But their success is actually dependent on things like culture and behaviour, starting with the leadership team, the processes, and the business design differences.” It all started on a napkin Greg Armstrong was CEO when Lindseth was thinking about joining the business. Enron and other trading firms in Houston had inquired, but a sit-down with Greg at a hotel bar resulted in discussions and strategies, plans drawn on napkins; risk management and commercial strategies that ended up helping the company for years afterwards. “I thought, ‘I need to work for this guy’. The story of what he and Harry [Pefanis] did and how they started the company, taking a risk building storage tanks when there was little economic incentive to store with where the market was at that time. The other rule Greg had was ‘never run out of cash!’, which I think is tied to some of those early years and experiences that they had.”
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PLAINS ALL AMERICAN PIPELINE
1981
Year Founded
Energy Industry
4,094
Number of Employees
23.29bn Revenue 2020
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Lindseth came on board around the turn of the millennium, when the company had experienced a rogue trading loss from an employee who kept his positions hidden from management. Formerly a risk management consultant with PricewaterhouseCoopers, his first task as Corporate Risk Manager was to shape the right team and implement process redesign to deliver incremental changes and improvements throughout their risk management programme. In just over a year, the infectiously positive Lindseth would also assume control over IS & Operational Accounting in order to improve them, while building and strengthening the company's risk culture and technological capabilities. At the age of just 33, Lindseth 6
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would become one of PAA’s three SVPs, overseeing three areas: Technology, Process and Risk Management. “Once I got the promotion to SVP, my plan was to continue the path of improvement, going group by group, department by department, modernizing the systems where it made sense and was worth the investment. The idea behind the title was to overhaul everything on top of a really strong business model and get a real jump on the competition.” Riding the wave After those initial bumps, for almost 12 years, in almost every single quarter, Plains met or beat earnings guidance. It hit double digit annual growth - turning into a Fortune 100
PLAINS ALL AMERICAN PIPELINE
AL LINDSETH TITLE: S VP, TECHNOLOGY, PROCESS AND RISK MANAGEMENT LOCATION: T EXAS, UNITED STATES Al joined Plains All American in 2000 from PricewaterhouseCoopers. Al is responsible for the design and functionality of Plains’ risk management policies and procedures, information systems and business processes.
EXECUTIVE BIO
company. “The energy to redesign everything faded. Everyone was just too busy doing deals and acquisitions, myself included.” I had a process improvement group that marshalled the process optimisation work through. And that became a project management organization with all the new system work arising from growth. The last number of years, as the energy industry downturn has caught up to midstream, the focus on streamlining and re-engineering to optimise has returned. We call it efficiency mode.” Through the company’s growth period, Plains was able to protect the downside and capture upside in a way that made sense, through a lot of different and volatile supply/ demand and price cycles, through its risk management programme.
“ BUSINESS PEOPLE CAN APPROACH TRANSFORMATION AS A LAUNDRY LIST OF TECHNOLOGY PROJECTS”
XaaS. Cybersecurity. Enterprise Solutions. At our core we are specialized architects and engineers whether it be in Everything-as-a-Service, Cybersecurity, or Enterprise Solutions. Our process allows to take a proactive approach in many different environments. We tailor our approach and solutions, not custom build it, so when you are ready to evolve, we can evolve with you.
Creating lifelong partnerships through trust Worth Davis, President at Computex, reveals how the technology solutions provider invests in its staff, research and service levels to build customers for life. As President of Computex, Worth Davis’ role is to delight the customers at all levels, ensuring that Computex does all it can to keep customers and employees happy, creating a relationship of trust designed to last a lifetime. The more complex the project, the more Davis tends to enjoy it: “I like the complexity and the fact that we’re going to have a major impact on the growth of the client’s business.” On the Computex approach, Davis says that “we only bring in technologies that are vetted, so it brings success for clients. Tried and tested enterprise solutions and cybersecurity solutions. We continuously adapt to new technologies, as the technology landscape changes rapidly.” Plains All American Pipelines A key client for Computex is Plains All American Pipelines. Davis remembers his first engagement with them around a data centre in their office in downtown
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Houston: “We needed to get it out of that building for technical and disaster liability reasons but it’s location was designed for CEOs and CFOs, not a billion dollar company with massive infrastructure. It was a good project, and we rebuilt a lot of this old site at multiple plant sites, designing their networking, connectivity and backup data centres. As proven with Plains, the bigger the project, the more Davis tends to like it: “I like the complexity and the fact that we’re going to have a major impact on the client.” “A company like Plains is there to run their pipelines and have a solid financial model, one that’s good for their employees, their board and their shareholders at the end of the day. They’re actually not a technology company. So they’re looking for technology partners that provide maintenance, with clear licensing programmes and great references within the oil and gas industry”, he said.
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“There was a lot of volatility over that 12-year period that we were able to ride out, because of our programme and the whole culture we created.” “Plains is different from other organisations which have a separate CIO, CISO, or Chief Risk Officer. Here I'm the face to the board for all those functions.” There’s a lot of succession planning, delegation and leadership development constantly taking place so I can wear those different hats effectively. The business has a Canadian affiliate as well, where Dan Reinbold managed the IS organisation historically, working closely with Al. Three years ago Plains decided to converge its US and Canadian entities. For this to work, IS had to converge first. Al put Dan over a converged IS North America group. With Dan reporting to him still, Lindseth moved into the role of senior-level influencer focused on those elements upstream of technology, to help broker and pave the way for these larger and more complicated projects. “Dan took the traditional North American CIO role, focused on tech, with my support. He's done a great job. Getting the technology piece was critical. No one on the business side was going to be able to think about bringing together their applications or consolidating business processes if we didn’t get that right. It was table-stakes. People, process, culture and bringing business designs together: I took on that role. That’s how we split it up.” Influencing the market through cybersecurity Al kept the business risk program side throughout all this. Lindseth also helped Plains build its cybersecurity abilities from the ground up using those same fundamental risk concepts, and the field, along with Plains programme, continues to evolve. With 10
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“ WE PLANNED TO OVERHAUL EVERYTHING ON TOP OF A REALLY STRONG BUSINESS MODEL” AL LINDSETH
SVP, TECHNOLOGY, PROCESS AND RISK MANAGEMENT, PLAINS ALL AMERICAN PIPELINE
PLAINS ALL AMERICAN PIPELINE
Plains Profile: Where Information Services meets Risk
cyber, for instance, Lindseth says there’s four main objectives: “You're trying to prevent an incident. You're trying to detect it as it happens. You're trying to respond to it. You're trying to predict it or get ahead of it. Looking at vulnerability threats and magnitude, you're using those same fundamental techniques that you use in business risk management. Lindseth has found his influence extending outside of the organisation and into the community: “A rising tide lifts all boats in the oil and gas industry”. Greg Armstrong was the chairman of the National Petroleum Council and the former Plains’ CEO, for example, who pulled Al into a large NPC Report focused on midstream. Before COVID, Lindseth was invited up to the Department of Energy in Washington to present the cyber security recommendations from that Report. One component focused on technology and particularly cybersecurity, which Lindseth led and which received the most attention of the entire piece of work. plains.com
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“We looked at operational technology (OT). IT business systems are more likely to get attacked, but you can have a much greater magnitude and severity of an attack on an operational technology system. These form the backbone of industrial control systems, handling uptime, reliability, safety, compliance. This would result in much larger economic or physical disruption and impact environmental health and safety.” With OT cyber, there are many overlaps to Al’s focus on non-technology elements. “With all energy companies, you’ve got many different factors in trying to apply modern technology, cyber or otherwise, in the field like remote areas, user adoption issues and historical ways of doing the work. These projects are very complicated and difficult to pull off. And if you don't deal with a lot of those foundational elements, so that you have organisational readiness to take this on, to optimise the work process, and lead people through the change, it's very difficult to succeed. This is a transformational change for those groups.” According to Lindseth, technology is there to help to enhance things, but it doesn't make up for poor processes or team or individual ineffectiveness. A combination of bringing legacy habits and practices together with more modern behaviours is necessary when trying to use data to improve decision-making. “You must empower those people and give them more authority. It's much bigger than just technology,” he said. “I'm also on the board of the Oil and Natural Gas Information Sharing and Analysis Centre (ONG-ISAC). Every critical infrastructure sector has one of these ISACs and they are really important entities. We could be doing a lot more with them. The idea is that if a member company gets hit, they provide the threat intel to the other member companies.” 12
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Risk assessment in action Lindseth has always approached IT using the tools of a business risk manager. “It’s just what I know.” For example, he was in charge of a major trucking project, where he and the project manager sat down and figured out the 15 to 20 things that they could do to improve the odds of success of the project. Then, Lindseth suggested they quantify how much they could improve, helping them to prioritise.
PLAINS ALL AMERICAN PIPELINE
“ THERE WAS LOT OF VOLATILITY OVER THAT 12 YEAR PERIOD THAT WE WERE ABLE TO RIDE OUT” AL LINDSETH
SVP, TECHNOLOGY, PROCESS AND RISK MANAGEMENT, PLAINS ALL AMERICAN PIPELINE
“We picked certain ones and we executed them. Our initial assessment estimated putting these risk mitigation strategies in place would increase the odds of success by 70%. The quantification put the project after risk mitigation strategies were put in place at a 95% success vs an estimated 25% success had we not executed those actions. It’s difficult to know how it would have ended up for certain, but I am confident without those extra steps it would have been a failure.”
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PLAINS ALL AMERICAN PIPELINE
What is Your Legacy? Al Lindseth (CIO Plains All American Pipeline)
“This was a dual mode, satellite and Code Division Multiple Access (CDMA) implementation to gather key data from our trucking fleet. The CDMA didn’t reach in a lot of areas and satellite was problematic with the amount of data we were transmitting. We went above and beyond because we knew what a large issue that was - measures like putting WiFi at the truck stations, actually talking to the carrier to try and influence their rollout plan. We built a lot more data push into our dispatch programme so the data would get transmitted when the trucks were most likely to be at the main yard. If we had not 14
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done that, we would have had about 35% of our truck fleet in North America that would not be able to send critical data at the right times. The trucks would have been sitting a lot longer. Time is money. It would have been a real problem,” said Lindseth. Over the years, the business has used stress testing, experience analysis on the business side and reports that show what the impact is to hedging programmes and other commercial activities. Al has done this on the IS side as well. “For example, we took a number of different scenarios that would trigger our disaster recovery programme, such as fires, flooding, power outages and hurricanes
PLAINS ALL AMERICAN PIPELINE
and factored results of those scenarios into recovery time objectives and recovery point objectives, then weaved these exercises into the architecture of the programme.” Computex and modern infrastructure Plains has relied on a lot of trusted partners over the years, which it views as an extension of its team. It's all about achieving the goals, according to Lindseth. “If you think about the ecosystem that we're in, forecasts before COVID had 50% of S&P 500 companies going out of business within 10 years. The average tenure of an S&P 500 company was 40 years in 1977. By 2027, plains.com
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“ I SPEND A LOT OF TIME MENTORING AND DEVELOPING PEOPLE” AL LINDSETH
SVP, TECHNOLOGY, PROCESS AND RISK MANAGEMENT, PLAINS ALL AMERICAN PIPELINE
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it's expected to be 12 years. Companies need to be hyper-focused on their business model and their design and identifying disruptors and managing those to get ahead of them, if they want to be around in 10 years. Partners and the skills and perspectives they bring are a huge part of doing that,” he added. “For example, Computex has been a huge help to us over the years. They helped us design and implement our data centre and did the same thing around our disaster recovery programme.” Other areas Computex have been involved include a redesign of the Plains field networks: “They've been a great partner, very flexible. We accomplished pretty significant things in a very short amount of time.” said Lindseth. Houston as a technological hive Unlike Silicon Valley, where it is high risk and potentially high reward, there's a lot of companies in Houston that are highly profitable, but haven't gotten the most out of technology. Lindseth believes it really increases the opportunity and also decreases the risk. “The city is set up to have a great trajectory over the next 10 years, I think it'll continue to be the energy capital of the world, even as it transitions into renewables. And part of the value of collaborating is diversifying into other industries and seeing how they do things just a little bit different. I speak and collaborate a great deal, both in oil and gas and outside of it. I’ve learned a lot that way, and there's ample opportunity to do that here.” said Lindseth.
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