Talking Business: New Orleans is ‘falling way short of its potential’ says IMTT chief
By Stephanie Riegel
Source: The Times-Picayune | NOLA.com
April 3, 2023
In late 2020, Carlin Conner and a group of private equity investors acquired International-Matex Tank Terminals for nearly $2.7 billion. In the years since, the company, which provides liquid storage for industrial users and consumers, has invested some $400 million in its Avondale, Geismar and St. Rose facilities alone — three of its 19 North American terminals.
Conner, now chair and CEO of International-Matex Tank Terminals, is a 30-year veteran of the industry. He acquired the company after seven years as CEO of SemGroup Corp., an Oklahoma-based pipeline company. Prior to that, he was chair and CEO of Oiltanking North America, the North American arm of one of the world’s largest independent operators of tank terminals.
Conner is no stranger to Louisiana, but he is relatively new to New Orleans, where International-Matex Tank Terminals’ corporate headquarters are located. In this week’s Talking Business, Conner opens up about the city and where his company is headed.
This interview has been edited for length and clarity.
How do you like New Orleans, and how do you compare it to other places where you’ve lived and worked?
It is chaotic, crazy, unpredictable and maddening. But at the same time, I go to bed every night with a smile on my face.
It has a spirit. It has a soul. I have gotten to be fairly active trying to do my part to help out, so I am working with the Metropolitan Crime Commission and am on the Business Council’s Criminal Justice Committee. I also recently became a director of BGR. … As we think about our headquarters being in the city, it is important that this is a place that we can attract and retain talent.
What about New Orleans concerns you?
I see an extremely unique city with so much history but it is falling way short of its potential. We are not as organized and efficient as we need to be in government. We are not united. We are very divided.
How did you come to acquire IMTT?
I have 30 years of experience in the oil and gas terminals business. IMTT is a terminal company, so this is the business that I grew up in. Riverstone Private Equity was looking to invest in a business like this and we both liked IMTT because of its expansive footprint. And even though it was largely working in the petroleum sector, we believed the assets could transition as we reshape the industry with greener and cleaner products.
It seems like the entire energy sector is going this way and that the big energy companies get that this is the future. Yet, I see so much push back in some political circles.
I would not confuse what they fight for on the legislative side as a strategy endorsement. The CEOs and boards of these companies absolutely understand that the energy transition is not just a topic of discussion. It is a path they have to embrace. I would suggest that any big oil and gas company has, like us, a legacy footprint that is doing what we normally do. But as they invest new capital, they are investing in energy transition opportunities.
There are a lot of facilities that deal with “blue” and “green” fuels that are coming here or strongly considering it. Do you think it is going to materialize?
By end of 2024, we will be handling 25 percent of all the renewable diesel in the U.S. We really have grown in that direction. We also believe there is opportunity on the Blue Ammonia front and with the hydrogen economy … Ammonia is a fertilizer, but it is now becoming a fuel and it is valuable because of the hydrogen content and it also can be dropped into an old coal-fired plant … so that is where the demand is coming from, and the plants along the river have a great natural gas supply, a stable government and great logistics.
Part of this state’s renewables focus is centered on carbon capture and sequestration. Do the environmental questions that have been raised about the long-term safety of burying carbon underground bother you?
I am a big believer that we have to do things in a competent, comfortable way for our environment and citizens.
There is a disconnect between what people think is happening and what is really happening. I am less worried about sequestration of CO2 than almost anything because you are putting it back into geologic formations that are tested and will hold it forever and ever.
That is science you can replicate and model.
How is the global uncertainty on so many fronts impacting your business?
One is energy independence and what is happening in Russia, Ukraine, the Middle East. Where are the molecules going to come from to meet global demand for energy? Forget about greener, cleaner at this point. The U.S. is producing more oil and gas than we ever have. We have a refining output that is maxed out, and there is a lot of uncertainty in the world.
So, you have uncertainty and on top of that the energy transition push to decarbonize and that has to be managed because it has impacts on supply and demand.
What about inflationary pressures? Supply chain issues?
Inflation is a big pressure point. Any project we are contracted to deliver has a one- to two-year delivery time, and that is typically priced at today’s prices. So, if you are in an inflationary environment and you don’t know what steel and labor are going to cost, you can get behind the eight ball.
Any business like ours is capital intensive and we have a substantial amount of debt, so you see higher borrowing costs. At the same time, you see inflationary issues with demand. At the end of the day, if people are not using energy because it is too expensive that shrinks demand and that indirectly will affect our business.
What keeps you up at night?
Globally, the biggest concern is the pace of the energy transition. I worry as a global citizen that the pace is too fast, and we are going to be creating bad outcomes for the poorest of the poor because we are replacing cheap energy with more expensive energy.
With respect to my business, it depends on what happens in the U.S. with respect to regulation. Our environmental policy debates are not nuanced and thoughtful but reactionary.
We have bad actors in the corporate world, and we have activists who do not understand the role of energy in their lives and we need it all. We need to be safer and cleaner, but we can’t roll back the clock.
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