As consumers, we rarely give much thought to the
enormous infrastructure
costs behind the comforts
of modern society. That is certainly true as we
into our local gas station or fill up our barbeque
propane tank.

Rarely, if ever, do we even think about the tens of thousands of miles of transmission and distribution pipelines, pump stations, refineries, tank farms, loading docks, truck terminals, and storage tanks required to deliver these products. But dealing with that staggering level of infrastructure is the day-to-day challenge of the IR professionals in the oil and gas industry.

The surplus assets of the oil and gas industry have several issues unique to their industry. For starters, think in terms of pipe – LOTS of it! Imagine the logistics and sheer mass involved in the removal of 85 miles of 10” line pipe that one of our members calls his “most interesting” IR project: tens of thousands of pounds of bulky material, generally buried six feet deep, stretching through dozens of municipalities, and requiring extensive processing to remove the anti-corrosion coating so that the intrinsic value of the metal can be recouped. No small challenge!

Big Projects. Big Regulation.
Pipeline projects are not the only large-scale surplus with which this industry has to deal. The refining plants are enormous complexes, covering many acres. The occasional dismantling project brings  out governmental regulatory agencies in droves. Sometimes, oil company surplus at processing facilities is sold “as is, where is,” requiring the buyer to deal with the challenges of moving the equipment. Nonetheless, the ultimate responsibility for a successful completion of these complex projects remains with the investment recovery professionals within the selling company.

Environmental Stewardship.
Oil companies, often an easy target for the media, are actually at the forefront of efforts to reduce their environmental impact, while still working to meet the growing demand for energy. These efforts include decades of investment in renewable fuels, such as corn-based ethanol, and explorations
of new opportunities in next-generation biofuels. An especially active investment recovery program by the many oil-and-gas industry members of the Association is a significantly added effort to corporate sustainability.

A good example of this corporate responsibility is member company Valero, whose investment recovery efforts are led by Bob Wheeler, strategic sourcing manager. The company is working to develop new and innovative ways of processing spent catalyst (used in LPG refining), thus keeping this material out of landfills while recapturing additional dollars in the process.

Reprinted from ASSET 2.0, the Investment Recovery Business Journal, Vol. 5, 2009

© The Investment Recovery Association



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