In the 1990s, US energy giant Enron developed a huge gas and power infrastructure project on Teesside capable of processing up to 10% of the UK’s gas and generating 4% of the nation’s electricity capacity.
Run by Enron Power Operations Limited (EPOL) the development represented a total investment of over $1bn and, at the time, was the largest construction project in the UK.
But at the turn of the Millennium Enron’s global empire began to unravel as a litany of criminal accountancy practices were uncovered, leading to jail sentences for some of its directors and the collapse of Arthur Andersen accountants.
In 2001, Enron imploded and current px directors Ian Clifford and David Henderson were part of the Teesside management team that took over the EPOL operations.
Henderson, director of business development, explained: “There was significant value in the outstanding energy contracts and we were asked by the administrators to continue to run the business.
“We were operating the facilities and contracts worth hundreds of millions but the local milkman and petrol station had cancelled our accounts and we had to pay cash! Those were horrific times.”
Later that year px was born as Clifford, along with fellow senior managers Tim Underdown, Peter Hutchinson, Steve Roy and Martin Green, attracted enough financial backing to take over operations and form a new company.
The EPOL assets they inherited were the Teesside Gas Processing Plant (TGPP) north of the Tees at Seal Sands and the Teesside Power Plant (TPP), south of the Tees at Wilton, Redcar.
In 2006 German financiers Deutsche Bank took a 49% equity stake in px which supported the company’s plans to develop a new 1020MW combined heat and power gas power station at Seal Sands, called Thor.
Clifford explained: “In 2008, we were looking for investment to take the project forward and we had a meeting with Lehman Brothers, but they didn’t turn up.
“Later in the day we turned on the TV and found out why!”
The global financial meltdown that resulted from Lehman’s collapse and the ensuing credit crunch is still being felt in the market today.
Px is currently working on a number of programmes in the renewable energy sector, particularly with biomass and energy from waste.
These developments are worth a combined total over £1bn but the uncertainty in the UK energy market, due to the slow progress of the Energy Bill and the way the sector has become a political football, are sapping confidence from the market at this time, say Clifford and Henderson.
Henderson said: “The world started to change after Lehman’s and the banks stopped lending.
“This was when we looked at broadening our business base and purchased an engineering company to open up a new market opportunity. We see great potential overseas and this has driven our office openings in the Middle East.
“However, back in the UK the political uncertainties in the market mean the appetite for investment has worsened over the last 12 months.”
While operating and maintaining the TGPP is still a cornerstone of the px business, the directors have been able to utilise their skills to create a diversified business with interests in a number of areas.
Their primary business, the one which employs almost 200 of their 350 staff, is to operate and maintain high-value power generation and transmission assets, including the plant which provides the energy to Sellafield nuclear reprocessing facility in Cumbria.
The directors have also developed an engineering consultancy division, an overseas operation based in the Middle East, and grown an energy trading division which helps businesses reduce their energy costs.
As well as the TGPP, px now operates and maintains power plants for a number of clients in Cumbria, London, Teesside and Humberside as well as large fuel terminals in Manchester and Cardiff.
With such high value and high profile assets under management px is a business which has, and continues to work in partnership with some of the world’s leading utilities and financiers.
As the Thor scheme demonstrates px is happy to support utilities and power generation companies develop programmes from the start of their life through the consultancy division, as well as contracting to undertake the operations and maintenance.
In the last few years it has been working in partnership with German energy company RWE on the Breagh gas field development in the southern North Sea.
The Breagh field is one of the North Sea’s largest gas discoveries in recent years and the project has involved the construction of a new pipeline to bring gas ashore at Coatham Sands, Redcar.
From here it has been piped via a new onshore pipeline to the TGPP for processing.
Sales quality gas is then exported to either the National Transmission System or local industrial users, with natural gas liquids that are removed as part of the processing being delivered to local Teesside businesses.
The first gas from this new unmanned gas platform started to arrive at the TGPP in October.
Chief executive officer Clifford said: “The resurgence of activity in the North Sea, brought about by the high oil price, is driving growth. Aberdeen is booming and this is helping the North East businesses like ourselves.”
The company is now assessing a number of multi-million pound investment projects to increase its gas processing capabilities even further.
Px’s track record and potential to date continues to attract interest and in August it announced a new equity investor.
Christopher Picotte, an experienced energy finance and private equity professional, purchased a 25% equity stake in the business and was appointed the non-executive chairman.
Picotte joins at a time when px is making strong headway which has resulted in revenues doubling in the space of two years.
In the year to March 2012, px saw sales increase by 44% to £63.21m, with pre-tax profits of £1.78m, and sales for the year up to March 2013 came in at £83m.
Its achievements over the last few years were recognised in September when it was named as the fastest-growing large firm in the North East in The Journal Ward Hadaway Fastest 50.
Clifford said: “We have seen substantial growth in our operations and maintenance division and revenues have been helped with the Breagh development project.
“Our new investor has excellent contacts across the globe and will help our drive into new areas. We are looking for further acquisitions and mergers, especially in new geographies.”
One market of particular interest to px is Germany, due in part to the maturity of the power sector in the country and the explosion of renewable energy projects.
Clifford: “The German market is very similar to ours, while it is further down the path of decarbonising its electricity supplies there are some great opportunities for businesses like ours to take advantage of these changes.”