Mike Callan’s office at Arkansas Oklahoma Gas Corp. was almost empty the Thursday before the Labor Day weekend. There were hooks on the walls where pictures once hung. On his desk was a box of shotgun shells and Rice Krispie treats in a Ziploc bag.
It was his last day as an AOG employee.
“I hope not,” Callan replied, laughing in acknowledgment of the odd pairing on his desk when asked if the items are part of his severance package.
The departure of Callan, 56, from the top post at the Fort Smith-based regional natural gas utility providing service to almost 60,000 customers may have been a surprise to those outside the company. But for a highly regulated company forced to predict and balance a myriad of factors – weather, customer usage, market price shifts, etc. – that often defy balance and prediction, internal surprises are few and far between.
It has been known for several months within AOG’s 210 employees that Callan would depart and Kim Linam would become the next president. Linam, a certified public accountant and a 10-year veteran with the company, will be the first female to lead the organization and the first non-attorney at the top post since 1978. She will also be the sixth president to lead the company in this corporate structure.
“Kim is going to be a natural fit for this. … She has a tremendous grasp of the industry,” Callan said.
Later in the interview, Callan dismissed the issue of gender.
“People don’t get hired or promoted around here because they are male or female. They get that based on whether they can do the job. … She can do the job,” Callan said.
MORE THAN A STEPPING STONE
In the mid-1980s, Callan wasn’t sure AOG was the job for him. He was hired as an intern while attending law school, and in September 1985 joined the AOG staff as a landman.
“I thought this would just be a good career stepping stone,” Callan said.
It wasn’t. It was a career. He credits that to Emon Mahony Jr., the president of AOG from 1978 to 1998.
“Emon was the single biggest influence on my professional career. … I’ve been here just short of 30 years, and that would not have happened without that (mentoring and support from Mahony),” Callan said.
Callan would become general counsel for the company in the early 1990s, and then succeed Mike Carter as company president in March 2008. Callan’s rise through the leadership ranks at AOG would correspond with a significant industry shift that would see AOG be forced to depend less on natural gas from the surrounding Arkoma Basin and more on natural gas purchased from the broader commodity market. That gas was much more expensive, and the supply was not as certain. It was a troubling recipe that could have resulted in higher prices for customers in the Fort Smith area and the possibility of outages.
But fracking and other technology generated a boom in the domestic natural gas industry that would result in the Fayetteville Shale Play, a reduction in natural gas prices and proven natural gas reserves that some estimates say could provide at least 100 years of the clean-burning fossil fuel for the U.S. market.
THE CNG VEHICLE PUSH
The abundance of natural gas resolved a supply and price problem for AOG, and gave Callan the platform to push for what would become a growing effort in Arkansas and nationwide to convert vehicles to use compressed natural gas (CNG) for fuel. AOG would open Arkansas’ first public CNG fuel station in early 2011. By the end of 2011, the company sold around 3,000 gasoline-gallon equivalents (GGE) of CNG. That would grow to more than 10,000 GGE by the end of July 2014. AOG would open its second public CNG station in August 2014, and Arkansas is likely to have at least 11 public CNG stations by the end of the year.
AOG also expanded its fleet usage of CNG during Callan’s tenure as president.
“We really picked it up in recent years and made it a mainstay in our operation,” Callan said of the use and promotion of CNG.
In an Aug. 7 interview, Callan said moving to more CNG vehicles was an easy decision from a budget standpoint.
“Most of our vehicles, we're looking at at an amortization of less than three years. We're able to pay for the conversion and then everything after that is pure operations cost savings," he said.
Another aspect of Callan’s tenure is the continued effort to incorporate technology into the system. Technology improvements are ongoing, but AOG has the ability to see most of the system in “real time” and is able to read in “real time” about 10,000 home and business meters among the company’s 58,000 customers. Eventually, all meters will be monitored in real time.
The company is also able to track work trucks, which allows for efficient response to planned and unplanned maintenance issues and other field work needs.
“It gives you much better control of the system and allows you to operate a much safer system,” Callan said of technology upgrades. “And you’re not sending a truck all the way across town when you have a crew just across the street.”
Callan and Linam credited AOG employees and the University of Arkansas at Fort Smith for helping the company adapt to technology ahead of larger utility companies with more resources. AOG has a program that pays full or partial tuition to employees pursuing higher education.
“We’ve gotten a lot of talent out of UAFS,” Callan said, adding that a more educated employee “is also a benefit for our customers because they are better able to serve the customer.”
Linam said the “aggressive” use of technology began when Mahony sought ways to “improve internal controls.”
“As a small utility, I would say we are ahead (of other utilities) with technology. … You can do that when you have talented people who know the right thing to do to best utilize the system within the resources we have,” Linam explained.
The technology feeds Linam’s number-crunching background. It’s one of several reasons she was promoted, Callan said.
“I’m a data geek. We can put our hands on so much data that we didn’t have just five years ago,” Linam said.
The small size of the company may have helped it move quickly with technology.
“We don’t spend a lot of time flailing around in paperwork or with a bureaucracy. … If we’ve got an issue in the morning, we will often have you an answer by the end of the day,” Callan said.
Linam professes to be a “behind the scenes person,” with the public and AOG customers and employees seeing only an “easy transition” of leadership and “natural progression” of service. But in adjusting herself higher in the chair and folding her arms against her body, she noted: “I’m not a shrinking flower. I will stand up for what I think is right for AOG and our customers.”
She follows presidents who were active at state and local levels. Mahony was chairman of the Fort Smith Chamber of Commerce and as head of a city task force was, arguably, the single biggest force behind the expansion of Lake Fort Smith.
The lake expansion, completed in late 2006, increased water storage from about 8.4 billion gallons to almost 28 billion gallons. It is estimated to provide water for the entire Fort Smith region beyond 2060.
Callan has served as board chairman for the Fort Smith chamber and the Arkansas State Chamber of Commerce. He’s also been recognized as a leader in pushing private and public expansion of CNG use.
Linam wants AOG to continue to be a “champion” in the CNG push, and lobby at the state and local levels for job creation policies.
“Economic development is always important to AOG,” Linam said.
Her top priority, she said, is to monitor and grow the company’s “progressive path.”
“I’m just fortunate to be able to build upon the foundation that is already here,” Linam said.
Every job has its frustrations. Callan said his top frustration will also be one Linam will face – especially with increased government involvement in the energy sector.
“I think that (top frustration) has been over the years a lack of understanding of the business among the regulators. That’s not just Arkansas, but you see it across the country. … Regulation is not the problem. It’s not being regulated that is frustrating, it’s that lack of understanding among those doing it (regulating),” Callan said.