Architecturally aesthetic, the new building emits a modern yet industrial vibe. CONSOL TV, a company-wide high definition network of 200 screens, broadcasts company news and safety messages on LCD panels placed in strategic, high-traffic locations. It does seem like the kind of place where financiers and investors could meet with engineers and executives to chart the future course of the coal and natural gas industries.
Wearing a suit, DeIuliis greets us with a smile. “Coal Age is celebrating 100 years?” he asked. “Welcome to the 100-year club. We’re quickly approaching 150 years.”
DeIuliis has been the president of CONSOL Energy since February 2011; prior to this role, he was chief operating officer of CONSOL Energy and was instrumental in building CONSOL Energy’s gas division. He started his 23-year career with CONSOL Energy in the company’s research department as a chemical engineer upon graduation from Penn State. After eight years of working with customers, he had visited countless coal-fired power plants east of the Mississippi River. He then moved to the strategic planning department and at the same time earned an MBA and a law degree from Duquesne University.
According to DeIuliis, three areas—the value system, applied technology development, and a long-term horizon—set CONSOL Energy apart from other coal operators. “Our value system is consistent with our day-to-day decision making process,” DeIuliis said. “If you put production ahead of safety, it’s a career killer. It’s something that we have made taboo by continually talking about our core values and backing it up with decision making.”
Citing the recent conveyor collapse as an example, DeIuliis explains that the first decision was to stop everything. “We needed to perform a risk assessment before we put anyone in harm’s way,” DeIuliis said. “The flagship operation for the company is down. If it takes three weeks to bring it back online safely vs. cutting corners to bring it back online in one week, we take the three week route. If any vendors or contractors suggest any other route, a CONSOL Energy team member will steer them in the right direction.”
DeIuliis believes the most important value is continuous improvement. “You have to have your values straight as far as safety and compliance certainly, yet we are in a commodity business so production and costs matter,” DeIuliis said. “Continuous improvement in my mind is the bridge between those two areas. With a continuous improvement mind set, if we embrace that Absolute Zero culture, then not only are we going to improve safety by adapting new technologies, such as proximity detection, production and unit cost performance will improve too.
“We have been operating under the Absolute Zero program for five years now,” DeIuliis said. “It’s gotten us to a new level of performance. Getting people to accept that exceptions are not inevitable within this industry has a big cultural impact. To get to the next level—Absolute Zero across the company—technology is going to be the driver. Continuous improvement, especially the use of new technology and training, will be the bridge needed to push out top two values.”
“Many leaders in CONSOL Energy look at the company today and its expectations as far as safety and compliance, and think about where they were in the past, and they will say there is a night and day difference between then and now,” DeIuliis said. “We hear it a lot, but then one has to wonder what it will look like for the next generation.”
The namesake for the Bailey mine, Conoco Chairman Ralph Bailey said some similar things when he broke ground on the mine in 1984. He was an executive from a prior generation that had the foresight to build the Bailey Complex, DeIuliis explained. “Similar to CONSOL Energy CEO Brett Harvey today, he had a vision for a future generation,” DeIuliis said. “Once they define the goal, they have the ability to enable and facilitate at team to realize that potential. Mr. Bailey’s expectations were consistent with what we are seeing today. As great as the company is performing today, Mr. Harvey has expectations for the future that are substantially different and better than what we are doing today. We will achieve that sooner rather than later with the team and tools we have in place now.”
CONSOL Energy is one of the better-performing, publicly-traded mining companies and DeIuliis also has to convey this message to Wall Street investors. The company takes a very long-term view and short-term investors tend to question major capital investments. “We could reduce capital expenses and get better cash flow metrics from operating assets. That approach would work for a while, but we didn’t build a 150-year-old company by worrying about the quarter or the week,” DeIuliis said. “We are reaping rewards today of investments made decades ago.” A 30- to 40-year vision is an exception for a publicly traded company.
There is constant discussion between shareholders as far as long-term accretive, profitable investments vs. the short-term impacts of the investment, DeIuliis explained. “Other shareholders, call them value investors or buy-and-hold investors, are more in tune with those investment decisions,” DeIuliis said. “Whenever a company discusses a major investment decision, it’s challenging to keep investors focused on why the short-term investment drives long-term value. There was a similar learning curve with the value system.”
Investors are beginning to understand the importance of safety. Many coal investors have learned the hard way recently what happens when priorities are placed above values.
Savvy coal investors now look for the mining companies with the best safety performance.
“When we meet with shareholders and discuss our core value system and why that correlates to the best performing entities from a financial perspective, they get it,” DeIuliis said. “If you look at any industry where there is a possibility of people getting injured, the best in class in those industries are the safest and most compliant companies. That’s true for manufacturing, steel, power plants, chemicals, coal mining, and natural gas exploration and production.”
What worries DeIuliis the most is society’s disconnect between the reality of what the coal industry brings to the table for society and the politically correct view of the industry. “The degree of the disconnect is amazing,” DeIuliis said. “Are we perfect as an industry? Certainly not. Have we made mistakes in the past? We have. Are our best days with safety, compliance and continuous improvement in front of us as an industry? They are.
“To see this industry attacked and maligned to the extent it has is very disturbing on a personal and professional level,” DeIuliis said. “Middle America gets it, but the people living on the coasts do not. A lot of people live in New York, Washington and Los Angeles, which are all powered by coal and other fossil fuels, and they have been misled about energy.
“This is a noble industry and what we do matters,” DeIuliis said. “If we do not accomplish what we need to get done, regional economies, this country and the global economy will suffer greatly. We provide a standard of living for the developed world that is second to none—the best it’s ever been in the history of human existence. For the developing world, we hold the key to getting the 3 billion people who need access to the reliable, inexpensive electricity they need to improve their quality of life.”