IBM Moves Pipeline Operation to the Cloud
IBM will supply cloud and other IT services to a new gas pipeline company spun off earlier this month from a large energy infrastructure supplier.
IBM said Thursday (July 9) its five-year IT services deal with Columbia Pipeline Group Inc. is worth $180 million. Along with cloud services, IBM said it would provide the gas pipeline company with analytics, security and mobile infrastructure services.
NiSource Inc., a Midwest-based natural gas and electricity provider, completed its spinoff of Columbia Pipeline on July 1. IBM previously supplied IT services to NiSource.
The agreement calls for IBM to move Columbia Pipeline's IT infrastructure and business applications such as human resources, pipeline operations and IT management from NiSource's datacenter into a private cloud. That cloud infrastructure is hosted from an IBM datacenter in Columbus, Ohio.
IBM also said it would oversee the separation of Columbia Pipeline's networks from NiSource. Along with shifting the pipeline company's business operations to the cloud, IBM said it would provide network services, "intelligent security platforms," mobile device management and operational analytics.
Columbia Pipeline's said its enterprise technology strategy includes deploying IBM's QRadar Security Intelligence Platform designed to integrate security data and event and log management along with anomaly detection, incident forensics. The security platform also integrates configuration and vulnerability management tools designed to boost network threat detection capabilities.
Columbia Pipeline operates critical infrastructure stretching from the Gulf of Mexico to New York State. That energy infrastructure includes about 15,000 miles of strategically located interstate pipeline along with gathering and processing assets in the eastern U.S. It also operates one the nation's largest underground natural gas storage systems.
The energy company also has extensive operations in the Marcellus and Utica Shale natural gas production areas of Ohio, Pennsylvania and New York. According to recent estimates by market tracker IHS Energy, the Marcellus Shale region alone—including operations in Ohio, Pennsylvania and West Virginia—is expected to see as many as 17 new pipeline projects over the next three years. That new pipeline infrastructure is expected to ship an estimated 17.3 billion cubic feet of natural gas per day.
The boom in energy production from shale deposits has led to exponential growth in pipeline operations, prompting large energy companies like NiSource to spinoff off their gas pipeline units. Columbia Pipeline's shift to a private cloud infrastructure to manage and secure its pipeline operations could signal a significant new revenue stream for cloud providers like IBM.
In announcing the cloud deal with IBM, Columbia Pipeline said it is rapidly expanding its operations to target new customers and markets. Net asset investments are expected to grow from about $4.6 billion in 2015 to about $13.5 billion by 2020, the pipeline company projects.