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Robert E. Warren, Vice President of Industry and Government Affairs, Pride International, Houston
"We can be knowledgeable with other men’s knowledge, but we cannot be wise with other men’s wisdom.” - Michel de Montaigne
“If you don’t know where you’re going, you’ll end up someplace else.” - Yogi Berra
That just about sums up the challenge we face as an industry and as a nation. Wise indeed. During a season when most energy-related companies were performing well for their clients and creating value for their stakeholders - while providing fuel for society - energy became a hot political topic. The public (and many politicians) expressed harsh words for anything attached to fossil fuel, as evidenced by network news at the pump and critical speeches on the campaign trail. It confirms again that the energy industry cannot serve its investors, clients, employees and society, and be appreciated by much of the public at the same time. No change there.
With news that the drilling moratoria for the Outer Continental Shelf - in place for some 26 years - had been deleted from the recent budget bill, light began to shine through the clouds of US offshore energy policy. We checked the NOAA charts along both coasts to see which floater class fit the water depths should the areas actually produce future drilling opportunities. With the price of gas over $4 at the pump, consumers demanded that Congress take the necessary action to cancel the moratoria, environmental objections notwithstanding, and a major step was accomplished on behalf the nation’s energy needs. Will this special exploration opportunity be squandered on the altar of political interests, or will rational voices prevail?
“Change.” This became the dominant theme during the political campaign, when what is really needed is visionary, cooperative leadership throughout business and government. Pummeling the energy industry in the court of public opinion may have been an effective vote generator, but it does not bode well for enlightened energy policy and much-needed progress on US production. Then, the economic downturn and significant drop in commodity prices and prices at the pump diverted public focus from the long-term oil and gas shortfall. Drilling the OCS now does not seem as urgent in the public’s view as developing alternative fuels and renewables.
But here’s an analogy: Imagine waiting until the population overwhelms the transportation infrastructure before building a railway system and expanding the roadways. If consensus is that alternatives and renewables will not make a major dent in this nation’s long-term energy requirements, and if we believe that depletion will continue to reduce supply until the longer-term price at the pump may rise again to $4-$5 (or more) per gallon, wouldn’t the wise decision be to commence the orderly, long-term development of the new OCS areas? The American people deserve a clearer picture of the strategic exposure to our nation with and without the OCS drilling effort. It looks daunting.
Industry-wide PR effort. The slope of the journey ahead has steepened with the election results and the “change” agenda of the new administration and congressional leadership. We should act in warp speed with a combined industry voice to educate politicians, policy makers, educators and interested citizens (especially students) about the complex journey of hydrocarbons from the reservoir to the pump. We ought not to allow an economic catastrophe, followed by a national political transition, to diminish the progress that has been made in this area. Leaders in the upstream sector should seriously consider increasing support of the education process through additional funding, along with greater participation and general activism with our trade associations including API, NOIA, IPAA, SPE, IADC, AADE, OEC and OOC. Great effort has been made by these industry groups; as never before, increased support from our respective companies is needed to continue the work.
Essential industry leadership. By all accounts, our road to 2009, and the future beyond, takes us through the valley of uncertainty where we may encounter new tax regimes, as well as regulatory, environmental and other issues that challenge us to develop wise positions. On an industry level, the evolving economic developments may well impact some nearer-term E&P projects and associated equipment construction. Almost certainly, speculative offshore rig construction will come to a halt as credit dries up for payments due. Land rig construction is also approaching a downturn in output.
The drillers and service companies able to execute with superior competence will be those that continue to excel for their stakeholders. Those that haven’t managed their debt and invested in their people will fail or be consumed. Our clients expect our people and our equipment to provide cost-effective solutions to address ever more complex problems, often before the issue has arisen.
Directional and extended-reach wells are achieving new records deemed impossible a few years ago. Our clients expect that effort to continue and increase. Same with HPHT and smart wells: Operators require that contractors and service companies continue raising the bar on performance and efficiency. In short, our mission is to increase their return on spending for our services in an ever safer workplace, and with greater environmental stewardship.
At our company, we do this through leadership and planning. It’s about designing and building the equipment required for the most extreme projects; e.g., we’re building four 12,000-ft world-class drillships with a world-class engineering and technical services organization. It’s about recruiting and developing young people for the most exciting and demanding career imaginable; we have a substantial training program, with major emphasis on competence, in place preparing for the next generation of deepwater operations. It’s about treating people like our most valuable asset; we’ve provided over $300,000 to nearly 200 employees who suffered loss from hurricanes Ike and Gustav. Our people are an essential constituent in our stakeholder group.
It’s about leadership at the top. It’s about the strict application of ethics and transparency. It’s about how we provide our service and treat our people, not about how much is in it for me. Character in this business counts - and wisdom in leadership - now more than ever.
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THE AUTHOR
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Robert E. Warren is Vice President of Industry and Government Affairs for Pride International, Inc. Now in his 19th year with Pride, he has previously served as Vice President of Russia Operations, Vice President of Marketing and Communications, and Vice President of Investor Relations. Mr. Warren has managed drilling operations in Iran, Libya, the UAE, Pakistan and Russia. He holds a BS degree in petroleum engineering from Texas Tech University and an MBA degree from the McCombs School of Business at the University of Texas.
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