The words of Jean-Baptiste Alphonse Karr, “plus ça change, plus c’est la même,” or in the approximate English translation, “the more things change, the more they stay the same,” resonate for me, especially today. Our industry, particularly in North America, has gone through a great resurgence with the growth in unconventional reservoir production.
On a global basis, sustained oil prices in excess of $85/bbl (WTI spot price, FOB, Cushing, Okla.), for nearly three years, have also helped bring the industry prosperity. However, we are now hearing rumblings of retrenchment, belt-tightening, and, even, lay-offs. As Yogi Berra put it, “It’s like déjà vu, all over again.” Admittedly, this is on the heels of more than a month of decreasing oil prices, with the current WTI benchmark well below $80/bbl. (Editor’s note: Another quotation from the great Yankee Hall-of-Famer, Mr. Berra, seems equally appropriate to this discussion—“If you don’t know where you are going, you might wind up someplace else.”)
In recent years, things have changed, with differences at the very core of our industry. Majors “de-integrating,” more rigs drilling horizontal wells than any other type, and completions costing more than drilling operations are just a few of the bigger changes. Yet, one key factor remains a constant. The boom-bust specter hovers, ready to spread the blanket of uncertainty. Things have changed, but they are the same. It seems, inevitably, that reductions in the cost of supply, in a competitive commodity-based business, result in a lower sales price that, in turn, leads to reduced profits. However, downturns can also lead to opportunities. It’s really all in your perspective.
This price rollercoaster is not new to anyone who has been in the oil patch for more than a decade or two. In contrast, for those with five years of experience or less, this will be, at a minimum, unnerving for some and enough to drive others out of the industry, as steadily expanding budgets and continuous growth are replaced by more measured actions. But what we, as individuals, should recognize is that today’s apparent downturn really represents great opportunity for those committed to long-term careers. The last big price retreat that ended with 2008 had the consequence of delaying the long-anticipated, big crew change. The subsequent expansion, coupled with six more years of intense, rewarding work, means that many of the more experienced folks will now be ready to leave the industry.
This groundswell of retirements is the delayed, natural result following the purges of experienced personnel during the mid-1980s to the mid-1990s, as the industry faced weak markets. Those who began their careers before then, and survived the reductions, were pushed into management and other strategic positions, sometimes with minimal experience. This trial-by-fire prepared them well for the unsettled times that followed. This old guard will reap the final rewards of their extended, often chaotic careers; opening the door for the next generation to learn quickly and grow into leadership positions.
There is little doubt that prices will recover, and more booms will follow. A key factor in future success will be for the new leaders to seize opportunities as they arise. My message is to prepare yourselves—now! Get more hands-on field experience, take that transfer to the new business unit, or deepen your skills base with a special project; do something to increase your value to your company. If your company doesn’t reward you, another will. Above all else, focus on getting the job done right. That means safely, with respect for people and the environment. The industry must perform at the highest level. The group retiring from the business will leave behind important lessons learned that need not be re-learned. Otherwise, problematic repetition of old issues will distract from managing real progress. The new leaders will need to develop the insight and focus to assess the new systems and processes, to prevent new problems. Performance must meet stakeholders’ expectations without fail.
The market can certainly make things relatively easy for the industry at times, but price volatility will always be present. One measure that would help, would be for the U.S. government to allow exports of surplus, light crude oil. Beyond being a significant stabilizing force in the market, this could help preserve the economic stimulation and job creation driven by the U.S. energy renaissance. It also would generate greater revenue for government, improve the U.S. trade balance and enhance our country’s geopolitical strength. Anachronistic regulation that only serves to hinder production expansion is not good policy.
With swings and surges not new to the oil industry, dealing with uncertainty and volatility has always been part of the business. There is much we can do. As an industry, we can turn to innovation and technology, to achieve continued improvements in efficacy and efficiency, enhancing our competitiveness and ability to prosper despite the downturn. Individuals must also be alert to emerging personal opportunities. The trick is to recognize the opportunity, and be bold enough to take full advantage. 
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