Listening Loudly to Our Members and Our Industry
Helge Hove Haldorsen, 2015 SPE President
SPE is unique by design. It is global, it is not-for-profit, it exists for the benefit of its large and diverse membership of 143,000 and the technical content of SPE’s programs is developed by its members. Hence, SPE is an organization in which the primary beneficiaries—the workers and the customers are the same people—the members! SPE’s mission and vision (see boxes) provide us with a world of opportunity to serve our members and the exploration and production (E&P) industry as a whole. At any time, there are hundreds of new initiatives that SPE could consider in delivering an improved value proposition to our members and the E&P industry we serve.
The SPE Board of Directors, elected as global representatives of the members, allocates SPE’s resources across a portfolio of member services in alignment with SPE’s approved strategic plan and the more specific strategic objectives. The Annual Technical Conference and Exhibition (ATCE) in October 2014 in Amsterdam gave us the opportunity to hear from two important groups: senior industry executives and young professionals (YPs). We wanted to hear their ideas, desires, and concerns for improving SPE’s value proposition from their vantage point.
Initiated about 7 years ago, the Industry Advisory Council (IAC) is an international group of senior E&P executives. The IAC meets annually during ATCE. The Amsterdam venue allowed for greater participation by representatives of European companies, along with US and Middle Eastern participants.
The IAC strongly recommends that SPE continues to focus on its core mission. In doing so, SPE provides timely, objective E&P context for its members (e.g., E&P costs are too high, the industry’s competitiveness is being eroded, communities expect more of us, our field forecasts are often too optimistic, and more than 80% of project risks are nontechnical risks). The Society also provides sharing of the latest relevant technology, tools, and the best practices with members quickly to improve health, safety, security, environmental, and social responsibility (HSSE-SR) practices and the industry’s overall value creation.
The IAC also noted that if SPE continues to listen to our industry’s and our members’ needs, the Society’s sharing arenas and conferences will be preferred by the E&P industry because of its spot-on relevance. The IAC would further like to see more focus on the importance of the integration of disciplines and field development teamwork through sessions with more case study focus. I say: Let us make 2015 the year of massive cross-discipline collaboration. E&P value creation is a jigsaw puzzle with many pieces to offer. The role of the project “integrator” is to orchestrate ways of getting great pieces (ideas) from all disciplines such that we end up with the best looking field development picture we can in terms of value creation and forecasts (of schedule, cost, production, reserves, and similar) actually resembling actuals. The industry needs better integrators or people with a good understanding and links to all parts of the business, thus making them understand the totality of the challenge and opportunity. SPE’s recent Leadership Academy is an early response to this need. Further, if a person’s competence profile is a T and the stem of the T is a member’s core professional or discipline competence, the IAC would like to see SPE increasingly help members develop the bar of the T, which represents the various key nontechnical skills in the E&P industry, such as HSSE-SR, project management, teamwork, decision analysis and great communication skills.
The IAC appreciates the Society’s continued focus on quality in everything we do and pointed out that growth does not always have to be our goal.
One particular area in which the IAC would like to see SPE’s role grow is public awareness: communicating facts about our industry to the public. While all agree that SPE should not be a lobbying organization, there are valuable things that SPE can do. As regulation and government action are driven by public opinion, the IAC suggested that a top priority for SPE’s 143,000 members, wherever they live, is to become E&P ambassadors. The Society should provide its membership with clear, simple, factual, and science-based messages to share with the public along the lines of: This is how we help supply energy to 7.2 billion people every day in a sustainable manner. We are a key part of the solution, not the problem, and we are very proud of our achievements. As the world’s population grows to 9 billion by 2040, “all of the above” energy sources will be needed to supply the world with the energy required (including the 1.3 billion people today without electricity) in a sustainable and affordable manner.
The final IAC recommendation was for SPE to really prioritize YPs as they are the future of the industry. Later, during ATCE week in Amsterdam, we did just that.
Expanding our work on public awareness was part of SPE’s Strategic Plan (http://www.spe.org/about/strategicplan.php). We already have launched a hydraulic fracturing website with nontechnical information (http://www.energy4me.org/hydraulicfracturing/), introduced a “Beyond the Headlines” column in JPT, and are working on developing additional materials to equip our members to help us in educating the public.
On 30 October, following ATCE, a small group of Board and staff members had the opportunity to meet with a very different constituency: a group of 22 YPs from around the globe. Recognizing that most of our Board members have been in the industry for 20 years or more, we wanted to get the views of YPs on what they would like to see in SPE 2.0: The SPE of the Future.
We structured the day’s activities as an innovation event, gathering ideas around things that SPE can or should do to address future trends and respond to the needs of our next generation energy professionals. During the first portion of the day, the participants quickly generated nearly 300 individual ideas for new SPE programs and services, and changes to existing ones. Next, the participants looked for common themes among the ideas and began focusing on the most valuable changes that SPE could make from the viewpoint of YPs.
The group selected five areas it fleshed out in greater detail. They are:
- Personalization (SPE4Me). YPs want a much more personalized experience on the SPE website and in communications that are tailored to their specific interests and giving them a greater control over the process.
- Volunteerism. By better articulating volunteer opportunities and recognizing those who do, SPE will grow and be enhanced and gain company support for members who want to volunteer. There was a clear sentiment that SPE can better explain and convey the amazing value proposition inherent in an SPE membership, especially in the direction of potential SPE members with nonpetroleum engineering background in the geosciences, financial analysis, risk analysis, project management, and HSSE-SR areas. In the process, SPE could be creating a bigger “tent” and create more cross-discipline collaboration as stressed by the IAC.
- Member Engagement and Loyalty. Concepts around engaging our members throughout their career journey from student through retirement and beyond.
- Skill Development. To help YPs develop their skills, SPE should offer nontechnical skill courses and technical training. Competency management and assessment (such as the new system launched at ATCE) is a valuable resource to help YPs take charge of their own career.
- Gender and Diversity. YPs perceive a gap in the treatment of women, particularly those with children, in the industry. The group worked on defining what SPE could do with networking and other approaches to support them.
SPE’s Board committees will be taking the input received during the YP innovation session and determine how we can implement suggestions. In many cases, we can tweak an existing program. For those that require new initiatives, we will need to evaluate how they fit with the other suite of possible programs and services that SPE could provide.
When asked about the challenges facing SPE and the industry in the next 5 to 10 years, YPs were a bit more attuned to social media and the possibilities that new technology and increased connectivity offers (leading to new business models for old businesses such as Uber and airbnb) than Board members and the IAC might be. Generally, however, their major concerns mirror those of others in the industry, such as:
- Oil price instability
- Rising development costs and the high break-even of new barrels
- Sufficiently rapid dissemination of tools, technology, experience, and best practice
- The competitiveness of oil and gas vs. other energy sources
- Generational shifts (“the big crew change”)
- Regulations on carbon emissions
- Maintaining quality and avoiding SPE “mission creep” (SPE cannot be everything to everyone)
- Operating safely, responsibly, and sustainably
- The public’s view of the industry and maintaining the public’s trust through strong, local stakeholder engagemen
SPE’s Board welcomes the input of the membership as we fulfill our obligations to determine how SPE should constantly renew and adapt to “stay fit” in the view of its members and the industry by allocating its available resources to programs and services that will benefit them. We will systematically be reviewing our portfolio of offerings with a critical eye to member “bang for the buck” while listening loudly for your input. When the famous Canadian hockey player Wayne Gretzky was asked why he was so good he said, “Because I go to where the puck is going to be before it goes there.” Henry Ford said, “If I asked people what they wanted, they would have said a faster horse.” While SPE is coming up with incrementally “faster horses,” we also need to look for cars that can radically improve the SPE value proposition for our members utilizing the e-latest and e-greatest to better and more quickly and more precisely inform, communicate, innovate, form arenas, networks and special interest groups.
As I write this column in January 2015, I believe we may have a new “normal” both short and long term in the E&P industry. Brent and West Texas Intermediate oil prices are now at or below USD 50/bbl (more than 50% less than the June 2014 price) and most analysts forecast that the oil oversupply situation (currently around 1.8–2 million BOEPD) could last for quite a while and that oil prices as a consequence could stay lowish most of 2015 and into 2016 as cutbacks and drilling and natural decline reduce supply. Further barring geopolitical mega events affecting oil supply, they do not see us returning to a USD 100–125/bbl oil price band anytime soon. This outlook spells a need for serious adaptation, creative deconstruction and cost reductions across the board for a margin business like E&P. Activist investors say that E&P should stop thinking they are so special—you should think of yourself as safely “manufacturing” oil and gas in a low-cost manner, learning supply chain from other manufacturing businesses. They also suggest we X-ray our companies for bad or nice to have costs (in departments we do not really need) and become more competitive by cutting. CERA Week 2014 concluded that “100 is the new 20” and now analysts see us having to make a satisfactory return for investors with only USD 75–80/bbl being the new 20. Remember though, that the best cure for a low oil price is a low oil price—so we are already taking the medicine. While I certainly cannot and will not predict what oil prices will be as you read this in February 2015, I do believe it is important to discuss how SPE is addressing the low oil price situation. We will be listening loudly for your input.
Last August, when prices were still above USD 100/bbl, SPE’s staff leadership team undertook a planning exercise on how to respond should oil prices fall to USD 65/bbl. At the time, no one knew how imminent such a situation might be. As the staff team considered how lower oil prices would affect SPE’s business (e.g., reduced number of exhibits, fewer sponsorships, less advertising, and reduced meeting attendance), it also proposed principles to guide SPE’s reaction to a short-term (1- to 2-year) price drop:
- We are here to serve the industry and our members, whether the industry is doing well or not.
- We are more concerned about helping our members than preserving revenue or profit.
- We will explore growth opportunities that may be presented by a downturn (such as purchasing an event from a commercial provider).
- We will position ourselves for the recovery by taking a long-term view, while also preparing in case the downturn is prolonged.
SPE has healthy financial reserves that allow us to take a long-term view. SPE staff and the SPE Board will be scrutinizing and prioritizing SPE’s budget for its fiscal year 2016 (1 April 2015–31 March 2016). We believe that we do not have to take immediate drastic actions beyond showing much more fiscal discipline and restraint. I am pleased to be leading an organization that can establish guiding principles like those above, and I know that SPE will be able to continue delivering value to its members even if oil prices remain low for a while.
In my book, the best response to a downturn is to attend SPE arenas to get fresh innovative ideas for boosting revenues and smartly reducing bad costs rather than building a moat around your company and staying away from all the good ideas you could capture, adapt, and apply at home. Ask: Can we afford not to go (and miss out on all the good ideas) rather than can we afford to go! Just one great idea from an SPE meeting can mean millions on the bottom line of your company when implemented at home. For my part, the key is to continue to listen loudly to our members and the industry we serve, since we are in this together.
To collect, disseminate, and exchange technical knowledge concerning the exploration, development, and production of oil and gas resources, and related technologies for the public benefit; and to provide opportunities for professionals to enhance their technical and professional competence.
Enable the global oil and gas exploration and production industry to share technical knowledge needed to meet the world’s energy needs in a safe and environmentally responsible manner.