To Be Leaders of Integrity, We Must Earn Trust

Source: Railroad Commission of Texas
If our industry doesn’t develop a workable solution for orphan wells, a solution will be imposed on us.

Our reputation is earned. The public has high expectations, and we must strive to deliver perfection in our operations. But of course, we work in an unpredictable and imperfect world. Sustainability and environmental awareness require small development footprints and controlled production streams. 

As engineers, we often try to argue with logic and facts, when emotions and media buzz are what really drive the conversation. Benjamin Franklin said that “it takes many good deeds to build a good reputation, and only one bad one to lose it.” Today’s financial pressures leave little margin for error. All of us pay when anyone in our industry makes a mistake, and we pay forever. How do we preserve our license to operate in a world that distrusts our industry? 

A recent column in the Houston Chronicle, which we would all expect to be energy-friendly, admitted that our industry has “always fulfilled a critical societal need by providing affordable energy that spurs economic development.” But “those benefits have been overshadowed by catastrophic events and a warming planet.” The article was accompanied by photos of oil-covered cleanup workers from the 1989 Exxon Valdez oil spill. 

We can never outrun our past.

I have a special concern about operating in a safe and environmentally responsible manner. When I was president of Chevron’s Environmental Management Company, we dealt with the end of life issues with all aspects of our industry— offshore platforms, pipelines in the Gulf of Mexico, remediated refinery and service station sites, and Superfund sites. Environmental management doesn’t generate revenue, and every quarter I had to go to Chevron’s executive committee and report the charges against Chevron’s financial reserves for environmental cleanup.  

After yet another unhappy report, I remember one of the executive vice presidents leaning over to ask me, “What would it take to stop this?” My reply was simple: Just keep it in the tanks. Without releases, no cleanup. Small footprint operations save money. And in a time when concern about use of fossil fuels is growing in North America and Western ­Europe, our past actions affect our social license to continue to operate.

Any discussion of environmental issues always brings up the question on global climate change, which is a hot political issue in some, but not all, parts of the world. SPE has commissioned a work group to look into what, if any, position SPE should take on this issue. The task force is charged with identifying what it considers to be the key aspects of climate change and public perceptions of climate change that may impact SPE and our ability to deliver our mission and serve our members’ interests. This does not mean taking a position on whether or not climate change is happening; merely that with the level of public discourse it is prudent for SPE to consider how we may be affected by public perceptions. The task force members have been asked to review what, if anything, analogous professional organizations have done in relation to climate change. They also are expected to develop a strategy for SPE’s reaction in response to the key aspects of climate change, which would best serve, protect, and move forward our mission. 

By definition, as the Society of Petroleum Engineers, we are pro-fossil fuels. However, environmental pollution should be minimized from all sources, not just those that are politically unpopular, like us. 

Environmental responsibility means taking responsibility for the entire life cycle of our operations, including the cleanup and repurposing at the end. We can develop our assets sustainably with an eye to the end of life. Sustainable development includes small footprints and full life cycle management of our waste streams. As an industry, we should take responsibility for our impacts. Operators should be held accountable for eventual abandonments.

Plugging and abandoning “orphan” wells is a currently hot issue in mature basins. In the United States, the pattern is often that big operators initially drill and produce a field, then the field or well is sold down the food chain to smaller and smaller operators who have lower operating costs and can give vital engineering attention to the low-volume fields. Often, as a well nears its economic life, it may be sold out to a financially unstable operator, and when economics change, the unstable operators go under. The wells are orphaned, sitting idle and unplugged. I believe that if our industry doesn’t develop a workable solution for orphan wells, a solution will be imposed on us. 

Is public education the answer? We have a strong tide against us. Engineers believe in facts. I believe that if only the public understood how hydraulic fracturing—and other engineering processes—work, they would understand and come over to our side. Sadly, many in the general public are not interested in facts or understanding; they are unlikely to be persuaded by anything that originates with the oil industry. Media outlets tell stories, usually through pictures, and images of big fires, oil spills, or flaming water from faucets tell a story sure to capture public attention. The “facts” often come later, if at all, once the sensationalism dies down. Anti-­industry groups created “fracking” with a “k” and have branded it in a way that it gets applied to activities not remotely related to hydraulic fracturing. Our actions, and our interactions with people at the local level, have to speak for us, and that’s where the catastrophes overwhelm our public education efforts.

Negative views of the oil industry are not universal—many countries view energy development as progress and increased standards of living. Billions of people around the world want basic energy access—an electrical grid, safe cooking and heating fuels, and efficient transportation. Should they be denied what we have? There will always be people who hate the oil industry but drive an electric car, powered by electricity from coal. We can earn our reputation as responsible citizens who care about the world around us and help raise living standards for people all over the world. 

The Deepwater Horizon explosion in 2010 was the industry’s worst environmental incident. Earlier this year, BP’s total cost for the Macondo incident was reported as about USD 60 billion, greater than the entire market capitalization of ­ConocoPhillips, Eni, or Statoil. One incident, one management failure, could wipe out most oil companies.

A few months ago, Hollywood released the movie Deep­water Horizon, with a major star and backer, telling the story of the Deepwater Horizon/Macondo accident from the workers’ perspective. I had seen the trailer on YouTube and fully expected to see the usual Hollywood depiction of our industry—redneck rig hands shown drunk and smeared with oil, evil money-hungry management, and everyone as not caring about our employees, the environment, or safety. 

I was surprised to see that though there is money-grubbing management (portrayed by the perennial villain, actor John Malkovich), the film does a good job of telling the tale from the perspective of the rig workers. The filmmakers got many of the technical aspects of the blowout wrong—for a technical analysis, see SPE Distinguished Member and University of Texas petroleum engineering professor Eric van Ort’s online review at www.theconversation.com. But what the public will remember is the massive explosion, the months-long oil spill, and the perception that we just don’t care.

As I walked to my car thinking about the film, I was shaken by the fire and the workers’ terror. But the word that rattled in my head as I drove home was integrity. A key cause of the Macondo accident was lack of true integrity to their stated ­values of safety and environmental responsibility. If we really believed that safety and environmental stewardship are our top priorities, then we would practice it always. We would praise, not punish, those who hold true to our stated values of integrity. I know that doesn’t always happen, and I have experienced the misalignment between stated corporate goals and actual management behavior. But to be leaders of integrity, we must hold true to our stated values or our industry won’t be here anymore. Our trust must be earned.

To Be Leaders of Integrity, We Must Earn Trust

Janeen Judah, 2017 SPE President

01 December 2016

Volume: 68 | Issue: 12