Interview

Stephen A. Holditch President, SA Holditch & Associates

David Vaucher, Editor-in-Chief, The Way Ahead

How and why did you get into the oil and gas business?

My older brother went to Texas A&M. I decided I wanted to follow in his footsteps, so I started out in electrical engineering, like my brother. But my dad was exploration manager for Lonestar Producing Company. During the summer after my freshman year, some of my dad’s associates told me I should consider the oil business. I did as suggested and changed majors shortly thereafter. During that time the USA was in the middle of the Vietnam War, so I decided to become an Army officer. I got my bachelor’s degree in petroleum engineering in 1969 and my master’s degree in 1970. By that time the US was actually pulling troops out of Vietnam, so I went straight to work for Shell Oil Company.

What major challenges and choices did you have throughout your career and how did you learn from them?

In August 1970, I published my master’s thesis that showed how to use long hydraulic fractures to create pathways to produce gas from low-permeability reservoirs. Then I went to work for Shell, where I was allowed to design fracture treatments. One major challenge was deciding to leave my first job, with Shell, and return to Texas A&M to work on a PhD. By the time I had worked at Shell for about three and a half years, I had reached the conclusion that there were few people within the industry who truly understood what was going on during a fracture treatment. So I decided to focus my PhD work on building models to simulate the reservoir of a hydraulically fractured well.

The next major choice was deciding whether to stay at Texas A&M or return to Shell. Up until that point, I had never planned to go back and be a professor. It just happened. I was offered a position as assistant professor when I finished my PhD, and I took the job. I live in College Station to this day. I learned it’s good to follow your instincts and work hard—and if you do, opportunity will happen.

You’ve had a very busy professional life teaching, researching, and consulting. What is your advice on managing the work/life balance?

Life balance is very difficult; however, it can be done. I was lucky because I was head of my own consulting company and was a college professor. As such, I could set my own schedule to some degree. I remember one year I wanted to coach my youngest daughter’s softball team. So for a couple of months I arranged everything so I did not miss any (or many) practices or games. You have to make time for your family; however, if you talk to my wife of 42 years, she will say I was gone a lot and worked a lot of nights and weekends.

You started your own business right out of school. How has entrepreneurship changed since then, and what do you think it will look like in the future?

While working for Shell, I did a lot of well completions and stimulations in south Texas in deep gas reservoirs. As a graduate student, I got a call from my old boss at Shell telling me about a company that could use my help in completing and fracture-treating a deep gas well. One job led to another and after one year I had made more money consulting as a graduate student at Texas A&M than I had the previous year working for Shell. And the next year I made even more. After two and a half years, I had my PhD and a thriving consulting practice.

Startups have always been part of the oil and gas business. There are thousands of oil and gas operators, service providers, and consultants—with ample room for more. Petroleum engineering is the ideal major for people who want to run their own company. Many of my former students are now presidents of their own oil or service company. A petroleum engineer can start his or her own company if they wish to. They can go drill wells or they can do reservoir engineering consulting. The financial side is a possibility also: There’ve been a lot of petroleum graduates at A&M who’ve started or joined hedge funds, venture capital funds, and investment banks.

Any advice for startup business owners and entrepreneurs?

You have to find a niche for your company. I got into deep gas reservoirs, low-permeability reservoirs, and hydraulic fracturing 40 years ago when that technology was just emerging. Most people had no faith we would ever produce these low-permeability reservoirs and make any money.

A good friend and classmate of mine who grew up in Graham and went to work in Graham basically just drills wells within a 100-mile radius of Graham. Now they’ve branched out a little bit more to west Texas, but if, like him, you know an area better than anyone else, you can make money. You’ve got to be focused on what you’re doing with your business.

What do you see as the engineering technologies of the future?

The oil and gas industry has historically spent about 70% on actual drilling and about 7% on drilling research and development. We need to develop completion systems that reduce the cost of completing long horizontal wells. Everything in the oil and gas industry is ultimately paid for by the oil and gas that comes out of the reservoir. So we really need to understand it. I think developing technologies to see what is going on underground—like fiberoptic measurements, microseismic measurements, and 4D seismic—could be very beneficial.

Regarding hydraulic fracturing, we’ll continue searching for better fluids and better propping agents. We need fluids that will clean up after a fracture treatment, which means it must be viscous when it carries proppants and then break to a fluid with low viscosity and low gel strength when it reaches the formation. To transport fluids in deep, hot reservoirs, we need proppants that are lighter and stronger.

The main issue operators currently face with both drilling and hydraulic fracturing is trying to get costs down without decreasing reserves. Another area is to go back into many old wells, figure out what hydrocarbons have been produced, quantify the missed pays, and refracture them for a higher recovery factor.

How can we go about making unconventionals conventional?

As you might suspect, the industry is doing a great job of making unconventional reservoirs viable. There seem to be several conferences each week around the world on this subject. However, you need the basins, technical people, equipment, markets, legal system, and infrastructure to all come together before you can really develop an unconventional reservoir economically. This is starting to happen in some parts of Asia, Europe, the Middle East, and South America, but it will take decades. That bodes well for young professionals.

When I was SPE president [2002], one of my talks showed information that production from conventional reservoirs would peak some time from 2010 to 2020 and begin to decline at a time when demand for oil and gas would continue to increase especially from India and China. With the advancement of unconventionals, we’ll have plenty of hydrocarbons to meet demand, but it’s going to cost more money.

If you look at how much oil and gas is in place worldwide, there’s several hundred years of supply. The hottest formations now are source rocks. It’s very likely to expect over the next 40 years that this generation of petroleum engineers and the next will be drilling and stimulating these source rocks worldwide. There are huge barriers to doing so—lack of people, equipment, and markets—but my opinion is that the oil and gas is there and we can get it out if the general public and local, state, and national governments want us to and allow us to. The world may ultimately choose to use some other form of energy, but we won’t run out of oil and gas.

Do YPs in the oil and gas industry have more opportunities for growth now compared to when you started? What is the future job outlook for our industry and how are universities all over the world responding?

I don’t think there has ever been a better time for getting into the industry than right now. It’s obviously a growing industry because oil and gas demand keeps going up every year. It’s a high-tech industry that a lot of people don’t understand. It’s a global business, so if you want to see the world—it’s a terrific time to get into the oil and gas business.

University enrollment in petroleum engineering has increased substantially in the last 5 years or so. So far, the industry has been hiring most, if not all, graduates. However, it would be wise for universities to put a cap on enrollment for a few years to see how the market reacts. In the 1980s there was a large surplus of capacity, and when oil prices fell the job market collapsed. I don’t see that happening now because supply, demand, and capacity are all relatively well balanced so there isn’t going to be a lot of pressure for an oil price collapse. Also, given the fact that many people, including me, have retired or are about to retire, I don’t see a big issue with the job market right now for students about to graduate. However, Daniel Hill—now head of the Harold Vance Department of Petroleum Engineering at Texas A&M—and I suggested it would be good to limit the rate of growth and make sure we don’t end up with an oversupply of graduates.

What is more important in a career progression—technical knowledge or interpersonal skills?

I learned a long time ago that 80% of success is getting along with your co-workers. Intellect is certainly a prerequisite for success, but how you deal with people is really the key factor. Interpersonal skills are essential and could make a huge difference in one’s climb up the management or technical career ladder.

The “grasshopper” phenomenon is commonly seen today among oil and gas YPs. What is your take on this?

Switching employers is more obviously prevalent now than when I started in the industry. Back then, you’d go to work for a company and wouldn’t even consider changing. One reason was you could expect a nice pension when you retired. When companies switched from pensions to 401k’s and started laying people off, they essentially broke that bond. You can’t blame anyone for saying “I can move down the street and double my pay.”

However, some of the most successful people I know have been with the same company their entire careers. They’ve done very well professionally and financially. So I think if you do stick with one company and move up the career ranks there, you may end up making a whole lot more money than “grasshopping”—unless of course one of those hops makes you a CEO.

What is the biggest challenge facing the oil and gas industry today?

Public perception. Some industries with only a handful of companies do a very good job of explaining their industries to the public. The perception of the oil and gas industry has always been kind of a swagger that “we’re in it for the profit” or that we haven’t taken care of the environment.

We have done a horrible job of telling the general public about what we do. One of the things that has facilitated the advancement of the United States and western Europe is that we’ve had abundant, reliable, affordable sources of energy. The industry should be applauded for that rather than demonized.

What can SPE do to change negative perceptions of our industry and help attract more young people to petroleum engineering?

SPE is doing quite a bit. Even before becoming SPE president, when I was on the SPE Board, we started the Public Energy Education Committee. We got SPE members to go to local schools and tell the story of energy—where energy comes from and how oil and gas fits into that story. We now have the Energy4me.org website which has an enormous amount of data available for giving talks to communities and civic groups. SPE has done a lot and has the tools for individual SPE members to do more.

Is there any further advice you have for TWA YP readers?

Each day at work, make a list of what you need to accomplish that day and prioritize the list. Then do it, go home, and forget about it. Start over the next day. Do not overcomplicate what you need to do.

Don’t make enemies; if you have to bite your tongue, just bite your tongue. That doesn’t mean you can’t speak your mind.

Write some papers. Most people look to SPE papers for case histories; every engineer can write a case history about what they’ve been doing for the last year or two.


Stephen A. Holditch, SPE, was on the faculty at Texas A&M University from 1976 until his retirement in 2013. He was the head of the Harold Vance Department of Petroleum Engineering from 2004 through 2012. Holditch taught undergraduate and graduate courses and supervised more than 100 MS and PhD students. He also began his own consulting firm, SA Holditch & Associates, in 1977. Holditch has held various leadership positions in SPE, including vice president–finance, member of the Board of Directors during 1998–2003, and SPE president in 2002. He has received numerous awards in recognition of his technical achievements and leadership. In 1995 he was elected to the National Academy of Engineering, and in 1997 he was inducted in to the Russian Academy of Natural Sciences. In 1998 Holditch was elected to the Petroleum Engineering Academy of Distinguished Graduates. He was elected as an SPE and AIME Honorary Member in 2006. Holditch earned BS, MS, and PhD degrees in petroleum engineering from Texas A&M University.