OTC: Global mindset, focus on personnel key among top leadership traits

May 3, 2005
Successful leaders of the future's oil and gas industry will need to possess several key characteristics, including having a strong sense of the true globalization of the industry as well as having a keen eye on recruiting new, raw talent for top management roles.

Steven Poruban
Senior Editor

HOUSTON, May 3 -- Successful leaders of the future's oil and gas industry will need to possess several key characteristics, including having a strong sense of the true globalization of the industry as well as having a keen eye on recruiting new, raw talent for top management roles.

So agreed a panel of industry members and politicians May 2 during the first day of the Offshore Technology Conference in Houston.

Among the panelists, Houston Mayor Bill White elaborated on this list, stating that his list of traits for sound future leadership within the energy industry contained four elements. First, he said, "The energy industry has to become a good citizen," because with any form of "power comes fear" and the public needs to know that industry cares about the environment while it is searching for new energy resources.

Second, "The energy industry will become increasingly global," White noted, adding that the good leaders of the future must stay attuned to this fact. Within the energy industry, arguably more so than with any other, there is a true internationalization of the workforce, he said.

"Successful companies in the future will function without a 'glass ceiling'" and will employ its workers based on merit. Successful leaders of multinational companies will have a new way of thinking, and leaders will rise within the organization as the industry discards certain stereotypical hiring and promoting mindsets that have existed in the industry, he said.

The third trait of a good leader White termed as "discipline." Oil and gas is one of the few commodities that possess a sharp, inelastic demand curve. Today, White contends, the industry is seeing "companies' capital budgets equal to their capital available." This cannot continue to happen, he reckoned, adding that companies also should not "ramp up employment [on a project] only to pull the plug later on."

The last trait that future leaders will possess is a genuine interest in the hiring of new, younger employees, who will take the reins of their companies when current senior executives—now nearing retirement age—leave the workforce.

Congressional perspective
In an unscheduled visit to the panel discussion, US Congresswoman Sheila Jackson-Lee (D-Tex.) volunteered her philosophies about strong leadership qualities, stressing the need for interaction among both companies and countries around the globe.

Jackson-Lee noted that successful leaders do not shy away from interaction. Rather than running away from safety and the environment, she recommended that good leaders should "run toward safety, and run toward the environment."

The Texas congresswoman also recommended that leaders look around the world for examples of companies and countries working together successfully.

One example of such cooperation, Jackson-Lee noted, is "oil revenue boards" that serve in some countries to ensure that funds from oil and gas exploration and production are used for what they are intended—namely building and developing the home countries' infrastructure. "If this is found to be a good concept, let's use it," she said.

In addition, the US federal government needs to have access to more current information, Jackson-Lee stated, noting that surveys of the exploration and production potential in the Gulf of Mexico, now conducted every 5 years, should be completed every 2 years instead.

Overall, Jackson-Lee said that good leaders should "leave the doors of engagement open," to communication with other countries around the world.

Long-term challenges
Olivier Appert, chairman and CEO of Institut Français du Pétrole, said that the oil and gas industry's long-term challenges include prolonging the world's hydrocarbon reserves, developing cleaner processing and refining technologies, diversifying the world's energy mix, reducing emissions and world fuel consumption, and developing carbon dioxide capture and storage technology.

Also, Appert noted, producers will need to increase their exploration success ratios and increase hydrocarbon recovery rates from the current 35% to more than 50%, again through the use of advanced technology.

One observation Appert made was that oil companies have reduced their research and development budgets over the last few years, but Appert remains optimistic about that possibly changing in the near future.

Producers' outlook
Speaking on behalf of oil and gas producers, Gaurdie E. Banister Jr., technical director, EP Americas, Shell Exploration & Production, said that the energy industry is moving toward an "engage me" world where just telling the public to "trust me," doesn't suffice anymore. "We are impacting the environment," Banister warned.

As far as industry's shrinking workforce is concerned, Banister noted that it is the "government that sets the tone" for which occupations dominate the industry. "No wonder that most of the petroleum engineering graduates come from China," he observed.

In an unofficial survey of the industry, Banister noted that 68% of those E&P companies surveyed felt as though there would be a shortage of petroleum engineers over the next 5 years.

Contact Steven Poruban at [email protected].