OTC panel discusses improving industry's image

Oil and gas industry executives at the Offshore Technology Conference anguish over the bad image of their business, which seems to repel prospective employees, investors, regulators, and the general public. The public image of the oil and gas industry in general 'is just awful. I don't think it could get much worse,' said Paul M. Mecray III�senior vice-president and partner in Wellington Management Co., an industry analyst�at a general OTC panel discussion late Tuesday.


OFFSHORE TECHNOLOGY CONFERENCE, HOUSTON
Oil and gas industry executives at the Offshore Technology Conference anguish over the bad image of their business, which seems to repel prospective employees, investors, regulators, and the general public.

The public image of the oil and gas industry in general "is just awful. I don't think it could get much worse," said Paul M. Mecray III�senior vice-president and partner in Wellington Management Co., an industry analyst�at a general OTC panel discussion late Tuesday.

"As a former member of Congress, I'm probably the only one [on the panel] whose image was improved by coming to the industry," joked Dick Cheney, CEO of Halliburton Co.

Like others during that session, Mecray decried the lack of "a well-conceived public relations program" to improve the industry's image among the general public, government officials, and investors. But it's hard for the diverse segments of the industry to agree on such an effort, "especially where we have to spend money," said Cheney.

During a question-and-answer session, a member of the audience asked, "How can you improve the image of a product that the [end] customer never sees�or when he sees it, it�s a catastrophe?"

Most people have no direct contact with oil or refined products, he noted. Their only experience, he said, is with "fumes coming from the tailpipe, a spill, or the 'click, click, click' of the [service station] fuel pump."

Environmental performance
Panel members and speakers at other OTC sessions strongly defended the industry's environmental record. "There's a story to be told of the lengths we go to in order to do things safely, with no pollution," Cheney said.

But Warren G. Hubler, manager of health, safety, and environmental issues at Helmerich & Payne International Drilling Co., presented a different view from the field at the International Association of Drilling Contractors' annual land drilling seminar of in late April.

At that meeting, Hubler showed pictures of "real oilfield trash"�leaking fuel tanks and hoses, catch-buckets under dripping outlets, equipment repairs made with "high-tech duct tape," and use of "high-test clothesline" rope to tie valves open. Those pictures document "irresponsible behavior" at rig sites in Texas, "not some third-world country," he said.

It's a sign of a lingering "old-school mentality that mud tanks are meant to overflow�that's why they're built with tops that open," he said sarcastically.

Regardless of size, Hubler said, "Spills are a big deal. There's a learning opportunity in every spill�and shame on us if we don't learn it."

He said, "All spills can be prevented. If we don't believe this in our hearts, we're doomed to repeat the same mistakes."

Hubler's criticism was aimed solely at land drilling operations. Land drilling crews should "work as though they're drilling in the Gulf of Mexico, where the rule is, `Don't spill a drop,'" he said.

Walt Rosenbusch, director of the US Minerals Management Service, said at OTC Wednesday that the offshore industry's safety and environmental record in the gulf has shown "significant improvement over the last few years." But with more contractors operating in those waters, he said, "We may have to reach out to be sure they're as dedicated to safety as the operators."

Personnel shortage
At Tuesday's keynote OTC session, panel members also addressed "the paradox of record earnings and layoffs" within the industry. This, too, has given the industry a bad reputation.

Through massive layoffs in the 1980s and 1990s, all segments of the industry have permanently lost thousands of experienced and talented employees. Now many contractors face a shortage of qualified workers to staff rigs and supply boats and perform other services in the next ramp-up of drilling operations. "And we did it to ourselves," said William C. O'Malley, chairman and CEO of Tidewater Inc. and former chairman of the National Ocean Industries Association.

He suggested the service industry adopt a program in cooperation with public school officials to sponsor a 2-year high school job-training program for students who don't plan to go to college after graduation. Participating students who complete the program with acceptable grades would be guaranteed jobs with a $25,000 annual starting salary.

"We could do this," said O'Malley, "and we shouldn't be looking for government support to fund it. [We should] just do it ourselves."

Drilling and offshore supply contractors previously were able to recruit entry-level employees straight out of high school. But that's no longer possible in the face of more stringent education and training requirements, say some industry executives. To attract new field workers, pay scales must be raised�"perhaps more than some companies realize," Mecray said.

Because of the offshore industry's volatile boom-and-bust nature and its physical demands, he said, "job enhancement is not an easy thing to offer in this business." However, he said, "There's no reason stock options can't reach further down [below management levels] in a company" as a means of recruiting and retaining employees.

The industry also needs managers "who can go to a country and start a business, maybe close that business a few years later, and go to another country and start up again," O'Malley said.

However, the oil and gas industry "has a problem competing" with the computer industry for technical employees," said an audience member who identified himself as a recruiter during a question-and-answer period.

"Compensation is at the forefront of all your employees' minds," said another recruiter from the audience. And he warned industry executives that key employees, who were forced to work harder because of staff cuts during the downturn, will leave for better offers during the upswing.

Meanwhile, new technology is one way that the industry can work "faster, cheaper, better, with fewer people," said Cheney.

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