SPE CHIEF: OPPORTUNITY KNOCKING FOR ENGINEERS

Robin Buckner Price
Staff Writer

Opportunity is knocking, and flexibility will be the key that opens the door.

Opportunity and flexibility are two words that crop up often when talking with Arlie M. Skov, president of the Society of Petroleum Engineers and a senior consultant in the technology group with BP Exploration Inc., Houston.

The new world order that is beginning to unfold gives the ready and willing in the petroleum industry the chance of a lifetime. And while there will be challenges, the door of opportunity is standing wide open,

Skov is bullish on the U.S. onshore petroleum industry.

Although many larger companies are trimming operations in the U.S., Skov believes the small and medium size independents are capable of keeping that industry alive.

Part of the opportunity lies in environmental awareness, a place where SPE is putting some emphasis. Environmentally, Skov thinks the U.S. has a lot to offer the rest of the world.

And SPE is doing its part to see that its members continue to have a place in the industry. For years the society has placed a lot of emphasis on the international arena. Today, Skov believes SPE is truly international, an achievement that will serve the organization well in the coming years.

CHANGE EQUALS OPPORTUNITY

While this year has seen many political events that had a strong influence on the petroleum industry, Skov cites the opening of eastern Europe and the Soviet Union as having the most profound and long lasting effects. And, Skov notes, those changes have created an abundance of opportunities.

"The Soviets are at the point where they desperately need western management techniques and western capital," Skov said. "It is a major change of direction for the U.S.S.R."

He thinks major and independent operators can find a niche in the Soviet Union, noting the greatest successes to date have been by small companies such as Phibro Energy Inc. and Anglo Suisse.

However, he said, "I think the scale of the operation and the tremendous amount of problems that obviously exist there will require generally more economic depth than most independents have."

It's possible that as the eastern world opens up and scientists there have new freedom the U.S. could be inundated with eastern engineers. But Skov believes more balance will be achieved as U.S. scientists become more international.

"There is not the opportunity, not the tremendous number of jobs available in this country that there once was, and the future is going to be international," Skov said. "So I think many of them will be staying at home.

"The important message to the oil industry and to engineers is that our world is one of rapidly changing events. It is vitally important to keep one's technical skills honed, to be flexible, to be prepared for international assignments.

"Our industry and its technical people must be prepared to adapt. It is exciting, but it may not be the quiet, comfortable life we are used to.

CURRENT IMBALANCE

Adaptability will be key if a company plans to get a piece of the international petroleum pie-a pie that is not equally cut at this time, Skov noted.

He pointed out that worldwide about two thirds of oil production, 40% of refining capacity, and one third of product sales are in the hands of national oil companies or governments.

"There is a tremendous concentration of national oil companies and governments in the upstream end of the business," Skov said. "So there has to be an interest in those countries to integrate downstream. You see it happening. The Saudis have bought a share of Texaco, and Kuwait has purchased refining and marketing all over Europe. Venezuela is in the U.S. and Europe.

"At the same time there has to be a tremendous drive for the private sector to migrate upstream more than it has. They will have to achieve that in two ways. One is by cutting deals with governments who own reserves, and the second is to take advantage of free market systems that are developing in much of the world. Private industry is well equipped to do that."

TECHNOLOGY TRANSFER

Technology has for some time been considered an area in which many countries fell short of the West's mark. Skov noted this gap is growing much smaller, but the level of technological advancement among countries still forms a wide continuum.

"Twenty years ago you could say quite honestly their technology lagged the West's substantially," Skov said. "I think that has changed. A lot of it is due to people being educated in this country, but a lot of it is also homegrown in places as diverse as Malaysia, Venezuela, and the U. K."

Skov recently traveled to China to plan an international SPE meeting to be held in Beijing next March.

"I was amazed at the depth of understanding they have about the current level of technology in this country," he said. "Sometimes there is some translation difficulties. Some English speaking Chinese engineers had written what they wanted, a lot of it translated from their colleagues, and most of it was quite clear. But one example was solids control. Solids control in drilling mud is a real problem, but that is not what they meant. What they meant was the set up time for cement.

"in understanding another country's needs and where they are technologically, language can be an enormous barrier."

U.S. ENERGY INDUSTRY

Skov believes the exodus of major companies from the U.S. onshore will continue. Yet he also believes the future of the industry in the Lower 48 is in good hands.

He cites higher overhead and lack of large prospects as the reasons major operators are deemphasizing U.S. exploration.

"Increasingly the bigger targets are scarce in the U.S., and we don't have access to the ones that do exist such as the Coastal Plain of the Alaska National Wildlife

Refuge and much of the offshore area," Skov said. "I think it is inevitable that large operators will continue to migrate overseas as long as the climate there is hospitable."

He points to the new breed of entrepreneurs buying and operating leases majors deemed uneconomic.

"You can look at the Appalachian basin where majors have not been for many many decades," he said. "They are still producing a lot of oil and gas, and they are doing it with sort of mom and pop operations, but it's effective.

"I don't see a collapse of U.S. oil production. Lower 48 onshore will continue to decline to be sure, and it will be a function of oil prices."

SPE wants its voice heard in regard to U.S. energy issues because it offers a source of expertise that can be called upon to answer technical questions, Skov said.

"I think it's appropriate that we speak out on the technical aspects of issues, and technology is increasingly important to political decisions.

"Clearly, U.S. energy issues are not just an engineering or just a petroleum engineering problem. All aspects of society have to agree on what is done. We have been accused in this country-certainly under President Reagan we were accused-of having an energy policy that consisted of no policy at all. And that may not be all that bad. It served us pretty well for the last couple of decades."

ENVIRONMENTAL ISSUES

In November SPE will host its first technical program devoted entirely to health, safety, and environmental issues. The program will be held at The Hague, Netherlands. Skov believes environmentally U.S. petroleum engineers have an opportunity to pave the way for the rest of the world.

He said, "Petroleum engineers in this country are uniquely trained in environmental awareness, whereas in other parts of the world that hasn't been true. I think we have a marketable skill in the U.S. petroleum engineer that will increasingly be looked upon as a resource by the rest of the world."

He noted this is another area in which keeping technical skills up to speed and aimed at current problems can give engineers a competitive edge.

Skov said, "Environmental awareness is not just a U.S. concern, it is worldwide. I traveled the world quite a bit the last 2 years. One of the things I observed is while we complain about environmental quality in this country, it generally is far, far better than in the rest of the world."

SPE'S ROLE

In a world of change, SPE's main goals remain the same. Its mission, Skov said, is two fold:

• Disseminate the technology of oil production and everything related to petroleum engineering.

• Enhance the skills of its members.

Skov thinks partly through SPE's publications, meetings, and education programs its mission is being accomplished. Those services prepare its members for the changes ahead and educate them on advances in the field.

For petroleum engineers, Skov said, the key to successfully pursuing their livelihood is to keep their technical skills honed as sharply as possible.

"That is the role SPE should properly play," he said.

"We should not be an employment agency, nor should we lobby for benefits for unemployed members.

"Our role is to be certain that all SPE members have access to ways to enhance their skills. That is a mission the society works hard to accomplish."

Skov noted SPE has recognized for some time the production and exploration industries were moving increasingly into the international arena.

"SPE's long range plan in the early 1970s was to develop into a worldwide organization. And we have been pursuing that goal faithfully. Now we have one third of our membership outside of the U.S., and nearly half of the 120 sections are outside the U.S.

"We have become a truly international organization."

SKOV'S OUTLOOK

Skov said, "I see the world economy and the world energy industry needing to move forward. I see increasing environmental regulations. I see worldwide increasing interest in the free market system, an encouraging sign. I think that is something that will help us conquer all the challenges that lie ahead.

"I see that petroleum engineers, geologists-the technical people-are going to have a very interesting career ahead of them.

"I see tremendous opportunities for young people entering the profession today, as long as they are willing to keep their skills highly honed and are very flexible in where they are willing to work and what they are willing to do. There always will be a demand for people who have the ability, stamina, and willingness to educate themselves and develop their skills. We have not begun to see an end to the petroleum industry's restructuring. But I don't see that as necessarily bad. It may not be comfortable to some of us, but it also provides opportunities."

Copyright 1991 Oil & Gas Journal. All Rights Reserved.