Alaska pipeline observations
Recent press coverage on the intermittent progress of the energy bill elicits a review of the Alaska Gas Pipeline. Industry reports show capital requirements of $9.8 billion for an overland northern route and $20.3 billion for the southern route. Is the longer southern route worth an extra $10 billion? As the principal designer behind the $3.5 billion Alliance Pipeline, successfully operating between Western Canada and Chicago for the past 3 years, I can offer a seasoned comment on the North/South routing issue.
The northern route cost assumes a land route traversing fringes, not centers, of pristine wildlife parks. With due respect to "keep out" legislation, access allowances merit consideration. Seasonal construction windows exist; today's installation techniques can be benign in this particular environment.
Two corridors—totaling of 3,100 miles of environmental impact—occur if both the southern route and the Mackenzie project proceed. If the northern route and the Mackenzie project proceed, a single corridor of 1,600 miles is created, with a reduction in capital of $10 billion. Given political will, interests of national security, and a recovering economy, is there a rational reason for the northern route not to be responsibly and rapidly constructed?
The project mandate requires safe transportation of gas to the consumer at the lowest tariff and minimal risk of capital. For the northern route, the government guarantee on $10 billion capital is unnecessary. The lower tariff translates into higher producer netback and 20 years or more of increased royalties to Alaska's treasury. A greater long-term tax return, measured in billions of dollars, is more beneficial than a 2-year construction boom generated by the southern route for Alaska.
Finally, if $20 billion capital is deemed worthy of investment in the Alaskan hydrocarbon industry, could not this remaining $10 billion be better spent on infrastructure other than additional pipeline length? This can be a win-win situation for all Americans. Building blocks exist—just place them together in the right order.
Ian Morris
Campbell River, BC
Brain drain
I am writing concerning the article by Michael Minyard, "How to fix oil industry 'brain drain': Change the industry, not the image," (OGJ, Oct. 20, 2003, p. 20).
I agree with Mr. Minyard on his apprenticeship and contract solutions.
Indeed, mentoring relationships are good at all stages of a person's career and serve not only to enhance one's technical and business skills but to also build camaraderie and esprit de corps.
Unfortunately, the industry trend towards an ever-shrinking workforce renders any mentoring extremely unlikely, as the reality is individuals within a company are in competition with one another for continually fewer positions. Also, there is the inevitable culture this builds which dictates that to move up you must move out.
True advancement is usually easier to obtain by moving to a new company.
Concerning contracts, these should be offered to individuals at all levels; it is not only junior personnel that have a low level of trust in their employers.
Finally, I would like to add a few other observations to those raised by Mr. Minyard. It is not necessarily the best and brightest that have remained in the industry. All too often we have preserved the keen and cunning in the business and lost the most skilled.
Individuals with strong technical skills have choices; they don't have to work in the oil industry, they can use their fundamental abilities in science and engineering in many other industries.
Beyond the company consolidation in the industry is the geographic consolidation. Houston is the star around which the US oil industry orbits. Frankly, many skilled people do not want to live where the industry is now geographically concentrated. This geographic focus is a natural barrier to retention and recruitment. A good engineering student from Penn State or geology student from Stanford has choices, and Houston is often far from the top of their list.
Indeed, many current employees do not want to be in these areas. There is no reason in this day and age why the technical workforce needs to be located in any particular place, as communications through email, cell phone, and the web can be obtained virtually anywhere; there are numerous locales where travel is easier and cheaper than many of the cities that are now oil and gas centers.
Mr. Minyard was right on the points he made, but stopped short of identifying the other barriers the oil and gas industry has raised to retaining and recruiting the best and brightest. Like most issues in life, it is all about control, and most companies in oil and gas have placed such strong emphasis on control of their workforce that the industry becomes an increasingly less-attractive work choice for new college graduates and existing employees alike.
Kevin Corbett
Sequoia Production
Denver