OTC 2011: Oil leaders warn against emotion in policy decisions

by Brett Clanton
Posted on May 3, 2011 at 11:25 pm


The Chevron Genesis platform in the Gulf of Mexico (AP file photo/Mary Altaffer)

As the global offshore oil and gas industry meets in Houston this week, leaders say they are aware the reputation of their business is still bruised after the BP Gulf of Mexico oil spill and that motorists and politicians are fuming over $4 gasoline prices.

But they cautioned Washington against overreaching with new regulation and taxes, stressing the enormity of the challenge ahead in meeting the world’s surging energy needs.

“We cannot afford to have emotions control business and policy decisions,” Zuhair Hussain, vice president of Saudi Aramco’s drilling and workover unit, said during a panel discussion Tuesday at the 2011 Offshore Technology Conference.

With global energy demand expected to rise 40 percent by 2035, industry must be unencumbered to invest in finding more resources and developing new technology, said other panelists.

“You can’t be emotional about our business based on gas prices,” said Ali Moshiri, president of Chevron Corp.’s Africa and Latin America exploration and production company.

But Obama administration officials and oil company executives agreed that last year’s Macondo well blowout, which killed 11 workers and launched the nation’s worst oil spill, gave the industry a major image problem that could take years to quash.

Christopher Smith, U.S. deputy assistant energy secretary, noted that “blowout preventer” and “fracking” have become familiar words since the Deepwater Horizon disaster and amid controversy surrounding the fracturing process used to unlock natural gas. And that’s not a good thing, he said.

“These terms have entered into the public consciousness in a way that is going to be a net negative for industry and for government as we try to advance our goals,” Smith said.

But government, industry and environmentalists can work together on shared goals, such as advancing safe development of natural gas, he said.

Farouk Hussain Al Zanki, CEO of Kuwait Petroleum Corp., described a key lesson industry should take away from events of recent months, including the Gulf oil spill and Japan’s tsunami-triggered nuclear power plant disaster.

“Energy safety has moved to the forefront of industry challenges,” he said.

Dave Payne, Chevron’s vice president of drilling and completions, said the damage from the spill will be particularly long-lasting.

“A large percentage of the American public doesn’t understand our business,” he said. “We have not regained trust. It will take us years as an industry to get to where we need to be.”

He cautioned against an adversarial relationship between federal regulators and the offshore drilling industry. We “need a partnership with government,” he said. “We cannot work at loggerheads with the government and be successful.”

In an afternoon panel on the Gulf spill, speakers explored specific ways that the industry could learn from the blowout last year.

One big lesson: The data streaming from the seafloor to the drilling rig may not be displayed in the best way to help workers make quick decisions.

There’s a concern that amid a barrage of data, “someone working in real time has to tease out” what’s relevant “and make real consequential decisions on the fly,” Smith said.

The oil and gas industry can take cues from how information is presented to pilots in airplane cockpits and engineers in nuclear reactors, he said.

“Instead of relying on a person who is smart and quick and who has that intestinal fortitude to stop work on a $350 million rig,” Smith said, the airlines and nuclear industry use more checklists and automation.

Chevron’s Payne said industry stalwarts likely would resist safety checklists, but acknowledged they could go a long way to improving safety offshore.

“We need to start bringing procedures and checklists into our business,” he said. “We have an opportunity to work together as an industry and hold each other accountable.”

OTC attendance so far is up about 10 percent from last year, when 72,900 came to the four-day annual event, said Stephen Graham, OTC’s associate managing director.

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Posted on May 3, 2011, in Natural Gas, Oil & Gas - offshore, Regulation and tagged , , , , , , , , , , , , , , , , . Bookmark the permalink. Comments Off on OTC 2011: Oil leaders warn against emotion in policy decisions.

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