Helge Hove Haldorsen, vice president of strategy and portfolio at Statoil Development and Production North America, based in Houston, will become 2015 SPE President on 29 October during the SPE Annual Technical Conference and Exhibition in Amsterdam.
Before his tenure at Statoil, Haldorsen worked for Norsk Hydro in various roles including chief reservoir engineer, vice president technology and competence, vice president exploration and research, senior vice president international exploration and production, and president Hydro Gulf of Mexico. He has also held various engineering positions at British Petroleum, Standard Oil of Ohio (Sohio), and ExxonMobil (Esso). He was a second lieutenant in the Royal Norwegian Navy and a professor of industrial mathematics at the University of Oslo.
Haldorsen earned an MS degree in petroleum engineering from the Norwegian Institute of Technology and a PhD in reservoir engineering from The University of Texas at Austin. He currently serves on the Offshore Technology Conference Board of Directors and the external advisory board for the Cockrell School of Engineering at The University of Texas at Austin.
Where do you see SPE growing in membership in the short to medium term?
SPE is a global organization on a mission to share. Petroleum engineers have a passion for their business and SPE has a passion for helping them, connecting them, and providing them with evolving best practices. Also, SPE wants everyone who works in exploration and production (E&P) to help shape the industry’s future since we know that attacking E&P challenges from different perspectives always secures smarter solutions. Therefore, the future of E&P starts with everyone, everywhere. With nonmember petroleum engineers throughout the world, our membership drive will continue because SPE gets better with more perspectives and more diversity. Reed’s Law states that the utility of networks increases exponentially with size. SPE members in turn get better in their trade because they joined SPE. My main point is that this is not just about volume and growth in membership for growth’s sake; it is about value and because we are talking about producing sufficient energy to meet global demand—it is about a win-win for all.
SPE has grown tremendously during the past 10 years, from 60,559 members in 2003 to 124,528 at the end of 2013, including student memberships. An overview of SPE’s current professional membership shows centers of gravity in North America, among the majors and oilfield service companies (over independents and engineering firms); among drilling, production, and reservoir engineers (over facilities, management, and health, safety, and environment [HSE] professionals); and among seniors (over juniors).
Global SPE membership potential can be estimated by function and aggregated by country and then globally. SPE’s total global membership potential was recently estimated to be over 200,000 professionals. The logical way forward would then be for SPE to focus its forward membership drive on the countries with the largest membership potential and where SPE currently has low penetration rates. Other important membership growth considerations are: In what can be called mature SPE markets such as the United States, Canada, Norway, and the United Kingdom, we need to make sure that every graduating petroleum engineer joins SPE, that under-represented disciplines get a membership boost (geology and geophysics, management, facilities, and HSE), and that more professionals working for independents join SPE. With Mexico opening, it is important that SPE quickly start collaborating with existing Mexican societies and associations to find new and innovative ways to share and co-evolve to the benefit of Mexican energy professionals. Mexican professionals will contribute to the global community with unique functional and operational skills in a number of key areas, from the evaluation and production of offshore carbonate reservoirs to offshore improved oil recovery with massive nitrogen injection. We also need to become more involved in emerging petroleum-producing countries, such as Myanmar, Tanzania, Mozambique, Kenya, and Ghana.
I have met young SPE members and nonmembers who have suggested to me that it is time for SPE to be even more inclusive and welcoming to non-petroleum engineers and, by implication, “increase SPE’s tent” even more to include more disciplines in our conferences and workshops. I think we can do even more than we are already doing to collaborate with other disciplines by working more closely with AAPG, SEG, EAGE, and other engineering societies. I would be interested in hearing what you think when we meet. I met a geologist last week who said that he really wanted to attend the SPE Annual Technical Conference and Exhibition in Amsterdam, but looking through the program, he could not find a single session that would convince his boss that this would be a valuable thing to do. He is currently the lead geologist on a large offshore field development planning team.
What are the main benefits of SPE membership?
Having been an active SPE member since 1978, I know that a career-long partnership with SPE is going to be very good for you and your career. You will join a global, voluntary professional and student force of 124,000 on a “mission to share,” giving you immediate access to like-minded professionals collaborating on drilling approximately 83,000 wells per year globally, yielding 92 million BOPD and 350 Bcf/D of natural gas, every single day. This is the energy that makes the world go round, fuels human progress, and raises living standards.
An SPE member gets convenient access to the latest and greatest and best practices in the field, to the top experts and gurus in a particular discipline, to ongoing R&D and case studies, and to new ideas that you can “try at home.” By joining SPE, I really believe you become a more innovative and creative professional because of your dramatically increased exposure to more ideas and to more experiences, and because of your larger network and connections. Employees with more tools in the tool box, with an evergreen state-of-the-art overview in their discipline, and with innovative ideas are much more valuable employees. So the return on investment for the employer of an SPE member is huge. I predict that, soon, an employee’s connectedness and network will be more important than where she reports in the internal company hierarchy. Bosses soon will say: Show me your network. This is because connections mean possibilities. Finally, by joining SPE, you can take on SPE leadership roles early in your career that will really benefit you in your job. Your inner sense of purpose will go up, and by sharing and volunteering you will soon feel that you have become an important part of the “rising tide that lifts the boats” in E&P and in SPE.
What are the main challenges for SPE in meeting the needs of a growing global membership?
SPE has an approved strategic plan that is regularly updated (www.spe.org/about/strategicplan). All SPE efforts are aligned with this strategy. In our global mission to share, SPE must maintain top relevance for all our members and insist on quality in everything we do as we help push global democratization of technology and the rapid sharing of good ideas and best practices. As a society, we must take every opportunity to “listen loudly” to our members and respond in an agile and swift manner to our diverse members’ different and changing needs. At Amazon board meetings, there is always an empty chair, signifying that an Amazon customer is listening in on Amazon’s forward strategy discussions. This is the corporate culture we want to maintain at SPE too; our SPE member should always be No. 1!
We desperately want our members to give us an A+ when it comes to: 1) offering them the state of the art in their function, 2) giving them virtual and real SPE arenas and platforms to meet, network, discuss, learn, and share in formal and ad hoc ways, and 3) the overall value proposition they experience as an SPE member. Some particular industry and member challenges that SPE must respond to are as follows:
- Engage our members to volunteer locally to educate students and the public about our industry and to help maintain our license to operate. We cannot be a great global society unless we are a great society locally.
- Respond with the right offerings as the unconventional revolution spreads from North America to other parts of the world.
- Assist “new places” that are developing and producing hydrocarbons, such as Myanmar, Tanzania, Mozambique, and Kenya
- Attract the next generation of energy professionals because the future of E&P depends on new science, technology, engineering, and mathematics (STEM) students joining our industry to help shape our energy future. USA Today newspaper recently reported that 74% of students with a bachelor’s degree in STEM subjects do not work in STEM jobs. Hence, we need to visit more STEM departments on campuses, telling every STEM student how exciting E&P is.
- Encourage the millennials to join SPE and bring their passion, tech-savviness, initiative, and creativity to the industry. Our ability to creatively destruct (i.e., relentlessly improve and renew with innovation) every aspect of the E&P value chain depends on this. The evergreen goal must be that every graduating petroleum engineer anywhere in the world joins SPE.
- Provide networks and connections for members working on a particular problem. As we design our “SPE 2.0,” we should find a way of becoming a personal network provider (among consenting SPE members). These are ad hoc networks that come and go.
- Ensure that SPE is a valuable curator and provider of content. Imagine that Niagara Falls is functional information that streams by every day; as an individual, you can only get your hands around a fraction of this and you do not even know what you do not know. What if someone put a net or a sieve under all this information flowing by and served it to all SPE members?
- Help the industry make improved field forecasts and much better project execution KPIs. The average global industry track record when it comes to actual vs. predicted production for field development projects is dismal. Our predictions must be improved and SPE must help this happen. According to Neeraj Nandurdikar, manager of exploration and production at Independent Project Analysis (IPA), some of the root causes for poor predictions are more complex reservoirs and projects, rising costs in all categories, struggling contractors, a lack of basic project data, and poor scrutiny of project viability, among others.
- Place more focus on soft skills. Many think of the oil business as only being about rocks, rigs, and remotely operated vehicles. There is of course much more to it. For example, nothing is more “business” than being ethical and having integrity and making decisions in line with your company’s values or choosing a strategy to navigate success or creating an innovative corporate culture built on trust in which initiative, creativity, and passion get rewarded. If rocks are the yin of the E&P business, these soft business issues are the yang. As young members are given larger management responsibilities earlier as the baby boomers retire, SPE can help them grow in wisdom more quickly by increasing its focus on and offerings in this area.
Some believe that members of the younger generation of professionals are not joiners like previous generations, so membership in an organization such as SPE is not as valuable. Do you agree and, if so, how does SPE attract and engage professionals early in their career?
An analysis of the current SPE membership base does indeed show that seniors dominate over juniors. Still, the SPE young professionals team adds up to approximately 25,000 members. As noted earlier, we need to do a better job of attracting the next generation of energy professionals and tech-savvy millennials into SPE. It is partly a matter of our narrative and our wrapping. SPE is actually a very, very cool organization in n-dimensions—almost as cool as Google and Facebook. And, our conferences and many arenas and networking opportunities are as good and as cool as SXSW or the XGames. So what can we do to boost the young professional membership fraction in SPE materially? It is not an overnight thing—we have to start early in our attempt at generating a “STEM spark” in young minds. There are some steps we could take. Imagine if SPE members in cities such as Houston, Kuala Lumpur, Moscow, and Mexico City mapped out every middle school, high school, and university in the city and arranged for SPE members to visit them for a lunch and learn session in which they explain how we are able to produce 92 million bbl and 350 Bcf every day, how important and challenging the planet’s forward energy challenge is, and how exciting a career in energy would be for them. Our industry is high tech (developing fields in 10,000 ft of water is like going to the moon every day), international, globally networked, and full of opportunities and a sense of purpose. Also, in my view, we need to get across that there is no conflict between working in oil and gas and being supportive of renewables. SPE must also get better at explaining the personal and professional benefits to young professionals of joining SPE. And we need to ask young energy professionals what they want SPE to offer them and how they want SPE to offer it so that SPE can be really relevant to them and offer a great value proposition from their perspective.
What are the industry’s most pressing needs? Our members’?
If you X-ray the E&P industry right now, this is what you see on average: very high costs, very low margins or earnings per barrel, very low returns on capital employed, too much complexity (rather than standardization), and difficulty replacing existing reserves with new high-margin barrels. And, as mentioned, we are seeing troublesome cost and schedule overruns in E&P investment projects and non-delivery of forecast production rates, reserve levels, schedule, and cost. In addition, baby boomers are leaving the industry; young professionals are getting huge responsibilities earlier in their careers; macro and geopolitical uncertainties weigh in; and the health, safety, environment, and social responsibility debate is intensifying.
The E&P industry, therefore, generally needs to push for changes and improvements all across the board and to keep erasing the “im” in impossible with technology and new business models and to creatively destruct (i.e., relentlessly improve and renew with innovation, creativity, and initiative) every aspect of the E&P value chain. The E&P companies and the various hydrocarbons (such as oil from oil sands, deep water, shale, and improved oil recovery) competing for market share in the global energy mix must constantly chase 2.0s everywhere and in everything to adapt and “stay fit.” We even need to upgrade ourselves as professionals to adapt and stay fit as technology, e-opportunities, new collaboration and networking arenas, and tools and integration evolve and, yes, that is exactly where SPE comes in.
In a macro sense, the energy industry increasingly will have to navigate success in “I+4E” space: I is for Imagination, the basis for every industrial, technological, and scientific improvement. Imagination can lead to an incremental “new and improved” or “2.0 version” of something or a disruptive or game-changing element in technology, business model, or method.
The first E is for Energy—to come up with the hydrocarbon supply the world needs at a price affordable for all (including the approximately 1.4 billion people on the planet without electricity in 2014). The second E is for Economics because the energy supply must be economical to produce and yield a competitive return on investment. The third E is for the Environment because energy must be produced in a safe and sustainable manner with a lower environmental footprint. With only 50% of the CO2 emissions of coal, natural gas will grow significantly above what is now forecast if a global climate agreement is reached, since you get the most bang for the climate buck if coal consumption is reduced. And the fourth E is for Education, including of the public and local stakeholders, and also the education of the next generation of STEM students.
Professor Gary Hamel suggests that the future winners will do it with employees who are innovative and constantly borrow from other industries, and who take the initiative without being asked to find a better, cheaper, and safer way, and who are really passionate about their jobs. The bottom line is that over the next 86 years (2014 to 2100), the E&P industry will have to work very hard to navigate hydrocarbon success in the I+4E space.
What is SPE not doing now that it should be doing?
SPE has a large portfolio of excellent ongoing offerings and initiatives and is, in fact, quite agile and responsive when it comes to acting quickly with a new offering to meet member needs and new trends in the industry. Even longtime SPE members are not always fully aware of the very extensive SPE menu for members.
The key for me is that SPE must not be static; SPE must always think: How can we change for the better in our members’ view? How do we best adapt and become SPE 2.0 and stay efficient and relevant? To find out what the changing needs are, we need to constantly ask the customer what she is after—how SPE can help. To this end, SPE is surveying members systematically to gain critical member needs insight.
We should always ask our members: What are we not doing for you that we should be doing? What should we stop doing and how can we improve in your view? What is good that could be great? What other great ideas do you have? The day when we start SPE initiatives without asking our members first is over. My specific ideas for what I think SPE needs to especially focus on were outlined above. Almost in every case, however, before initiating new and costly SPE programs, members will be asked: Will this help you? Should we kick this project off? How do we maximize the utility for you? What do you think we should do?
You seem particularly passionate about the industry and life in general. Where does your passion come from and what fuels it today?
Securing the world the energy it needs in a sustainable fashion is among the greatest human challenges facing us (see related article, p. 20). If you asked a person cutting rocks next to a Giza pyramid as it was being built in approximately 1500 B.C.: “Sir, are you cutting rocks?” He might have replied: “No, I’m not just cutting rocks, I’m building a pyramid.” The difference is having a sense of purpose as a personal motivational driver for your job. It is about the job being more than a job; it is about being a small part of something much bigger than you. It is about 1.4 billion people being without electricity in 2014. What if we could give them the dignity of electricity through accessible and affordable energy? We cut rocks too, but we don’t build pyramids; we help build 92 million BOPD and 350 Bcf/D every single day. And, I work for a great global company that is a force for good in so many dimensions in so many places. In addition, I am on team SPE with 124,000 other energy professionals and students around the world.
Together, we have set up a massive global collaborative network of energy professionals materially assisting in getting the world the energy it needs, in a sustainable manner, every day. And, I have to say it again: The energy we produce fuels human progress and raises living standards. How can you not be passionate about being a small part of this village? I say village because it takes a massive amount of collaboration to get anything done in E&P.
What led you to join the oil and gas industry?
When I finished high school in Norway in the early 1970s, the oil age was beginning to take off and it all sounded really interesting. Besides, the demand for new petroleum engineers was high as many companies were building up their Norwegian E&P organizations in parallel. So, in many ways it was a no-brainer. When I finished my MSc degree in August 1978, I had eight job offers. I want to take this opportunity to praise Norwegian politicians and administrators for how quickly they started investing in petroleum engineering education, E&P research and development, and in building a petroleum cluster. They wanted it to become an era and not an episode. They were able to attract excellent foreign professors from around the world to teach us and one of them, Professor Tony Podio from The University of Texas at Austin, suggested that I come to UT Austin for my PhD—something I did a few years later. When I am introduced as a speaker, people say: He talks a little funny, but at least he is a Longhorn!
There is an incident from your childhood in which you have drawn some professional lessons. Can you talk about that?
I grew up on an island in Norway and I will tell you an island story from my childhood. One day, I went fishing with two friends. We went down to the dock and had to pull the boat rope hard to get the boat close enough to the dock to jump on board to grab the fishing gear. When the boat was pulled back out, I jumped a little too late and fell in the water. I could not swim. I thought I was going to drown. Then I heard my friends scream: Lift up your hands. I did, and one friend leaned over the dock to grab me while my other friend held his feet so he did not fall in the water, and he was able to lift me up to safety. That saved my life and I am forever thankful and impressed by their quick thinking, ability to innovate in a crisis, and their resolve.
This is what I learned from this incident: If you live on an island, learn to swim. Competence is the key. Either you know how to design a safe exploration well or you don’t. There is no “I can almost swim.” SPE can help you with this throughout your career. Mind the gap. Compare yourself and your project and your company and your key performance indicators with the best, and mind the gap. If the gap is in their favor, quickly work to close it. And, finally, collaboration is a matter of life and death. My “island story” in many ways sums up our industry. You must be strong in your professional field (learn to swim), you must always adapt and renew yourself and your tool kit so there is no gap, and collaboration or teamwork is the way we work in E&P and in SPE.
What experiences have you had in SPE and in the industry that will help you as SPE president?
In SPE, leadership is mostly a team sport. Rather than being like a herd of buffalo, which apparently just stops bewildered when the leader is taken out, SPE is more like a flock of geese flying in V formation. We know where we are going (the SPE strategic plan), we have a clear division of labor (the SPE Board and the SPE committees), and SPE’s excellent staff executes.
The hardest place to fly, in many organizations, is in the leadership position, in the front of the V. But, watch closely and you will see many different geese taking their turn to fly in this position in SPE. New visions and initiatives are proposed by SPE Board members all the time, and the proposer often ends up “carrying the ball” until the new initiative is implemented with staff ’s help. So all the leaders in SPE take their turn flying in front of the V-SPE. The most important contributions a president can deliver during the one year in front of the V-SPE are: Maintain the “fire in everyone’s belly” around SPE’s vision, mission, and strategy and keep thanking everyone for volunteering and for helping produce the energy the world needs to lift living standards and fuel human progress. Push everyone to think: What should SPE 2.0 look like so that we change before we have to and never stagnate, get complacent, or forget to adapt to our members’ needs? Introduce incremental or disruptive SPE 2.0 ideas to make sure that SPE adapts to stay fit. Insist on quality, diversity, and a global mind-set throughout the SPE ecosystem. Listen loudly to members’ changing needs and respond appropriately as quickly as possible, and especially get the perspectives of young members.
I have served in several capacities with SPE—board member, board committee chairmanships, Distinguished Lecturer, etc.—which gives me a good picture of and feel for how the organization works. And, in the E&P industry and in academia, I have held many jobs on several continents (chief reservoir engineer, vice president of business units, vice president of exploration, vice president of R&D, etc.). All this has given me the ability to relate to our members in most SPE camps, be it professionally or geographically.
What are your main goals as SPE president?
SPE is a team sport. As president, you promulgate your core ideas, ambitions, and goals for the 3 years you are on the Board of Directors and, hopefully, some of them are good enough to gain traction and survive. There are hundreds of ideas that bubble up in SPE every year. Hopefully, we are Darwinistically excellent in SPE; the good ideas survive and the bad ideas die.
Here are some of the ideas that I will try to win hearts and minds with: To push for changes and improvements for the better or ‘SPE 2.0’ in every corner of SPE, especially trying to harness the reach and networking opportunities provided by the increased e-connectedness; the many e-arenas; and the “massive open online courses” where one teacher in theory can educate all our 124,000 members in one go via webinars. This does not mean that all we should do is experiment and not focus on the execution of our existing programs with top quality. No, this is about doing what we do with quality and better than anyone else and concurrently adapting and renewing ourselves: to listen loudly to our members and to respond swiftly to their needs; to promulgate SPE’s health, safety, security, environment, and social responsibility position, because we must maintain the public’s trust and our license to operate locally and globally or we are out of business; to help the industry predict and execute investment projects better; to find ways to assist Mexico’s engineers and geoscientists post energy reform in close cooperation with the existing Mexican professional organizations; to make SPE appealing for young professionals and to attract many more of them; to push for even more collaboration in n dimensions and especially between academia and business; to have more “soft E&P issues” at conferences and in our publications (entrepreneurialism, innovation, building a company from a lab discovery, project execution, creative destruction, making a strategy, learning from other industries, and creating competitive advantage, to mention a few).
How do you expect the oil and gas industry to be different 5, 10, or 20 years from now?
Daniel Yergin recently wrote in a Wall Street Journal column that the 2034 energy picture may look a lot like today’s because the process of shifting from one energy carrier to another is a huge and costly undertaking. He hedges his bet though by saying that “energy surprises tend to confound the best predictions.” His Exhibit A for this: In the US, companies only a few years ago built several billion-dollar LNG (liquefied natural gas) import terminals to meet the country’s growing need for imported gas. After the shale gas revolution, however, the investments are in LNG export terminals and, in a few years, the US could become one of the world’s top LNG exporters.
If you look at the global energy forecasts to 2030, 2040, and 2050 of BP, Shell, and ExxonMobil, the US Energy Information Administration, and McKinsey & Company, they all basically agree: Global energy demand will grow dramatically and oil, gas, and coal are still kings in 2040, while renewables grow the most but from a small base so they still only provide about 5% of global demand, and the future looks bright for natural gas. The most vocal contrarians suggest that this forecast is wrong because the world may agree on global emission goals, natural gas might substitute for oil more quickly than expected, and the cost of solar could come down more rapidly than believed combined with new batteries that shine at night when the sun is taking a break.
I expect the E&P industry to relentlessly and incrementally improve everything it does along the E&P value chain. I also expect disruptive game-changing E&P events (they can be negative or positive depending on your perspective and vantage point), of some kind, at least every 5 years. Some examples are: The impact of increased connectedness and e-networks will change E&P companies and organizations such as SPE. The “office model” of work will further disappear as we are measured on how we communicate and what we get done rather than on when we work and where we do the work. Just imagine the cost savings for E&P companies when huge headquarters are not needed any more; this will be a creative destruction contribution to lowering the break-evens of a barrel produced. “The Internet of everything” will get increasingly into every aspect of E&P so that everything becomes “smart.”
The key is to ensure that what we measure and make digital in the field lead to actions that improve value creation. Otherwise, it is just nice-to-haves and added-on cost. Disruptive technologies that will come could be hydraulic fracturing without using water, seismic acquisition by drones flying over land and sea, and 10,000-ft multilateral wells used at 30,000‑ft total depth in the deepwater Gulf of Mexico. The triple bottom line will grow in importance: Companies will need to give a great return, have a low environmental footprint, and generate a good social return for local communities. Global standards and norms will increasingly become valid for everyone as a global agreement on climate is reached. Because, how long can 190 boats (read: nations) be on the deck of a super-tanker (read: planet Earth) where all the 190 boats have captains, clear goals, and destinations, but the super-tanker is “captain-less”?
The industry’s image continues to languish in many regions. How should members react to this? Should they be proactive?
Absolutely, and they are. In the Bakken, Marcellus, Eagle Ford, and other shale plays, for example, individual operators and/or local operator associations invite community members to town halls (or other local forums or arenas) to introduce themselves and their way of working, and to explain in detail how operations will affect the community’s daily life. This is the “no surprise” approach to stakeholder management. It starts things off on the right foot and it gives a good first impression; that is important when you plan to spend the next 20 years in the neighborhood. Residents tend to be concerned with risks from increased traffic, the impact on road surfaces, and perceived environmental issues related to water and emissions. They also want to hear about how drilling and fracturing operations work and how their community may benefit from the operations. The meeting continues until everyone has gotten an answer to everything. Then another town hall in 6 months is arranged to see if the community thinks the operators are living up to their promises. In this manner, trust is built and collaboration, rather than conflict, is the goal.
How well is the industry handling the controversies and public questions surrounding hydraulic fracturing?
Well, but still not well enough. In the US, I recently read that more than 13 million Americans live within 1 mile of an unconventional well. With all the negative press and often emotional, rather than fact-based, position taking, it is fully reasonable that families and communities ask questions. The frontline for local stakeholder engagement must be the operating companies and they really are stepping up to the plate. There just is no place for shortcuts and rogue actors in this endeavor.
DNV GL just announced a comprehensive verification service based on its recommended practice for risk management of shale gas developments and operations, regulatory requirements, and other publicly available standards. The American Petroleum Institute just issued standards for oil and natural gas companies to develop community relations amid the rise of drilling and hydraulic fracturing in towns. In Colorado, Anadarko Petroleum Corporation and Noble Energy, two leaders in the Colorado oil and natural gas community, formed Coloradans for Responsible Energy Development (CRED, a 501(c)(6) nonprofit organization) to provide scientifically sound information about hydraulic fracturing in local communities where hydraulic fracturing ban proposals started appearing (see article, p. 24). CRED’s core mission is to educate the general public about the energy, economic, and environmental benefits of safe and responsible oil and natural gas development. Their message to voters considering limits on fracturing operations is simple and clear: Get the facts on hydraulic fracturing first before you make a decision. For good order, SPE is a not-for-profit, non-political organization on a mission to educate our members and to share best practice.
