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2014 SPE President Jeff Spath

“Now I come to my central point on how SPE can become more valuable to the industry: It is the coordination of solving complex technology challenges through integration and collaboration.”

Previously, he was president of the Schlumberger Reservoir Management Group and was president of Data and Consulting Services. He began his career with Flopetrol-Johnston Schlumberger as a field engineer conducting well tests onshore and offshore Louisiana and has worked for 30 years in various global positions in reservoir engineering, research, and management.

Spath is a recognized leader in the development and application of reservoir engineering and production enhancement techniques, including well testing, reservoir simulation, and nodal analysis. He is the author or coauthor of nearly 30 peer-reviewed publications and holds 14 patents.

An SPE member since 1983, Spath has served on many SPE committees and in many sections around the world. He was a Distinguished Lecturer during 1999–2000 and served as Technical Director of Management and Information during 2005–2008. He was elected an SPE Distinguished Member in 2011. Spath also currently serves on the Management Committee of the International Association of Oil & Gas Producers; the petroleum engineering advisory boards at Texas A&M University, the Colorado School of Mines, and the Natural Petroleum Council; and on the United Nations Global Energy Board.

Spath earned BS and MS degrees in petroleum engineering from Texas A&M University and a PhD degree in reservoir engineering from the Mining University of Leoben in Austria.

What are your goals as SPE president?

One goal would be to further globalize the Society. There is no doubt that SPE has made huge strides internationally from what was once a predominantly North American member society in the 1970s and 1980s. Today, more than half of our members reside outside North America. We have to continue to follow the upstream oil and gas business to the new frontiers, the new basins, and the new regions of exploration such as Greenland, east Africa, and the Caspian. Not just for the sake of member growth, but to make SPE more local and more relevant by adding professional sections and student chapters so critical to achieving success—both for industry and for individuals—in these new regions.

Secondly, we need to increase the degree to which SPE engages and collaborates with other organizations. We all accept that reservoirs are becoming more challenging to discover and produce. They are smaller, more complex, and they exist in increasingly hostile terrains under more difficult temperatures and pressures. Not to mention the challenges created by nano-perm shales and ultraheavy oil.

No single company, university, or government has all the expertise required. So we need to collaborate in all directions, including with other industries, such as the aerospace, automobile, and medical industries. SPE has an incredible reputation as a professional society and I want to capitalize on this reputation by taking the lead in fostering collaboration with other industries, other societies—which we are already doing quite well—and with trade associations.

Also, I hope members are aware of the new SPE Strategic Plan that the SPE Board of Directors put together under the guidance of my two predecessors. I am in the fortunate position now to oversee the implementation of this strategy that will further grow and strengthen SPE, and this will occupy much of my time.

 

What is the best way for SPE to continue to pursue globalization?

Historically, SPE has followed the industry. After a significant number of operators and service companies have located in a region and universities have staffed up, SPE establishes a presence. What I would like to do in places such as east Africa and in Myanmar, for example, is to be there, not necessarily first, but in parallel with the building of the industry.

Myanmar is a great example of a country in which SPE can bring significant value to individuals and to companies both, proactively, as they begin upstream development. Trade sanctions have just been removed, and Myanmar has had huge, very successful lease sales recently with operators such as Chevron, Petronas, PTTEP, Total, and others entering the mix.

I had an interesting experience on my last visit there when I toured the technical universities, recently reopened, after decades of being closed by the government. Schlumberger supports universities around the globe by donating computers, software, bandwidth, etc., and so I offered these things but they said, “No, no, we need buildings, we need faculty.” They don’t even have buildings and faculty and are trying to start a petroleum engineering program. This is where SPE should be—on the ground, early, where the operators and service companies are going and initiating new operations, disseminating the technology, and sharing the expertise.

You mentioned the importance of the SPE Strategic Plan. What does it stress?

The new plan refocuses the Society on what will be its most important functions over the next several years while reinforcing its mission and vision (see article on the SPE Strategic Plan beginning on Page 42). First, let me say that the strategy is a verification of our original and fundamental purpose—that of serving our members in the dissemination of quality, trusted technical information. To this end, members can expect to see additional methods of obtaining information about technology, through online journals, mobile devices, and other means.

Beyond this, though, there are a few specific strategic intents that will be important to ensuring the continued success of the industry, our profession, and SPE. One of my personal favorites is the strategic intent of increasing the attraction and retention of petroleum engineering faculty. The shortage of faculty at petroleum engineering schools is having a significant effect on the growth of our industry and, by correlation, our Society. Universities and industry both recognize this, and SPE is in an opportune position to help coordinate a solution. This issue is, to a certain extent, global, and is particularly challenging in North America. It does no good to attract more young people to our profession and then accept less than 10% of petroleum engineering applicants due to lack of sufficient faculty.

SPE has spent a lot of time and effort—well-spent time and effort—going in to secondary schools to educate teachers and students on the wonders of our industry. So, on the one hand, we are encouraging all of these young bright students to enter our profession, but then we have to turn them down at the university level because we do not have enough faculty.

Only two countries graduate more petroleum engineers than they can employ: Venezuela and China. Everywhere else in the world, the industry is screaming for more petroleum engineering graduates. And the reason there are not more petroleum engineering graduates is not a lack of people who want to be petroleum engineers, but because we do not have enough people to teach them.

Many companies hire mechanical engineers, electrical engineers, chemical engineers, and civil engineers and turn them into petroleum engineers through internal training. The industry would love to hire 100% petroleum engineers but it can’t because they are not there. I have worked with a lot of university deans in trying to solve this problem and I believe it is solvable. But what is happening now is that you have Schlumberger trying to solve it with Texas A&M, Chevron trying to solve it with the University of Southern California, and so on. There is a lack of coordination. Coordination will be the role of SPE.

If you have a choice between being a teacher or working for an operator or service company that does really interesting work and pays a higher salary, you might choose that company over teaching.

That is the crux of the problem. Like nowhere else in the world, US universities graduate PhDs but don’t keep them. They all go to industry. Or they go back to their country of origin.

A possible solution, and where SPE could help, is to take the 50-plus-year-old employees that do not have a PhD and put them into the universities as they finish their careers. I have worked with the deans at Texas A&M, the University of Texas, and the Colorado School of Mines and convinced them that they need to drop the PhD requirement for teaching undergraduate education. If a petrophysicist, for example, has been interpreting well logs for 35 years, he or she can probably teach undergraduates how to interpret well logs. We call them professors of practice.

Our company has taken another step along that path with a program called Schlumberger Professor Emeritus. We just did this for Colorado School of Mines. We took a world-class petrophysicist who was 60 years old and loved teaching. We kept him on our payroll to simplify benefits and he teaches at the university, which reimburses us 50% of his salary. We win because we want him there readying students for hire and he is a good ambassador for our company. The university wins because it is getting for half price a world-class petrophysicist who has interpreted logs and geologies all around the world.

The only way to make a program such as this work is to do it in volume and that is how SPE can help, by coordinating such a program. This is a passion of mine, and it happens to be part of the strategic plan.

How will individual members be affected by the strategic plan?

One of its emphases will be the bread and butter of SPE, which is the dissemination of technical information. We have identified ways SPE can be more relevant to members, such as bringing technology to people on the go. That is another element of the plan that I have a personal passion for: knowledge building and capability development. SPE will continue to provide options in training and competency assessment in an effort to reduce the time to autonomous decision making—one of the banes of our industry.

Two things cut horizontally across everything SPE does—technical quality and volunteerism. Volunteerism originally was one of the intents of the strategic plan, but the board concluded that it does not really fit as a strategic intent because volunteerism is part and parcel of everything SPE does. But one thing members around the world will notice about the strategic plan throughout is the renewed focus on volunteerism.

SPE is going to improve the volunteer recognition program, and we are going to help industry professionals volunteer by helping with some administrative details that volunteers deal with. Here is a great example from west Texas: when a small section wants to have an SPE Distinguished Lecturer come speak, someone from the section has to volunteer time to book a hotel room, make sure somebody picks the lecturer up at the airport, etc. We need to make better use of our volunteers’ time and to support them so that they can add the most value to SPE.

Volunteerism is fundamental to our success, so we want to develop ways to improve volunteerism. We need to continually re-emphasize volunteerism because people are getting busier and busier and the volunteers that SPE traditionally relies on outside of young professionals are mid-career employees.

Engineers and managers both are doing more with less. I am not saying it was ever easy to balance workload, family, and volunteering, but it seems to me that the workload for many has dramatically increased. Mid-career professionals do the bulk of the volunteering today. Unfortunately, mid-careers are the exact demographic that is being challenged by the big crew change. I have talked to members of operating companies who used to be responsible for 10 wells in the Permian Basin in Texas and now they are responsible for 100 wells in the Permian and three new wells being drilled in the Gulf of Mexico. And you want them to volunteer? I mean, the guy hasn’t seen his kids in 2 weeks. It is up to SPE to think of ways to help members volunteer, such as reducing the burden of administrative tasks associated with reviewing technical papers or setting up Distinguished Lecturer tours. We need to emphasize the value of volunteering and get better at recognizing the effort.

What else should SPE emphasize in the near term?

If SPE is to continue to grow as rapidly as it has in the past decade, the organization needs to better emphasize the advantages of being a member, and here I am talking simply about marketing what it can provide, both to existing and potential members. I have talked with members who have never been to the SPE website and seen the valuable links and information it provides. One of the most valuable assets the Society offers, the OnePetro library of 150,000 technical papers, is never accessed by some members.

Perhaps one of the most important initiatives SPE has embarked on fairly recently, and one in which we must increase our emphasis, is educating the public about our industry and, more importantly, our profession. We need to proactively, honestly, factually, rationally, openly, and not defensivelydiscuss the good our industry brings to society, and SPE must be the trusted, independent source of facts around issues that worry the public. This theme of energy education, now professionally delivered through the Energy4Me initiative, is essential to SPE’s mission and I will build on the work of my predecessors in this effort.

What is the best way to educate the public about energy?

Let me start by saying we got off on the wrong foot. When the movies came out about hydraulic fracturing and the rhetoric got hot and heavy, what did the oil and gas industry do? We, as we typically do as engineers, said, “That’s not right, here are the facts, you guys are wrong,” and we got defensive. And guess what? They found one well out of a million in Pennsylvania somewhere, which for completely different reasons, was leaking gas. And critics said, “Engineers, you’re not so smart. Here is an example.” So we have to level with the public. We have to agree with them, first of all, that there are potential hazards involved in producing oil and gas, as with any form of energy. And we have to prove to them that we are addressing those potential hazards.

There is a consortium of companies—including Schlumberger, Halliburton, Baker Hughes, the other pressure pumpers, and the operators—that are involved in an initiative called FracFocus, a website whose primary purpose is to provide the public access to information on chemicals used for hydraulic fracturing in their region. For example, a service company will go out and take a baseline measurement of methane, noise, CO2 in the atmosphere, and any groundwater contaminants in the area. Then after the well is fractured, the same measurements are taken and the before-and-after results are published along with details about exactly what was pumped, chemical by chemical. A landowner, an environmentalist, or whomever can go to this website and get facts. So that is one way that we have disseminated factual information, and it is working. This has been so successful in the US that the International Association of Oil & Gas Producers, of which I am on the board, is doing something similar for Europe and elsewhere.

Are there other ways in which SPE can become more valuable to the industry?

SPE has an extraordinary record of adding value to its members and to our industry in general; I doubt anyone would question that. This value will increase as our services and our global footprint continue to grow. SPE has the ability and opportunity to help the industry as a whole by leveraging the strengths of its global reach, its more than 110,000 members, its technology library, its independence, and its financial strength to achieve solutions to significant issues that may not be possible to achieve by companies working alone, or by individual companies working with individual universities. Solving the faculty shortage problem I mentioned earlier is one example of an industry problem that SPE can work across companies and across universities to mitigate.

And now I come to my central point on how SPE can become more valuable to the industry: It is the coordination of solving complex technology challenges through integration and collaboration.

By providing seminal, member-written white papers and providing the forum to showcase technical challenges and sharing potential solutions through the new Summit program, SPE can facilitate and accelerate the solving of industrywide technical challenges. Each individual company can do that, or SPE can pave the way and coordinate the collaboration.

We are already adding significant value around integration by partnering with AAPG and SEG, for example, in various conferences and workshops to facilitate the bringing together of ideas, domains, and data. The feedback on these types of joint conferences has been very positive so we need to think about how to expand this. A great example is the Unconventional Resources Technology Conference recently held in Denver. We cohosted this with AAPG and SEG because we know that the understanding of shale gas requires geologists, geophysicists, and engineers. In the future, we need to also invite geochemists and mathematicians.

How does collaboration benefit the oil and gas industry?

As I mentioned before, the technical challenges we face today are often too difficult for any one organization to solve. Take the challenge of dramatically improving recovery factors, for example. Schlumberger has gotten serious in improving EOR techniques and measurements. However, while we are really good at measurements and understanding the subsurface, we do not possess the best chemistry labs in the business. So we partnered with Shell. Now, neither Schlumberger nor Shell has world-class imaging at a nanoparticle level, so we partnered with Massachusetts Institute of Technology, who does. We now have a three-pronged alliance with seven successful EOR research projects.

This is the value of collaboration. And of course it doesn’t need to end with collaboration within our industry. There are a lot of exciting developments happening outside of the E&P world that can have a huge impact on our business—from nano-technology to advanced robotics. As disruptive technologies evolve in other industries, we need to get smarter and quicker at adopting them into our industry. To a certain degree it requires a culture shift, and SPE can lead the way by fostering and coordinating the necessary relationships.

 

Can SPE continue to grow at the same pace that it has for the past few years?

SPE has doubled membership in the past 10 years, and it can repeat this in another 10. There are two modes of growth. One is old-fashioned geographical expansion, where you grow your footprint in areas that are emerging. Places such as the Arctic, east Africa, Greenland, Myanmar—those are places in which we have not yet stepped foot.

A second mode of growth is where SPE has a presence but has yet to achieve the level of acceptance desired. One is Mexico and another is Russia. In Russia, I have already talked to the heads of Lukoil, Rosneft, and Gazprom and received positive feedback. We need to follow up now with the employees. Another area for growth, of course, is China. There are obstacles in language and in culture but we are solving these.

How will your career experience inform your presidency?

To my knowledge, there is not a job description for being SPE president, nor a list of required qualifications, but I would like to think I am well prepared, and naturally hope my peers will agree. Two strengths I have that I feel will serve me well are a strong technical background and a varied, global career that has allowed me to work among many different cultures, value systems, business philosophies, and operating environments. One advantage I think I have from working for a global service company for 30 years is the experience of interacting with all walks of the upstream life: from the largest IOCs and NOCs to the smallest independents. Finally, while I have worked for the same company my entire career, I have held positions from field engineer to salesman, from R&D to executive management, so I think I can relate to people in various parts of the business.

So this gives me the breadth of understanding of how Anadarko, for example, works differently than Petrobras. And they both work differently than, say, ExxonMobil. Each of these groups of companies, not to mention each individual company, has a unique culture and I have seen it in practice. I know, for example, there are companies that just love SPE and they encourage their employees to write papers and go to conferences and travel halfway around the world for an SPE training course, because they know it will be worthwhile. And I have seen the opposite, where a company I will not mention recently told me, “We don’t need SPE.” There is a spectrum out there and I think my experience in knowing how different companies and different cultures extract value from SPE differently will be an advantage.

Where do you see technology taking the industry in the next 5 or 10 years?

Quite a few exciting developments are going on now in the industry. If I had to pick one or two that I think are most promising, the recent advances in drilling, specifically around rig automation, would be among the top in terms of improving our efficiency, safety, and bringing overall well costs down. The combination of a dramatic increase in measurements along the drillstring and bottomhole assembly with computerization (thus optimization) on the rig floor and the designed integration of rotary steerable motors with the optimal bit and the optimal fluids is creating a huge impact on the operator’s bottom line.

A second growing trend in the industry addresses the integration of disparate measurements and data to reduce uncertainty and manage risk. This is not a new concept by any means, but the extent to which we are now combining seemingly unrelated data from different domains is making the industry much more confident in our subsurface interpretations and improving our ability to optimize production and maximize ultimate recovery. Think about the recent developments made in geomechanics, for example. Today, we are taking advanced, in-situ measurements of geomechanical properties and routinely integrating them into everything we do; a decade ago, that was unheard of by many. Who thought 10 years ago that we would be integrating seismic data—acquired, processed, and interpreted while drilling—to guide the bit around hazards to the most productive part of the reservoir? Or to help us understand fracture propagation in shale? Integration is one trend we will definitely see continuing.

You have written quite a few technical papers during your career. What is the value of writing technical papers, for the individual, the company, and the industry?

It benefits all three. Fundamentally, a good engineer should be a good writer; you have to be able to express your thoughts. Writing technical papers enriches an individual’s career. At Schlumberger, it isn’t just encouraged, it isn’t just rewarded, it’s a requirement for promotion. We have a formal technical ladder, like a lot of companies, and if you want to go from one rung on that ladder to the next, there is a concrete list of criteria. One of them is how many technical papers the person has written. So if somebody comes to me and says, “I think I am ready to become an advisor,” I will say, “Have you published 10 SPE papers?” And they might say, “No, but I have written nine,” and I will say, “OK, come see me when you get that next one and we will discuss it.” It is a requirement for promotion.

Why do we do that? It takes away some of the subjectivity for technical promotions, but we know that there is value for the company. When somebody picks up an SPE journal and sees a paper on simulation from Schlumberger, we may gain a simulation customer.

But you cannot insist that employees write papers without giving them the time to do that and the time to go to conferences and learn from others presenting papers. It has to be part of the culture of the company.

Lastly, it benefits SPE’s mission of communicating technical information; papers are the lifeblood of SPE. Without them, what are we? I certainly think it is the place for SPE to start a campaign re-emphasizing the fundamentals of writing papers and the importance of writing papers, from section to section and chapter to chapter, giving advice on how to do it. Yes, that’s another thing I’ll push.

2014 SPE President Jeff Spath

John Donnelly, JPT Editor

01 September 2013

Volume: 65 | Issue: 9

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