|Date Published||September 29, 2016|
|Article Author||Stephen Mackisoc|
|Article Type||September 2016 Issue|
|Category||Articles, Oil & Gas|
|Tags||E&P, Oil & Gas Downturn, Oil & Gas Future, Oilfield HUB Community, S&S|
The other recurring theme in my musings has been teamwork and partnerships. True partnerships where all parties work together and all parties share the risk and reward equally according to their contribution. If you have been reading some of the many great articles in recent editions of Oilfield PULSE, you have read about the cost of doing nothing, being in the arena, and the need for collaboration. ALL of these concepts and methodologies apply to being able to thrive at forty-five!
However, there is still a somewhat adversarial and certainly secretive tone, whether expressed or implied, when dealing within many supply chains. The current operating theory seems to be, “Tell the vendors nothing and provide minimal feedback on bids.” Constant badgering about further discounts after a competitive bid process and over-engineering and re-engineering of a winning bid simply annoys key vendors. The current system continues to add cost and complexity to already pricey projects. Then, there is the sham that is a “competitive bid process”. This is where right in the middle of most bid documents the owner reserves the right to, “Negotiate with one or more successful bidders after close.” In my experience, these negotiations frequently involve more than one bidder.
Whether it is Integrated Project Delivery or a true partnership on work in the oil patch, it is long past time to work together! If we are to have an industry that can thrive at forty-five or forty or less than that, then we must become better at working together in a collaborative, open, and honest manner. The concept is used successfully in many industries, so we are certainly intelligent enough to make it work in oil and gas.
There are efforts being made to be sure. There are multiple working groups trying to redesign the project management and project flow concepts currently in use. There are collaborative, multi-disciplinary teams earnestly trying to find ways to improve process and products and reduce costs. Even though global commodity prices seem to be working against us, we are making headway.
The bleeding, however, must stop soon. Ian Tyson recently said, “We are not at the end of oil and gas, but we can see it from here.” If we cannot learn to thrive at fort-five, and perhaps lower, capital investment will never return to Alberta, and the end for us may come sooner than Mr. Tyson expects! Perhaps, as we are hearing on multiple fronts, there may be a bull run coming up on oil and gas in the next six months, but I don’t believe for one second we should count on it. Even if there is a bull market, it likely will not last, and the up and down cycle will continue. As we have all heard many times, hope is not a strategy. The leaders of our larger oil and gas companies do not seem to be counting on such a bull run either, at this point. Hefty losses month after month weigh heavily on organizations that need lots of cash flow to operate. Boards of Directors can sometimes make poor decisions based on their realistic concerns for the shareholders they represent, and I am confident that can also affect even the best of CEO’s. The people at the top are certainly not immune to pressure.
Now is not the time to manage solely according to the capital markets or remain focused only
on the next quarterly report. We need long term thinking and long term strategy with tactical performance that supports that strategy. Oil and gas will come to an end, of that I am certain. I don’t profess to know with what oil and gas will be replaced. Tidal electricity generators? Ridiculously effective solar power? Compact power cells like Ballard? The Tesla Powerwall in your home? Wind power that doesn’t mar the landscape and kill birds? Compact nuclear?
The question is, will Alberta have the support of all Canadians in remaining tapped into that global commodity market until it dries up? Or, will we continue
to be held hostage by various special interest groups, including our own neophyte government that continues to rankle against oil and gas? The Alberta government talks about how pumping up tourism will diversify our economy, and they need to move us away from oil and gas. Tourism and wind power will never put six and eight billion directly into government coffers to fund all the high cash need ideas our current government has. Business does need the support and encouragement of government, and diversification will require heavy R&D investment. I trust there will be business advantages given to Alberta companies that are able to research, design, and produce new technology.
It is never a good business decision to destroy your main source of revenue until you first have a way to replace that revenue. Of course, the Oil Sands Advisory group created by this same government has populated that with people who have been very vocal about their opposition to oil and gas. They have been certain the majority of participants are not from industry. Perhaps, they are more intelligent than I give them credit for. Maybe these appointees will actually be converted once they hear facts instead of rhetoric. One can always hope, but let us all never forget hope is not a strategy!
Finally, we have no chance of thriving at forty-five unless we can get our products to market. The same “environmental” out fit that was funding protests against KXL is now sticking its nose further into our business and attacking energy east. What business does a USA operation like the NRDC have providing funds and guidance to Canadian special interest groups or demographics to protest pipelines within our own country? It is long past time for all Canadians to stand up and do what is best for Canada!