Courage: What is Desperately Needed from Oil&Gas Leaders
Crude oil and natural gas. Oil and gas. Oil&Gas. A natural resource that has long been the cornerstone of civilization. Fueling humanities thirst for growth and better living conditions. It has defined our politics. Our economy. Our lives. My life.
I had never seen so much rain fall from the sky. There was standing water on the roads as the driver made his was to my hotel in downtown Houston. I was 20 years old and had just flown from Washington D.C. for a job interview. That night, as the rain continued to fall, I kept glancing at my phone, waiting anxiously, for a familiar chime before I would be told, apologetically, that dinner had been canceled. I was wrong. Life in Houston would not take a knee to a torrential downpour, this city was unfazed, resolute. I walked in carrying the same attitude for my string of interviews the next day and walked out to a spotless blue sky with an offer letter to join ExxonMobil. At the time they towered over the tech giants from Silicon Valley. I was delighted.
As I lean back on my chair and stare out into Houston’s sprawling footprint to the east, I cannot help but to focus on the refineries far into the distance. There, in the horizon, I used to manage Major Capital Projects. My name and signature will forever live on the engineering drawings used to expand and build out small portions of those refineries. I take a deep breath and I think about the courage it took to resign. The courage it took to take a chance on myself. The courage it took to stand resolute alone in the pouring rain.
I run, religiously, at Memorial Park. You probably seen me if you ever driven by there. I started when I first left ExxonMobil and kept it going even when I moved to Austin – around Lady Bird Lake – and San Francisco – around Crissy Field and the Presidio. It gives me the opportunity to think. To reflect. To challenge myself physically and mentally. As I finished my run one day I decided, admittedly without fully understanding the magnitude of the undertaking, that I was going to start a hedge fund. Yes, you read that correctly, a Project Engineer from Houston decided he wants to go toe to toe with Wall Street. I should point out it gets very hot in Houston.
I have never been afraid to take a risk. My philosophy on life is quite simple: you get just one chance to live and the goal is to experience as much as possible. Like I said, simple. How hard could it be anyway; I am, after all, an Engineer. The summer of 2009 saw me proudly walk across the stage to receive my Mechanical Engineering diploma from the University of Maryland. Years later, I was also admitted to Columbia University when I applied for graduate school. I ended up giving the Upper West Side school the Heisman and doubled down on paving my own path instead. You only had to look at the list of names admitted and the $90k a year in tuition and fees to see what Columbia was doing. It broke my heart.
I experienced quite a bit in those years; rock bottom lows and higher highs than even my most vivid dreams. The one thing I did not experience was regret. I remember looking up at the former Enron building – gleaming in the Houston sunshine – with all my personal possessions stuffed into three small bags as I was waiting for a taxi to take me to the airport – bound for San Francisco with the dream of raising capital for my fund. I ended up working in that very building years later; leading the development of machine learning applications for Chevron. Believe me, the irony of it all is not lost on me.
But I digress. I want to talk about managing your assets. My experience is not just limited to Oil&Gas and Tech, but also covers Nuclear (Calvert Cliffs Nuclear Power Plant) and Aerospace (NASA). Aside from a worrying radioactive glow late at night, my professional background has also given me quite the unique perspective. You see, there are articles from analysts with fancy diplomas that say the Oil&Gas industry is down and out. I am not so sure. Maybe the industry has taken a bit of a hit along the way. Misunderstood. Shunned for its dark complexion. Rejected for the wealth and power it has bestowed to those whose values may not align with ours. But far from down and out.
I will just come out and say it, as genuine as the people in Houston are – a handshake still means something around these parts – they do tend to be set in their ways. Can you blame them? I was with ExxonMobil when we posted a record $45.2 billion in profit; there was little talk of running operations more efficiently. That mindset, however, leaves you flatfooted; slow to react to the unexpected and will be further tested as the world shifts towards a more environmentally conscience style of policies. It plagues leaders who have an unwavering focus on short-term financial gains.
The courage to act, the courage to take a stand, the courage to make long-term transformational investments that may not be popular is what is needed and required of leaders. This is especially important when considering the geopolitics of the Oil&Gas industry. Let us pick on Saudi Arabia. The Kingdom is sitting on an ocean of oil and their crown jewel, Saudi Aramco, is not so much concerned with maximizing shareholder value as it is with funding the Saudi economy and promoting the regional and global ambitions of the ruling family. When independent shale producers in the US started to chip away at the Saudi market share, and thereby influence and power, the response was swift and heavy-handed: the markets were flooded with cheap oil in an effort to drive higher-cost producers out of business.
History teaches us that this is not the first time greed has crippled an industry. Naturally, you may be wondering, as an executive, how can I insulate my operations from such fluctuations? The answer is, surprisingly, not complicated: every decision, every investment, needs to have the singular focus of making your operations profitable under $30 a barrel. Simple. Clear. Concise. Given the geopolitical nature and strategic importance of Oil&Gas, volatility in the markets will remain elevated as long as there continues to be demand. To be clear: there will be periodic crashes in the price of oil again and again and again. The decision remains yours: do you have the courage to challenge convention, break from the reactive nature of the industry, and transform your operations by leaning on technology?
It looks like we have now come full circle. You see, a significant portion of Oil&Gas companies worldwide are SAP customers. A majority run SAP Plant Maintenance. As a next natural step, look to SAP Asset Manager: a mobile version of Plant Maintenance designed to cut down the non-productive time of field maintenance technicians while also lowering their safety risk. A small first step in moving towards becoming profitable under $30 a barrel. Asset Manager is part of SAP’s Intelligent Asset Management (IAM) suite which optimizes – not replaces – the inspection and maintenance activities of our Oil&Gas customers. The suite of solutions integrate seamlessly and allows users to define a proper hierarchy and taxonomy of assets, build a strategy around critical equipment using historical data, and identify discrepancies in the behavior of equipment with help from machine learning algorithms.
Although we may be years away from revolutionizing our energy supply, the technology needed to run our current operations more efficiently, cleanly, and as a result more profitably is certainly available today. Surely, continuing to call those who lack the courage and confidence to take a risk or a stand our leaders undermines the very change necessary to appropriately confront the challenges faced by the Oil&Gas industry.