Ocean Energy CFO Tells Producers to 'Play Ball'
Using the baseball movie Field of Dreams as a metaphor for the energy industry, Ocean Energy Inc.'s CFO William Transier told producers they have to "go the distance" if they believe the North American natural gas market will grow to 30 Tcf within 20 years. By overcoming the challenges, producers can build a "supply of dreams." But, he warned, it won't be a shutout.
Speaking to attendees at the North American Gas Strategies Conference in Houston, Transier warned the standing-room-only audience that industry has to improve its financial performance, solve the shortage of equipment and lack of qualified workers, and continue to invest in technology before it can grow in more than short-term profits.
"These are issues we must collectively address," Transier said. "Our financial performance has to be better than what it has been historically. We cannot continue to just chase production, but instead, we have to establish a supply base."
The energy industry is in a slump, said Transier, whose independent energy company is based in Houston. "The drilling base is aging and so is the work force." OEI, with international crude oil and natural gas operations, focuses its North American production along the Gulf of Mexico shelf and deepwater, as well as in the Permian Basin, Mid-continent, South Texas and Rocky Mountains.
Transier said that OEI predicts it will spend 20% more this year alone on service costs, related to its personnel needs and equipment. "Service costs have had a dramatic impact on our rate of return," he said. "Consolidations have eliminated the talent pool. There is a real shortage" of qualified people in both engineering positions and field work, which he does not expect to end before the 2010. And in the immediate future, "there is no technology on the horizon. My viewpoint is that industry has to resolve this issue. All of these issues."
More optimistic with the current White House administration but hesitant about state-level politics, Transier said that political forces are a "primary concern" for the energy industry. "There are reasons for optimism in Washington, D.C., but with California's problems, we can highlight the damage of short-sighted approaches."
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