Leaders on Leaders: Advice on Surviving the Storm From SPE’s Top Volunteers
The reality is that those working in the oil and gas industry are facing the toughest challenges seen in a generation. Aside from higher prices, one of the only things that will make it easier is good leadership.
In times of crises, people turn to their leaders.
So who do leaders turn to? Other leaders.
A very public example of this took place earlier this week during another SPE Live broadcast with a panel of SPE’s own top volunteer leaders, including two past presidents, one future president, and one nominee for president.
The thousands of oil and gas professionals who viewed the panel discussion on LinkedIn, Twitter, and SPE’s website heard each panelist’s personal rubric for what defines good leadership under extreme circumstances. Their lessons—which apply to executives, managers, and leaders of even the smallest teams—painted a collage of how industry leaders should be reacting to the double black swan of the COVID-19 pandemic and crushingly low oil prices.
Maria Angela Capello, chair of the SPE Business Management and Leadership Committee, moderated the panel. The BMLC is an SPE standing committee whose purpose is to identify gaps between nontechnical skills that members need and those currently provided by SPE, and making recommendations to the board to fill those gaps.
Capello and the panelists discussed major themes addressing the upstream industry’s current reality while resetting the template for the inevitable swing of the pendulum.
Those sharing their insights included:
- Tom Blasingame, 2021 SPE President, petroleum engineering professor at Texas A&M
- Eve Sprunt, 2006 SPE President, consultant and retired Chevron executive
- Kamel Ben-Naceur, 2022 SPE President nominee, CEO for Nomadia Energy Consulting
- Sami Alnuaim, 2019 SPE President, manager of petroleum engineering application, Saudi Aramco
Key takeaways from their wide-ranging conversation (which can be replayed here) are below.
Tom Blasingame, 2021 SPE President
For Blasingame, leaders need to be thinking about how they prepare people for what is unfolding today. No sugarcoating allowed.
“I think the No. 1 thing you do is be honest and you tell people this is absolutely the toughest time our industry has ever faced,” he said. “This is going to be a transformation of our industry. It’s going to be a transformation of our professional society. It’s going to be a transformation of our lives—certainly of our work life.”
The simple version of the new normal that Blasingame offered is that the physical world might not look that different, but everything will be.
Working from home is the most relatable change many professionals in the business can expect to share among them for the foreseeable future. Blasingame warned though that working from home tends to blur the lines between free time and work time, resulting in a few extra hours of work each week. This is a tradeoff he said will simply be expected of employees going forward.
As an academic leader, Blasingame noted that oil and gas educators tend to weather storms relatively well. The big exception though is that recruiting new talent into petroleum engineering programs will be a “hard sell” from now on.
Regarding the business of the upstream industry, he sees a structural shift underway that will test the know-how of the youngest generation of talent. The loss of jobs and capital taking place today is likely to result in “a near-global refocus on oil and gas [resources] which are much easier to recover,” and that are also the cheapest to recover, he said.
This will affect thousands of younger engineers from around the world who have spent the past decade studying and working in unconventional developments and have no experience with conventional reservoirs. “They’ll have to adapt,” said Blasingame, noting that future petroleum engineers will be encouraged to diversify their learnings by taking up chemical and mechanical engineering.
The cyclic nature of the oil business is perhaps the best source of clarity amid the uncertainty that comes at the beginning of a bust. Blasingame spoke of leaders’ need to nurture people through the trough because when times improve there will inevitably be a shortage of talent.
“Downturns or challenging times tend to bring out people who evolve or emerge as our best leaders,” he said. “I’m looking forward to that.”
Eve Sprunt, 2006 SPE President
Sprunt said a major key to good leadership during uncertain times such as these is decisiveness. “You are the leader—the buck stops there,” she said, while noting the complement to decisive action is flexibility. Today’s uncertainty is driven by a long list of unprecedented macroeconomic events.
“We don’t have case studies to go back to say ‘these are the best practices in something like this,’” said Sprunt. “So it’s about being flexible, willing to change course, and say what has worked, what hasn’t worked, and taking responsibility for those actions. Because with leadership comes responsibility.”
Leaders must also balance these commanding principles with compassion. Sprunt said that boils down to being a good listener. Taking advice from one’s own employees is required to truly understand the threat landscape. In turn, it becomes much easier for a leader to then decide “when to change the rules” and “when to flex to something else” in terms of how to run the company.
The last element needed to be a good leader during a crisis, Sprunt said, is clear messaging. The instructions to everyone in the organization must make sense; ambiguity and confusion are the enemy in this respect.
“I think it’s about leading by example,” she said. “You want to role model what you’re asking people to do for you.”
Sprunt also emphasized the importance of helping others by taking the time to listen. Listening to the challenges others face and sharing your own creates opportunities for mutual learning. She added, "Mutual mentoring and supporting others is not only a gift to others, but also to yourself."
Kamel Ben-Naceur, 2022 SPE President Nominee
To navigate through multiple black swan events, Ben-Naceur highlighted that leaders must be viewed as circus jugglers “because they have to combine action-taking in the short term, and review completely the medium- and long-term strategy,” he explained.
For example, the immediate focus of energy companies needs to be on maintaining safe working conditions—the definitions of which have certainly tightened up amid a pandemic. On the softer side of this coin, organizational leaders need to consider reorganizing work practices to adapt to new social distancing norms.
Ben-Naceur pointed out that regulations around the world vary wildly on this point as some countries and jurisdictions remain in lockdown mode while others are loosening restrictions, and some have virtually no restrictions on public activity.
Additionally, leadership will have to embrace new ways of reconnecting with customers. All the while, the financial levers must be minded by a steady hand to “ensure the organization they are leading is resilient.” One outcome of this mindset will be a more prepared industry.
Ben-Naceur framed today’s circumstances as a stress test of sorts for the oil and gas industry. Like the world’s major banks after the 2008 financial crisis, he said the oil and gas industry must consider the possibility of future black swans, “including the shut-ins of production to a level that we have never seen before.”
He elaborated on the uncertainty that exists without a baseline guided by precedent—a common thread of the discussion. The first question is whether OPEC+ and uncoordinated cuts by others are adhered to and are enough to rebalance global markets in an efficient time span. The second piece required to understand the industry’s trajectory will be the ability to restore the production as demand recovers, which is needed to keep markets in balance and avoid price volatility resulting from overcorrection.
Ben-Naceur illustrated the potential scope of the dilemma by recalling a story told to him by the chief executive of a South American oil producer that previously shut in production due to a worker strike: “They were able to restore—after significant effort—92% of production,” once the strike lifted.
“These kinds of cuts are terra incognita for many countries,” he continued. “They have never done anything like this, so this will be a very significant stress test for those countries and their willingness to go through similar agreements.”
Sami Alnuaim, 2019 SPE President
If there were any doubt, the embracing of digital technology will continue to be an important chore for leaders of organizations across the world. This point was raised several times by Alnuaim who said oil and gas companies especially need to be “turning on the IR 4.0,” the popular abbreviation for the fourth industrial revolution that is to be dominated by automation and artificial intelligence.
“I know there will be some tough decisions to be made to reduce costs and tough decisions to probably delay certain projects,” he said. “But let’s not forget the strategic nature of our business and industry. We never plan for the short term in our industry. We always look at the long term.”
Alnuaim said the one thing companies can count on is that demand will rise again. In agreement with his fellow panelists, he said companies vis-à-vis their leaders need to be ready.
It may be difficult now to know who is making the right moves. For many, it may be impossible to make any moves at all with cash flow restricted to minimally viable levels. But when the dust settles, Alnuaim said those who invested correctly during the recession will be “ready to harvest their investment during the upturn.”
Giving a real-time example, he added that like many organizations around the world, the SPE is going to be more digitally focused than ever before. Alnuaim emphasized that the first seeds of the society’s digital transformation were sown in just the last few years under his and prior SPE presidents. He said the “harvesting” of those investments has begun in earnest.
Alnuaim pointed out that the recent adoption of using social media platforms for multiple live broadcasts each week as perhaps the most recent and manifest example. Despite the disruption to in-person events, “as a matter of fact, we have the advantage of reaching more members” via the SPE’s web offerings which also include technical podcasts, webinars, and a growing number of virtual workshops.
Even during normal times, many SPE members are unable to attend conferences, he added. “But when you look at technology—what technology offers today—we can reach more than the 150,000 members we have globally.”
To guide companies during the process of recovery, Alnuaim highlighted the importance of the following priorities for leaders:
- Safety of people working to energize the world
- Business continuity
- Adoption of advanced technology
- Employee development with advanced technology and effective soft management skills
- Social responsibility
- Strategic focus on safety, environment, and cybersecurity