Business/economics

Oxy CEO Vicki Hollub Reflects on Career, Climate, and Carbon

Highlights of what the US oil and gas chief said to SPE members at the recent Hydraulic Fracturing Technology Conference.

Vicki Hollub, CEO Occidental Petroleum

Vicki Hollub could have ended up a coal miner if not for the fact that mines tend to be cold and a little cramped. Instead, she worked her way up through the oil field with Occidental Petroleum (Oxy), eventually rising to become its CEO and the first woman CEO of a large US oil and gas company.

The Alabama-native is also known for orchestrating one of the industry’s largest deals when Oxy outbid Chevron in the 2019 acquisition of Anadarko Petroleum. Additionally, Hollub has been outspoken on some of the biggest issues facing the industry, including its license to operate amid growing concerns over climate change.

Last week at the SPE Hydraulic Fracturing Technology Conference, Hollub shared her professional story, views on current events, and updates on Oxy’s direction toward becoming a low-carbon energy firm. Her remarks came during a fireside chat with members of the SPE Hydraulic Fracturing Technical Section. Some of the highlights from the nearly hour-long exchange follow.

Swapping Coal Mines for Drilling Rigs  

Covering her journey to the top, Hollub recounted how her journey to Oxy started while she was an undergraduate at the University of Alabama and majoring in music. The French horn player said it “was my dream” to play on the university band and follow the school’s legendary football team to a national championship in 1979. It took a music professor to convince her that music may not equal a career and that's when she made the switch to majoring in minerals engineering.

“There was a lot of coal mining around where I grew up,” she said on considering the new direction, “and so I got excited about going into coal mining.”

But that excitement would soon vanish. On her first field visit to experience a working mine, Hollub said, “It was cold. It was wet. I got claustrophobic. So, I had to scratch that off the list."

Shortly after, Hollub took another field trip, this time to a drilling rig. “It just so happened that they were pulling the equipment out of the hole when we arrived and that was the most exciting thing I had ever seen.”

Hooked on oil and gas development, Hollub was ready to graduate and begin her oil career in 1981 which she described as a time when "any interview you had, you were given an offer." Though for her, this wasn't exactly the case. Hollub admitted she may have rubbed the hiring managers at Exxon the wrong way with her request to work exclusively at their office in the beachside resort city of Pensacola, Florida.

Instead of going to work for Exxon, she was hired in Jackson, Mississippi, by a firm called Cities Service Company which owned utilities along with oil and gas projects. Within about a year of working there, Cities Service was bought by Oxy. Now its CEO, Hollub said she ended up at Oxy “by accident,” but was keen enough to realize her new company was one “where I could do whatever I was willing or wanted to do.”

The Geopolitics of Hydraulic Fracturing

One of the messages Hollub offered those attending the industry conference is that their work has shaped the fortunes of the US for the better.

“In terms of energy independence, hydraulic fracturing has helped the United States maintain a position of power in the world,” she said, adding that the major shale plays developed with fracturing account for around 8 million B/D out of the total of 11.6 million B/D of crude that the US produces today.

“Those of you that were part of developing [hydraulic fracturing technology] and those of you that are continuing to develop it, should be incredibly proud,” said Hollub, adding, “You may not have thought of it this way, but you made a difference in the world."

While recalling her role as an advisor to the US Department of Energy during the Trump administration, Hollub candidly spoke of the strategic gift this has represented for US policy makers. “I know how they use or leverage” US energy independence in tandem with its defense capabilities, she said. "When you put the two of those together, there’s no country in the world that can really challenge us very much.”

But there’s no guarantee such a dual advantage is guaranteed. On this, Hollub pointed to Europe where tensions with Russia have ignited concerns over both the continent’s future energy supply and stability.

Suggesting that Europe’s dependence on Russian energy instead of its own has weakened its hand in the current situation, she had this to say: “They attacked fossil fuels, they beat down the industry, they forced production to go down. And this will be, I think, the biggest mistake that they have made. This will be a huge mistake.”

For the US to maintain its geopolitical edge, Hollub sees a need for the domestic industry to promote its role in creating it. Meanwhile, the US government needs to find more alignment with the industry on things such as exporting more of the liquefied natural gas (LNG) that Europe has found itself short of in recent months.

Hollub also took issue with the recent attempts by US President Biden to secure LNG from Qatar to supply Europe with in the event that Russian supplies are curtailed. She said the role of supplier is one the US should be able to fulfil itself but that "we have a couple of LNG facilities, or would-be facilities, that can’t get their permits processed.”

Evolved View on Climate and Carbon Capture

Oxy has distinguished itself with a pledge to not just offset its Scope 1 and 2 emissions, but the much harder to abate Scope 3 emissions that are generated by energy consumers. This is something that the US supermajors have so far avoided doing. On being an outlier in this regard, Hollub said the company is able to move toward a complete carbon-footprint offset because of its expertise in carbon capture.

However, the CEO acknowledged that when the company began thinking about investing more in carbon capture over a decade ago, it was simply the logical means to maintaining its CO2 enhanced oil recovery efforts in Texas.

“When we first had the idea, there was nobody talking about climate mitigation,” she said. “Right now, there’s 50% more CO2 in the atmosphere than during pre-industrial times. We didn’t realize that back then.

“And so, as we started to learn more about climate change and climate mitigation, we realized this plan needed to happen, and would happen, to help the world.”

Becoming the Leader in DAC

The big plan at Oxy relies more specifically on a new technology called direct air capture (DAC). Revealing of her competitive spirit, Hollub said flatly that Oxy is “the lead on direct air capture” even though the company’s first such projects are not set to come on line until the end of 2023 or the beginning of 2024.

She brought up one of her competitors in this space which started up a DAC project in Iceland last year. Upon launch, the DAC facility developed by venture- backed Climeworks instantly became the world’s largest demonstration of the emerging capture technology.

While applauding the work in Iceland, Hollub argued that Oxy’s approach represents the one to keep an eye on in terms of the overall impact it represents. “You have to give them a lot of credit, but their process makes it difficult to do at a large scale,” she said.

Noting that the Iceland DAC project is designed to pull 4,000 tons of CO2 per year, she shared, “The first one we're going to build will be 500,000 tons [per year], but ultimately, the rest will be a full 1 million tons of CO2.”

Opening Up on Diversity

Hollub touched on other issues that the industry has struggled with and is trying to adapt to. On Oxy’s efforts to become a more diverse company, Hollub said strides have been made but she also lamented the lack of imperative her company has shown on this point in the past.

“I thought it was happening already,” and “that we were becoming more progressive” in hiring women, people of color, and those with different nationalities. Hollub then shared that it was after a succession planning exercise some years ago that she and other executives realized that wasn’t the case.

“We caught some things that we didn't notice happening,” and acknowledged there was an “unconscious bias” shaping the company’s makeup. “It was embarrassing to me to be the leader of an organization that wasn’t focused on diversity in a more aggressive way.”

Since the wakeup call, Hollub said she has committed to take charge in the diversity push and cited new programs the company has started to broaden its talent base.