Lyn Arscott retired in 2001 as the Executive Director of the International Association of Oil & Gas Producers (OGP) which represents the upstream oil and gas industry before international regulatory agencies. Prior to that position, he was employed by the Chevron Corporation where assignments included Director and Corporate General Manager of Health, Environment and Safety and Senior Executive Consultant for Exploration and Production reporting to the Chairman of the Board. He was the 1988 President of the Society of Petroleum Engineers (SPE). He is a past Chairman of the American Petroleum Institute’s General Committee on Health and Environment and past Chairman of the Western States Petroleum Association committee on Environment, Health and Safety. During 2001/2002, he was an SPE Distinguished Lecturer on the subject of Sustainable Development in the Oil and Gas Industry.
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About the Interview
Lyn Arscott: An interview conducted by Fritz Kerr for the Society of Petroleum Engineers, June 27, 2013.
Interview SPEOH000100 at the Society of Petroleum Engineers History Archive.
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INTERVIEWEE: Lyn Arscott
INTERVIEWER: Fritz Kerr
OTHERS PRESENT: Mark Flick, Paige McCown, Anthony Darby
DATE: June 27, 2013
PLACE: Houston, Texas
Background, Education, and Entry into the Petroleum Engineering Profession
All right. Lyn, tell us who you are and how to spell your name.
Raymond Lyndon Arscott, and Arscott is A-R-S-C-O-T-T, and my friends call me Lyn.
And what do you do?
I’m retired. I retired as the -- the last job I had was the executive director of the International Association of Oil and Gas Producers based in London and Brussels.
Very good. All right take over Fritz, please.
Okay. Now go ahead and look at me now. Mark is just the man behind the camera. Fair enough. So, just describe for us in your words how you got involved in the petroleum engineering industry.
I got involved in the petroleum industry after my PhD degree from the University of Nottingham in England. I had started at the University of Nottingham as a student in mining engineering. I was awarded a Commonwealth scholarship to study geophysics in India. This was intended to have people mix in the British Commonwealth, so it was a gorgeous opportunity for me to see the world. And then I came back to Nottingham to do the PhD in rock mechanics.
The choice at that time was the mining industry or the oil industry, and the oil industry was more attractive to me. The other decision was to stay in Europe and join BP or Shell or come to the United States. And my wife at that time was an American, so I was encouraged to come to United States. And I joined Gulf Oil in Pittsburgh at their research laboratory in ’68, 1968.
My first assignment was exceptionally interesting because we were developing a new drilling method, revolutionary new drilling method called high-pressure jet drilling, whereby we would increase the mud system to something like 10,000 psi. The drilling fluid would contain small pellets, like BB guns, BB shotgun pellets, and we would jet these at very high pressure into the bottom of the holes.
So we had to develop a method of circulating drilling fluid that would contain metal pellets, and you don’t want to settle out, otherwise you’d trap your drill pipe. You wanted low pressure drop, and you had to develop [good] materials that would not wear out. So, for probably four or five years, I worked on developing a system. We did field test it in West Texas, but we could never make it economic.
We could drill much faster than conventional roller cone drillings, but it was very, very expensive, so we had to abandon the project. And then after that, I worked on enhanced recovery. If you remember back in the late ‘60s, early ‘70s, the enhanced recovery was the savior of the industry. We were going to develop better methods to increase production. At that time, we would produce perhaps 20 percent, 30 at the most for most oil reservoirs.
We were trying to get it up to 50 or 60. So we developed steam methods, fire flooding, surfactants, different chemicals, but remember also that oil was $3 a barrel. It wasn’t until ’73 after the Yom Kippur War that it got to $10 a barrel. So a lot of the techniques we developed, again, were not economic until much later.
Changes He Saw in the Petroleum Industry during His Career
Tell me some of the main things that have changed in the industry from when you first started to as your career started to kind of wind down. Remember some of the main things. You’re going to answer my question, “Some of the main things have changed.”
Some of the main differences between the late ‘60s and today in the industry were, first, the price of oil back then was $3 a barrel, which means that costs had to be kept very, very low and you really couldn’t afford anything too dramatic in terms of technology. Technology was incremental. It wasn’t until ’73, when the price went up to $10, and then by the early ‘80s it was up to maybe $35.
And then we had that massive cutback in cost, at which time in the mid early ‘80s, we had a tremendous number of graduates in our petroleum engineering [fac] in the universities, and all of a sudden they couldn’t find jobs. It was a very, very sad period in our industry because these kids had invested four years when times were good in their careers with every expectation of having a good job, and all of a sudden, companies stopped hiring.
So prices made a lot of things different. Technology has been able to be introduced with the increase in price. The other big difference I think is in terms of the way we handled environment and safety. In the early days, people didn’t worry too much about environmental issues. If we did spill, we were sorry, we might pay some damages, but it really didn’t make the newspapers, and we cleaned it up and carried on.
When I was an operating manager in the ‘70s, looking back, environmental issues weren’t the highest problem I had. Most of the problems were cost, trying to make a profit in all oil fields. Today, that is reversed, where safety and environmental issues are almost ahead of cost issues, because if you don’t get that right, then as BP found out just a few years ago, it can ruin your company.
The other difference I think is the tremendous growth in technology. I didn’t start using computers till the late ‘60s, and we used big old IBM 360s. We had to carry little carts with punch cards on them back and forth to the computer. So trying to run a reservoir simulation would take months to just develop the code, get it right. Because sometimes you had to run it overnight, you had to wait till the next morning to get your reply, and then you’d have an error in the code.
So now, with modern laptops, you almost can get five and ten minute replies where it used to take us months. So technology has made a big difference, and the students coming out of school today are very well equipped to handle the modern technology.
Discusses His Contributions to the Petroleum Engineering Field
Okay, tell us in your words some of the most significant contributions to the petroleum engineering field that you’ve been able to offer.
The most significant contributions I can think about in my career was in the very early days, developing that high-pressure drilling technology. It was a wonderful opportunity for an engineer to apply innovation, and we overcame many, many obstacles. Unfortunately, the jet drilling did not become commercial, but some of the spinoffs did. The very high-pressure pumps are now very, very well used in the oil field.
Some of the materials we used to resist wear are well used. So we spun off a lot of good technology in those early years. The other contribution in the period when I was an operating manager was that I tried to introduce as much technology as I could to operations. I had a research background, and I was able to bring some innovative thinking to some of these oil fields that I was managing.
But probably the biggest contribution was after my operating years, when I was -- two things happened which were very, very important in my life and my career. I was elected as president of the Society of Petroleum Engineers, and I was also offered the job to head up Chevron’s Health Environment Safety Department. So this was a serendipitous coincidence because not only did we at that time have these enormous challenges to face, this avalanche of regulation, but I also had the entire SPE network of communication to deliver the message to the industry.
We were trying to change the culture of a global industry, and with the need to get the message out, combined with SPE’s very, very efficient and effective communication network of committees, publications, I think it made a big impact on the industry at that time. And we did change the culture.
That was spot on.
You’re going to be a hard act to follow, Lyn.
That’s why you went first.
Discusses How SPE has Benefited His Career
No, I like that. In fact, I took that whole minute and a half of the crescendo, the serendipitous… of things colliding nearly, right? Can you tell us briefly, how did the Society of Petroleum Engineers assist you or really benefit your career?
The Society of Petroleum Engineers was invaluable in my career and still holds a dear spot in my heart. In my early years as a young engineer, I had primarily a mining and geophysical background, so I had to learn petroleum engineering. And I would attend every one of the local section meetings. I would attend the annual meetings.
I would read religiously the Journal of Petroleum Technology because I was anxious to catch up and learn petroleum engineering, and SPE helped me do that. When I needed to help change the culture not only in my company but the industry, the SPE global network -- at that time in the mid ‘80s, we had an international network. The communication was excellent. We had conferences, but we did not have anything that concentrated on health environment safety at that time.
We had a series of what we call forums, and we would take a critical subject like engineering or drilling, we would invite selected people—they had to be experts—and that was the modus operandi. So for the very first time in ’89, we held a forum on health environment safety. We invited the leading experts in the industry to that forum in Colorado Springs in Colorado.
And that forum, we designed SPE conferences. We set up an SPE committee on health environment safety. In 1991, we held the first international conference in health environment safety. We held the first US EPA conference. We gave the first distinguished achievement in health environment safety award, which I was honored to accept at that time. So, starting with that forum, I look at that forum as a turning point in SPE’s history in HSE. And those experts at that time put together a plan which we’ve built on and followed ever since.
Discusses His Crowning Achievements in His Career
Excellent. What would you say is -- it says here most proud of, but what would you suggest as your crowning achievement? Do you think that’s the right term? What would you say is Lyn Arscott’s crowning achievement in your profession, in your career?
I think the part of my career I’m most proud of is the championing and the leadership that I gave to the HSE effort in the global industry. In 1986, I was a general manager of production. I had spent my years in research, petroleum engineering, and production management. The chairman of Chevron, the vice chairman at that time offered me the job to head up health environment safety for Chevron.
At that time in the mid ‘80s, there was a literal avalanche of regulations coming down on the industry—Clean Air Act, Clean Water Act, Waste Act—that had very, very severe penalties, both monetary penalties and jail sentences. And I remember George Keller and Ken Derr at the time, chairman and vice chairman of Chevron, saying, “We want this corporation in compliance, and you have to get us there.”
And the first step was to set up an organization. You had to get people. And we set up what we called management systems. You somehow have to have a system of management in the industry where health environment safety all of a sudden takes importance. And to give you an example, I would go to a regional production manager’s office and say, “We need you to implement all these measures to protect the environment, stop spills, close your pits.” You had that line pitch; you can’t just dump it on the ground anymore.
And they would just yell at you and say, “How do you expect me to make money when you’re coming along…” and of course it was always a personal attack, “You are making me do all these things.” And we had at that time a real uphill battle to get the culture changed, but there were some significant events that happened.
The first one was really the Santa Barbara oil spill, which was actually in ’69, at which time -- and that was Union Oil. Union Oil didn’t handle it very well because they treated it a little casually. I think the industry was embarrassed because we had a big oil spill and it really wasn’t taken very seriously. But, the consequences were very serious because it put a stop to drilling offshore California and a lot of questions offshore the United States.
The next really big event was the Exxon Valdez oil spill in Alaska in ’89. This really shocked the industry because all of a sudden, these massive penalties came out, and it cost Exxon a lot of money to clean up. And as a result of that oil spill, the industry voluntarily volunteered to set up an oil spill response organization. That was the first time that we set up, and there were four or five or six—I can’t remember how many—centers in coastal United States that had dispersants, they had booms, they had all sorts of equipment to respond to oil spills.
And I remember being on the committee that organized that first organization. It was a joint industry and coastguard, US coastguard committee. The industry of course had to pay for it, but we needed the coastguard to help us. And we set up the Oil Spill Response Organization, which was a major, major impact.
But there were numerous other things that had to happen. We had to get people educated on environmental issues, endangered species, the ecosystem, reducing waste. And it wasn’t a matter of the specialists doing that because we had difficulty at the time where someone, an operator would say, “Well, you’re the HSE specialist. Take care of it.” We had to reverse that. We’d say, “No, you are the operator. You have to build this into your business.”
And that was a changing culture, a changing attitude that literally took a decade or more. So once we had the management systems in place and it was clear what these people had to do, we had to train them. And I remember in Chevron it took almost two years to get every manager through the training programs.
I’m going to stop you there because we need to reset just for a second. That was really good.
That was great.
The question is tell me a funny or anecdotal type story about some of the challenges that you had in trying to get all these various facilities within Chevron into compliance.
One of the -- I don’t know if it’s humorous but certainly interesting stories we had was after the Exxon Valdez, when we were setting up the marine spill response organization and we were setting up an entire organization to handle spills—because we realized the industry wasn’t prepared—one of the things that we were concerned about which came out of Valdez was the captain had been drinking.
So all of a sudden, we decide we’d better focus a bit on the use of alcohol during working hours. And there were state limits. If you were driving a vehicle or operating vehicles, there were state and legal limits. And generally, it was .08 percent blood alcohol, which most companies would go along with. But Chevron decided no, we wanted to do a little better. We decided that the company limit was now half that, .04 percent.
This means that any time you were on working hours, you could only have just one small drink. And if you were operating machinery, we encouraged none. So most of the operators could handle that because they understood it, but it applied to people who were in sales and marketing, and I would get the most outrageous calls from people saying, “How do you expect me to make a deal if I can’t offer wine and drink wine or have a cocktail with lunch?”
And I would just have to say, “Look, this is serious. We have a corporate limit, and you have to abide by it.” And that was hard, but today I think you’ll find the culture is the oil business doesn’t drink a lot of alcohol, not in working hours.
Discusses What Inspired Him in His Career
Can you elaborate a little bit on some of the things that were inspirational to you? You have to get up every morning, put your pants on, shave. What inspired you to get up and keep doing it day after day after day? What inspired you?
Some of the things that inspired me in my career, particularly during those early years when I was trying to change the culture of the industry because we were facing difficult times. I was getting a lot of pushback from operating managers because they were worried about how they could maintain profits and still implement all these measures to protect the environment and improve safety.
I spent a lot of time talking to regulators, because at that time I was chairman of the API’s committee on the environment, and their responsibility was to help protect or to influence government to come up with reasonable regulations. So I spent a lot of time working with regulators, and I spent a lot of time talking to the public and environmental organizations.
And I remember some meetings with the environmentalists; they really did not like the oil industry. And thank goodness I was able to portray a more human face and I listened. And for a number of them said, “You’re a breath fresh air,” because very often they would get some hard-line person. So it was good to get the feedback from the public, and it was very good to get feedback from those operators in industry who would say, “Keep doing it. Keep pushing. We’ve got to do this.”
And I was appreciative that the senior management, the chairman corporate level, vice president level of the company, were very much in favor. They were supportive. So it was a matter of feeding off that support to overcome all the criticism and the negative input I would get from some of these other parts of the job.
Great answer. Anything?
Discusses the Evolution of His Career from a Petroleum Engineer to an HSE Specialist
So, you’ve already kind of answered this one, but how did your position evolve from just being you were a geological engineer, if I recall, to the petroleum engineer is what you followed, and then how did that evolve again into the HSE discipline?
How did I evolve from a petroleum engineering background to an HSE specialist? It took a while. I always read a lot. I had an open mind. And when I was given the HSE job, I spent a lot of time reading and talking to the staff, the specialists on the issues. And it’s really quite large. From a petroleum engineer you have got get into toxicology. You have to get into a lot of biology, a lot of legal issues.
You get into bacteriology because you have to clean up and remediate spills. And there was a wide range of specializations that I had not had to worry about before that all of a sudden I had to get up to speed with. So, talking to the people, spending a lot of time reading was very, very important at the time, where I could at least catch up with this new technology.
And that was useful then because I then had to figure out how I was going to pass this on to other operating managers what was important and what was not. And there’s something that when you have to get up in front of a group and give a talk, which I had to do within the company, within the industry, and also in SPE meetings, you’ve got to get up to speed yourself. And I found that was a tremendous discipline. I knew I had to talk about it. I spent a lot of time getting up to speed before I would get up and talk, and I spent a lot of time talking. So it was a busy period.
Discusses Some Challenges in Working in HSE
Good. Can you elaborate a little bit on some of the challenges as you were kind of breaking ground for the health safety and environment? I know -- you may want to talk about some of the regulatory things that came down from the government, the Clean Air Act, establishment of the EPA. So what were some of the biggest challenges as you were really starting to be the driver behind HSE?
Well, some of the challenges that I faced were really twofold. I had to try to get the operating people to take note of these new regulations. We tried to get the regulators to make sure they did not promulgate any regulation that didn’t make sense that we couldn’t handle. So looking within the company to the operating people was just a lot of effort, and we would have internal conferences, lots of one-on-one meetings to try to get the message across.
We had a lot of training programs to get our operating people to take note of these new regulations. With regard to the regulators, I had an interesting experience because in the US, there was an environment of what I would call an adversarial environment, where the industry more often than not would take a negative approach to any new regulation. It was a little frustrating for me because -- and at that time it was the API.
American Petroleum Industry was the industry organization that was the spokesman for the industry with the regulators, and they would decide that they were going to oppose this, oppose that and do this. And in my heart I felt that doesn’t make sense. I wanted a more balanced approach, but sometimes I had to represent the industry with a position that personally I would have rather softened. So I had a little internal struggle with that, and I did the best I could with it.
When I went to Europe based in London and Brussels dealing with both the British and those European governments and the European Union, I actually found the industry-government relationships were not quite as adversarial as in the US. There was a much more cooperative attitude, I felt, in Europe than there was in the US. And that was more refreshing to me because there was a little more trust between the industry and the government there than there was here.
Discusses the Image of the Oil Industry
The oil industry obviously had some issues with their image back in the day. Tell us how you were able to overcome that. Share some stories, if you can.
The image of the oil industry has never been good, although it is improving. And I think it was a matter of, really, trust and communication. The industry was always very defensive because they didn’t want, in the words of a [unintelligible] member, they didn’t want to get the camel’s nose under the tent. That means if industry felt like they would give in, then people would take more. You offer an inch; they take a mile, that sort of thing.
So in order to overcome that, we had to really develop a much better public affairs attitude. The SPE was very helpful there because at our conferences, we were able to invite politicians. We would invite environmentalists into the program with the industry. So particularly, the international and the regional environmental conferences, for the first time, we would have environmental leaders come in and talk to the industry and share in the discussion. So opening that dialogue was important.
The other important thing we did was every time we had an incident, let’s take for example an oil spill, I would get a call. I was the emergency response manager for Chevron. We’d get calls, and Murphy’s Law says the always come at night. I don’t know why that is. So in the middle of the night, you’ve got this incident, a spill offshore California, whatever, and we had a modus operandi.
We would always put the spill response out. We’d get a plane; we’d get a company plane and send our experts there right away. There was always a spill response expert. There was always a public affairs person because we knew that was going to be one of the biggest problems. And necessarily, there was a generally a lawyer that had to get there because all of a sudden, the lawsuits were piling up.
So from the engineering point of view, the operating response specialist, that was important and logical. But what we learnt was to send a public affairs specialist and legal experts because it was very complicated. And the best way to improve the image was to get your senior management down there early making the right statements and being sympathetic and listening.
That was good. Anthony, Paige?
Yeah, that was good.
Discusses Incidents with Oil Spills and Public Relations
Anything you’d like to have him elaborate on that? Within that same vein, were there any incidents that you remember where your phone rang at two o’clock in the morning and you were rushed to a plane, and you and the PR person, environment, what do you call it, public affairs?
So yourself, a PR and a lawyer. Any times that you can remember doing that? Any incidences that might resonate with the audience?
Some of the incidents I remember, thank goodness Chevron did not have a really big spill during that time, but we had quite a few small ones. And I always remember you get these calls at one o’clock or two o’clock in the morning, and the call I would get very often, they weren’t as sensitive to the fact that I was still half asleep because they’d start rattling away right away.
But what I learned when I had to then call everybody else on the team, the first thing I would do is say, “Get up, get awake,” because you knew if you started talking they really wouldn’t understand because they were still half asleep. And once you’ve gone through a few of these, you realize you have to be awake and alert, and you need a pencil and paper. So I always gave people time. And then we would just go down the list.
We’d get the company plane. We’d get the specialist and say, be at so and so in two hours or whatever time it took to get there. And you always had, in all of these instances, you had a barrage of media. You’d have the television cameras there right away, and the operators and the technical people just wanted to get on with the technical job. We had to have somebody to handle the media.
And that was the [unintelligible] on the television. It was on the nightly news. And if you didn’t handle that part right, you were in bad shape.
That was good. Was there one incidence that sticks out with you that might be of interest to the audience?
No, I can’t think of anything specific that’s going to be of value here on response, but there were lots and lots of crises at that time, small ones.
Discusses the Piper Alpha Incident and the Development of the Safety Case
Fair enough, fair enough. There was an incident some time ago in the North Sea that I believe you had some responsibility for after the fact. Is there something that you can elaborate on this?
There was an important incident in the North Sea in 1988. It was Piper Alpha. A number of people died. It was a big explosion in an offshore platform. It was a seminal event in the history of the oil business because the Brits in that case developed a method, a revolutionary, innovative method for handling safety. They called it the Safety Case. And in order to explain that, I have to define the difference between a prescriptive regulatory regime and a risk management system.
Prescriptive regulatory regime is what we had in the United States and had in the industry at that time. It was simply basically a checklist of safety items that an inspector could go onto a platform, and he would check do you have alarms, do you have safeguards, protection devices, do you have handrails. It was just check, check, check, check, check, check, check. It was easy for the inspector because all they had to do was go down the checklist.
For the operator, they just had to make sure that the checklist was okay. That’s called a prescriptive regulatory regime. After Piper Alpha -- and this was -- I have to give a lot of credit to the Brits. They realized that there’s a lot more than just prescription to get a safe operation. You have to manage risks. And what they decided to do they said, “Look, from the government perspective Mr. Operator, what are the risks on your operation, and how are you going to minimize them?”
And it resulted in a very difficult task of itemizing risks, analyzing risks, and then itemizing what you’re going to do to minimize. And we had to train a lot of people to do that. Not only did the oil industry operators have to be trained, but it’s very difficult for a regulator, for an inspector. He doesn’t have a checklist anymore. He has to make a lot of opinions on whether that risk management system they call a safety case was in fact adequate.
So the industry had to be retrained, and the inspectorate had to be retrained. What was interesting here was the United States did not pick it up. This was back in ’88 when Piper Alpha happened. And even when I was dealing with what was then the MMS [Minerals Management Service] in the ‘90s, they felt -- and the MMS was the regulator at offshore operations. They felt that it was just too difficult to bring a safety management system, a risk management system into the US, there are too many installations, we don’t have the right inspectorate to handle it. And although the industry picked up the general spirit of what we learned in the North Sea, it wasn’t implemented in the US until BP’s Macondo incident here in 2009. And after that, I think then the regulators realized they had to do more with this risk management system, and that is now getting more and more implemented. But Piper Alpha was a turning point in the industry in the management of safety.
Discusses More of His Contributions to the Petroleum Engineering Industry
So, tell us some of your primary contributions to the petroleum engineering industry and just go ahead and talk, and then we’ll get back to the climate change and stuff.
I think some of my specific contributions to this HSE revolution in the petroleum industry were really organizing the international conferences. The very first conference in the Hague in ’91 was the brainchild of a Shell head of the environment by the name of Koos Visser. He realized he needed the SPE help, and he came to me and asked what I could do to help, and I ended up chairing the advisory committee of that first conference, and then was the program chairman of a few others after that.
That was an opportunity to pull together the worldwide experts, the government regulators, the environmental leaders in these conferences, and we held them all over the world. We held them in Europe, we held them in Asia, in South America. So the conferences were important. Then I was able to write some papers, particularly on sustainable development, which brought in some of the critical issues.
Now, one of the critical issues facing the industry was climate change. It’s still a critical issue. And I think up until the middle ‘90s there was a lot of pushback, a lot of denial on the part of the industry. Until John Brown, who was the chairman of BP, spoke I think in ’97 at a conference in Stanford, where for the very, very first time a senior executive of an oil industry showed any real understanding and sympathy with the issues of climate change.
Up until that time the industry had been very adversarial and in denial. And I remember going through the arguments with a specialist at the time and having my own doubts and concerns about it. So when I was giving speeches during the ‘90s, I would be much more tolerant on the subject and much more balanced, I think, than the industry generally.
And I remember giving a talk in Australia in the mid ‘90s when I really said this was an important issue, and my conclusion at that point was we needed more data. And I felt we did at that time. That was the mid ‘90s. It didn’t take more than five years, certainly less than 10, before that data is now available. However, I think we still have some denial in the industry. There’s not enough balance in some areas on this controversial issue.
But we are doing things to help. For example, we’re trying to cut back on methane emission, which is a very big issue in climate change. And the industry has done a pretty good job in reducing flares and venting. It used to be in the Middle East you didn’t need headlights on your car at night. You would just drive around with the light of the flares. It was massive flaring. West Africa was another area.
Today, thank goodness, we’ve been able to cut back on a lot of those flares, and there’s an economic advantage because you save money if you can’t sell that gas. We’ve reduced our energy consumption within the industry. But of course today we’re still battling tar sands, which is tremendously energy-intensive to produce. And I think the industry really has to develop all the skills we’ve learned over the past years in handling public.
And the same with fracking. We just have to learn to listen to communities and be much more balanced and sensitive rather than adversarial.
That was good. Do you want to chat briefly with us, Lyn, about some of the regulatory things? Specifically, suggest things like the Clean Air Act, the advent of the EPA and how that affected what you did as an executive within not just the SPE but within your own firm that you worked for at the time—Chevron, I believe it was still. So tell me how the regulatory environment, the advent of the EPA, the various Clean Air Acts and things like that to me. Run with that.
Some of the major issues that we had to tackle in the ‘80s because we had an avalanche of regulations on Clean Air Act, Clean Water Act, waste, endangered species that came out of the government. Nixon was the president at the time, and they had very, very big penalties on non-compliance. I would say the biggest issues facing the industry at that time were handling -- were spills, which we set programs in place that we could -- we knew what we had to do with spills.
But the oil industry is perhaps a misnomer in many ways. It should be the water-producing industry because we were producing in the US 10 times more water than we produce oil, and it’s probably a bigger ratio than that today. Handling water in our industry is a massive challenge. At that time, certainly pride of the ‘80s, we had unlined pits, so a producing operation or a drilling rig would just dig a hole in the ground with a bulldozer and pour waste in it.
You’d have a lot of evaporation. You’d have seepage into the ground, which reduced the volume so that people thought that was good. The problem was it was polluting. So we had to change the attitude of the industry to line pits, develop drilling fluids, which were less toxic, and handle our disposal in a much more safe way with regard to the environment.
Disposal wells had to be very carefully monitored, and anything we dumped anywhere had to be very carefully regulated because there were penalties on the pollution that could result. There was something called a superfund set up at that time, which the oil industry ended up paying most of, so we had to be very careful where we dumped waste. So, handling water and other waste was, I think, one of the biggest challenges we had.
Air pollution was not as difficult because we would, just like any industrial operation, we had to have cleaner diesel engines. We had special problems in places that were nonattainment, like Kern County in California, where, because of the mountains, pollution collects there. It’s also a big, heavy oil field, lots of steam generators, which now burn gas. So we had real special problems in trying to meet the Clean Air Act in places like Kern County.
But water was then, I think, our biggest challenge, and protecting groundwater was and still is. And all the current issues with fracking have just magnified what we were fighting back then in the ‘80s and ‘90s in trying to make sure that well bores had good integrity, that you did not leak into shallow aquifers. And thank goodness some of the practices we developed back then are now hopefully useful in the modern fracking, gas fracking and oil fracking era.
Discusses Interesting Stories and People He Met During His Years of Travels
Very good. Any interesting stories, Lyn, that you’d like to share about any of that?
The interesting stories in that era, most people, operators understood why we had to be careful of where we disposed of what we disposed. But when it got to the Endangered Species Act, we had a special problem. And the Endangered Species Act was important because if you did not protect those species, the government would not let you operate. So we could not get access to oil field resource, not get into the land and operate unless you protected those species.
And you can imagine when you tell a driller that he says, “Well, I want to put my drill pad right here,” and you say, “Well, you see that weed over there? That’s an endangered species, and you can’t do it.” He says, “Look, I’m about to spend a million dollars on this well, and you’re telling me that weed is in my way.” So we had to really educate our people because intuitively it wasn’t important.
Who cared about some little critter like a fox or a shrew or a weed or a plant? But it was the law, and it is important. And getting people to understand not only it’s important but what you do to get around it, and there are ways that we did develop. Mainly it was offsetting acreage. That means if you took maybe a few hundred acres for a development project, you would have to buy maybe 10 times that much and set aside as a reserve to protect the endangered species.
And in that way, you would then get permission to go ahead and continue your operation. And that was really a tough task to get our hardbeaten operators to put any value on these species.
Your interesting travels, interesting places you’ve visited and maybe even something about the interesting people that you’ve met, especially if you can drop a few names that people might recognize.
Well, some of the interesting people I met during my travels around the world—and I had plenty of opportunity, particularly through SPE. Because as SPE president, you have access to heads of governments and senior people wherever you go. And I remember we had an SPE conference in Bahrain, and I was invited by the brother of the ruler. His brother was named Sheikh Bin Al Khalifa, who was a tennis player, and he knew I played tennis so he invited me to play tennis with him.
And he came to pick me up at the hotel in his Rolls Royce with his Arab garb himself. I thought he would send a driver, but he didn’t. I didn’t have a tennis racket with me and he said, “Don’t worry, I’ll lend you one,” which was very nice. We had a very nice game and we played with the, I think, the chief of police of Bahrain and had a nice tennis match.
So afterwards, my intuition, my culture said, “Well, thank you very much for the loan of this tennis racket. I really liked it. It was a beautiful racket.” I was trying to be nice. I didn’t understand in the Arab culture if you admire something, they have to give to you. Because I didn’t know that at the time, it was explained later, but he said, “Oh, then please have the tennis racket.”
Well, you know, I was on a worldwide tour and so I didn’t really care to carry a racket around with me, and I was trying to be nice. I said, “No, no. I really don’t want it.” But somehow or other he convinced me to take that tennis racket, and then they explained afterwards that that was their culture.
And then, when we were in China, myself and George -- I was president in ’88. The president after me was George Sawyer. So, both of us were at the China technical meeting in Tianjin. That would be I think 1990, ’89 or ’90. Both of us were tennis players. We were invited to play tennis with the member of the Politburo of China, which is very high position over there. He invited one of their Olympic tennis champions as his partner, and George and I were on the other side of the net.
Now, I would like to say that we played what is called customer tennis. We let them win. The fact of the matter is I don’t think we really did very well. But it’s a great icebreaker. You get to know these senior people on a personal level. And that carried on through Indonesia, where you would meet senior people. Europe, I remember meeting the head of the European Commission.
The nice thing about being part of the SPE was a non-confrontational situation. We were there to help, and they knew it. We weren’t asking for anything, and they very much appreciated what we were doing. But it was interesting in those early days. When we went to Russia and China, we would say, “We are the Society of Petroleum Engineers,” and they would say, “What part of the government do you belong to?”
They couldn’t quite get the concept that it was a voluntary organization. They had no analogy to that in these centrally planned economies. So we would explain to them that we’re all volunteers, and it took awhile for them to accept that, “Well, what do you want? What’s behind this?” “No, no, no we’re here to help you,” and it took awhile for them to accept, and they finally, of course, did.
I like that.
Discusses Volunteering for SPE and What SPE Can Do for Members
Well, since we’re talking about it, how about giving us a little bit of [unintelligible] about what it means to volunteer for SPE and what you get out of that? So that’s something we always [unintelligible] volunteers.
Yeah. That’s a good one. That’s a good one, yeah.
So tell us, Lyn. What did it mean to you, and what do you think it means to new members of SPE to become a volunteer, to really become active in the organization?
Volunteering for SPE for me was very natural, and I’ve often wondered why that was. And also, I’ve been impressed with a number of other people in the organization who spend a lot of time volunteering. When I think of why I volunteered and spent so much time, I obviously got a lot out of it. The people were great to work with. There was a mission that was important.
It started when I just a young engineer in the local section in Pittsburgh, Pennsylvania, where I realized how much I was learning and how important it was as a young engineer to have this organization. It was very natural then. I became the chairman of that local section. It was very natural then to set up the conferences and the meetings and help others.
And it just progressed from there where it was useful to me in my career, useful to me in my continuous pursuit of knowledge in petroleum engineering, and it was just easy to volunteer. And I’ve been impressed with how other people have put time and effort into this volunteer organization. I think it’s maybe one of the wonders of our modern times that it works, but it works remarkably well because people get out of it probably more than they put into it. So I have a very soft spot in my heart for the SPE organization, and I think it’s worked for me, and I think it works for others.
Let me just ask you a follow-up question and address it to Fritz [unintelligible]. What can the SPE do for people?
The SPE can really educate and help with networking. Now, the mission of the SPE is the collection, dissemination of information for the development of the profession of petroleum engineering. And it’s a wonderfully efficient organization collecting and disseminating information through conferences, papers, et cetera. Anybody in the business has to be a part of that information network to be efficient. So if they’re smart, they will get involved and they will learn. It will help them in their education, in their career.
And the network is invaluable. I found I would meet people all over the world at SPE conferences, and then I could just pick up a phone and call them and say, “Hey, I’m so and so. Can you help me with this, that, or the other?” So, the education and the network to me is invaluable. I don’t know where else you can really get it.
Discusses the Current and Future Challenges for the Petroleum Engineering Industry
Can you elaborate a bit on what do you think some of the major challenges are for the PE industry at this particular time and, say, look forward, say, the next five or ten years?
Some of the current challenges of our industry and challenges in the future are going to be really the part of the entire energy development in the future. Climate change, particularly, if it gets more serious—and it surely will—means that we’re going to have to have reduced carbon consumption. Coal is going to take the first hit because it’s the dirtiest of the fuels, the highest carbon for BTU, then oil, then natural gas.
We are not yet ready to transition to alternate renewable fuels yet, so there will be a long transition. So my perspective is we shouldn’t be so neurotic about being put out of business. Hydrocarbons will be needed for this long transition over the next many decades. It will take all our ingenuity as engineers to produce the oil and gas to get us through the transition. Maybe a hundred years from now we’ll be fully into renewables.
We need to produce these hydrocarbons safely and with good stewardship of the environment. Light oil has been part of our tradition we can handle and is very much needed. Natural gas is going to grow. It’s the lowest carbon per BTU. Heavy oils are going to have a much bigger environmental footprint, so they need very, very special attention. And of course, fracking needs special attention too.
We can frack safely and protect the environment if it is done properly. So we have to have sensible regulations. Operators have to abide by those regulations. And the problem today with fracking is not so much what happens at the fracking horizon, it’s protecting the shallow waters, the integrity of the drill pipe, of the casing, and how we handle the massive amounts of produced water when it returns to the surface.
It can be done, but the industry has to take it seriously. We have to work with the public and the communities to do this together. So I see, really, a bright future over the next many decades before we can transition to renewables.
Discusses Future Challenges in Health, Safety, and Environment
So along those same lines, Lyn, tell us how HSE can and should be a positive influence in this change from where we are now, where we’ll probably be in five years, and into the future beyond that.
Health environment and safety issues are going to dominate and perhaps direct the future of our oil industry over the next few decades as we transition to renewable energy. When I think back to the ‘60s and ‘70s where environment wasn’t a big issue, it’s now a driver. The development of tar sands—and we have an enormous amount of tar sands in the world, particularly in Canada, Venezuela—the environmental footprint is enormous. And we have to learn to develop that resource, the heavy oil, with minimal impact on the environment.
So all of the lessons we’ve learned over the past few decades on protecting the ecology, valuing ecology, raising the awareness of our operators, teaching the industry how to deal with communities and governments is going to become critical in these next few years. The same applies to fracking. The public is frightened of fracking. They think we’re going to inject pollutants into the water table.
We can operate these shell fracking operations safely and protect the environment, but we have to make sure we don’t make mistakes. We do it correctly, and then we have to somehow demonstrate to the public that they can trust us. In the oil industry, there are a number of tiers of operators. You have some of the major operators who have pretty sophisticated staffs, both for HSE and in their operations, but you have lots of smaller operators who are running more on a shoestring.
And we have to be very careful that one of those does not have an incident because we all got tarred with the same brush, and it will shut down the industry if that happens. There’s another important issue if you think about our industry is that—and I’m thinking of the safety database—70 percent of the hours in our database are contractor hours. They’re not operators. These are not people who belong and work for major oil companies. These are contractors. So it’s very, very important for the industry that all levels of contractors are trained and abide by the same rules, because any one of them makes a mistake, it’s going to impact all of us and the entire industry.
Really good. I like that.
Is there anything from your notes, Lyn, that you haven’t discussed or…?
The health thing we could discuss and the…
If I handed you your notes, would that help you to search?
Yeah, let me just…
Just sit. I’ll get them for you.
And elaborate as much as you can on the H in HSE.
The H in HSE has become much more important in recent years. If I think back on the general history of HSE, S was always there. Safety was always an issue. We would, years ago—and I’m thinking back in the ‘60s—we would have safety meetings and you have a safety award. It was a little bit boring for a lot of the operators, but once a month they’d have some meeting or other. But safety has always been there, and we can elaborate on that a little bit.
Environment grew, really, starting in the ‘60s, definitely the ‘70s and the ‘80s with the avalanche of regulations. So E became very, very important, and I think we have programs in place there. Health is a little bit different issue. Now, we’ve always had industrial hygiene, which is primarily exposure of our workers to pollutants in the workforce. It could be dust or hydrocarbons, whatever, carcinogens.
But as we developed overseas more and more, we began to realize that some of these diseases, like malaria, dengue fever, and more in the last two decades, AIDS, was a major issue. So the Society of Petroleum Engineers was exactly that: engineers. How did we get medical professionals involved in our business? And it wasn’t until we set up the first international meeting of HS and E that the H became important. And in my career, for the first time, I was starting to interact with medical professionals.
The oil companies were starting to hire more and more of these medical professionals, and we realized that they had an enormous role to play. We got into all sort of issues—for example, driver safety. One of the biggest causes of accidents is -- would you believe it’s not explosions or industrial operations? It’s driving. The simple act of driving of a car causes a lot of accidents. So we got into fatigue and people drive after they’ve been on a long shift.
So we got into sleep cycles. We started to get more and more into these medical and human issues. Ergonomics came into place. Epidemiologists started to get involved because they were the ones who measured what was happening and what we should do about it. So I think SPE is to be congratulated, really, on bringing the medical profession into our business and growing the H in HSE.
Now, if I can transition to safety, we had a lot of prescriptive regulations on safety, and we would just lecture to our workers to be safe, don’t have accidents, and if they had an accident, they would have to get called before the manager. What we realized is we had to change the attitude of the workers, and the phrase they used was “human factors.” And I remember a professor at one of our conferences made a big impact on me. He said, “If you have a poor safety record, you have bad management.”
And it finally dawned on me that managers really have to take safety seriously. They have to put it ahead of profit, and they have to raise the awareness. And today, I’m very pleased to see that at Chevron in particular—I think other companies but I know about Chevron—every meeting, every important meeting starts with a safety message. Safety is raised to such a high level now that it really is number one. That took quite a few decades to get there, and I’m pleased to see we’re there.
A bit ago—and this is about the safety—you talked about when you were referring to the North Sea incident. I wrote down a note that said this sounds like OSHA, if you will, where it’s a handrail thing, it’s a step thing or whatever versus risk management. I think that there is more there. Can you elaborate a little bit more on that?
Risk management is more of an insurance thing, where OSHA is more -- OSHA [like], if you will, is more of a governmental regulation check, check, check, check, check. What do you think?
Risk management is a very important part of the modern HSE code, and it really involves a deep understanding of all the aspects that go into safety—not just the reliability of equipment, whether you have guards or handrails or alarms, but how people react. Are they trained, are they the right attitude, does the management set the right message, the incentives, the rewards, all tied together to minimize risk?
There’s also a need to do a lot of analysis, and part of risk management is called management of change. We found that a lot of accidents occurred after we had modified equipment because of routine maintenance or whatever. We had to set up a whole department of management of change. Whenever you change something, there are steps, procedures, rules. And that only came out when we dug into the why accidents occurred and what the real risks were.
It then took a lot of training. It took a change of culture. You have to have a safety culture—not just a set of rules, but you have to have an attitude. Any operator could shut down an operation on their own without risk of being criticized if they feel there’s a safety issue at stake. And of course, it ties into the environment in the sense that if you have safe operations and you don’t have spills and silly things happening that can create damage to the environment, it also helps your bottom line because the cost of incidence is so high that the whole operation now becomes effective, which has led to the modern phrase of “operational effectiveness,” or effective operations. Which cover the whole attitude of environment, safety, health of the workers, concern for the public, and it will all lead to an improved bottom line.
I like that. So we kind of covered the H in HSE. And then we have before and we did a little more elaborate now on the S in HSE. So let’s now expand a little bit on the E of the HSE. Where is it going? What are its challenges moving forward? Think about it as we transition from the fossil fuels to renewables, et cetera. Elaborate more on the environmental side of things and where the industry is going, et cetera.
And I like the way you did earlier—excuse me for interrupting—you had said the H in HSE, then you also said S in HSE. So maybe you can start off by saying the E in HSE has some long-term objectives or long-term challenges as well. Go ahead.
The E in HSE is very, very important, and it’s going to be critical to the future of this industry. And when we think of the evolution of environment in our industry, you really go back. Maybe you could start in the ‘60s. Rachel Carson wrote a book which pointed out the problems of pollution on species, A Silent Spring. The EPA was set up in 1970. The first United Nations conference on the environment was set up in 1970.
That then launched the avalanche of regulations which hit in the ‘80s. So now the industry has to catch up, and we had to do a lot of educating and understanding. It was very clear that we didn’t want to spill oil. That was pretty easy to explain, and we had to set up procedures where we didn’t spill. We had to get into recycling of waste using less toxic materials so that we wouldn’t harm the environment. Air pollution was pretty obvious to people. We didn’t want dust and pollutants going into the air.
But to get a holistic view of what the ecology means has taken a lot longer. And the problem with trying to explain that is how does the -- if you damage one species, how does it interact with the rest of the environment? And we’ve learnt for example that rather than protect one individual species, we have to protect an entire ecosystem.
So engineers and operators today have to understand a much wider picture of the environment from a simple spill to an entire ecosystem, and how the operation is affecting maybe a small invisible critter that is part of a food chain that impacts the rest of the food chain. A lot of sensitivity. And I remember Chevron had a public affairs announcement that they used to pay a paid advertisement called People Do. And they would give examples of individual operators who had done something to protect a bird or an animal. For example, in the Midwest, eagles have very wide wingspans, and if they landed on a utility pole, they could touch two wires at one time and electrocute themselves. And very…
The eagle had a wide wingspan. Go.
Right. The eagle had a wide wingspan, and in our [unintelligible] operations, we would put utility wires to the operations on poles. And sometimes an eagle trying to land on a utility pole would touch both wires and electrocute themselves. But one of the operators just said, well, if we just put a perch above the utility pole the eagle can land and not risk touching the wires.
And that was such a simple idea that that operator on his own initiative thought about. So we encouraged operators to do this throughout our organization, and we would then put them on public television. People would come up to me and say, “Boy, you work for Chevron. The have a great environmental program,” because they had seen these advertisements of what individual operators had done.
And that made me feel good because I couldn’t take responsibility, but I identified with the culture of the environment. And we had a number of examples like that. The important thing there is that the individual operators had that culture, that sense that the environment was important and they could help. And if we can somehow get that all the way down the line, then you have an HSE culture that really matters.
Wow, I like that. That was the most emotion that you’ve shown since -- you got choked up about it a little bit, huh. That was good. That was good. I liked that.
Discusses Santa Barbara, Piper Alpha, Exxon Valdez, and Macondo and How They Impacted the Industry
You called them the seminal events: Santa Barbara, Piper of Alpha in North Sea, Exxon Valdez, Macondo of 2010. Share with us how this has impacted not only the industry but you as one of its leading professionals.
The really big events that have impacted this industry in HSE over the past few decades really start with Santa Barbara, the oil spill in ’69, and then Valdez, another oil spill in ’89, Piper Alpha in ’88, and then the Macondo well in 2010. If I start with the Santa Barbara spill, the industry was not sensitive enough to the public concerns at that time, and the big lesson we learned was you have to be much more sensitive to the public concerns. Plus, you have to quit spilling; you have to tighten up your operation.
But the lesson there for the industry wasn’t -- the operators at the time did not handle the public very well. Valdez, a little bit the same. The public affairs issues weren’t handled that well, but it did teach us that these spills were very important in the public’s eyes and we had to do a lot better to prevent them. And we set up the marine spill response organization. Piper Alpha taught us a big lesson in risk management for safety, and we implemented a lot of those measures.
But risk management as a system, safety case was not implemented in the US. Then came along the Macondo incident in 2010, and I was shocked because having spent decades trying to improve safety culture in the industry, I was surprised that we weren’t there yet, that this was a major company that had a sophisticated system, because I’d worked with their people before. But we learned that operators still took shortcuts and did not do everything they should have done from a safety management point of view.
What I think we’re going to learn from that is we just have to keep going with our safety systems, our human factors, our risk management systems. We thought we were there, but we’re not there yet. So hopefully, every operator learned from that incident and tightened up. The lessons are out there. We just have to implement them.
Discusses Influential People That Have Impacted the Industry and Him Personally
Okay. I think that’s very good. Now, tell us a bit about other people in the industry that have made an impact on not just the industry but on you personally from a personal perspective, from a professional perspective, and what impact they made.
Some of the people in this industry that have impacted me—and it’s going to be hard for me to remember all their names—but certainly Koos Visser with Shell was the one who initiated the first international conference for HSE in the Hague in ’91. [Mark Schimara] was very active in the U.S. conferences. There were some executives. I mean, Mark Moody-Stuart with Shell, I thought, was very influential. George Keller and Ken Derr with Chevron were supporters of what I was doing.
But then I had people who worked for me. Bill [Bromesek], I remember, Bill Mulligan who were experts in what they did and were essential to the industry. Mary Jane Wilson, who by the way was the first woman graduate in petroleum engineering from Stanford, moved from petroleum engineering to the environment. And she was influential in setting up the first committee on HSE for SPE or helped me set that up, and the first forum.
So there are a number of people, both senior management who gave support to their employees, and employees who just were so dedicated. And when I think back, a lot of people had to transition. They started in the industry as petroleum engineers or maybe geologists.
There was one particular woman that you suggested was in a way maybe a pioneer, but she was a graduate, the first PE graduate. So, “I remember,” I think is how you said it. “I remember this one particular woman. She was the first PE graduate,” [unintelligible] or something like that.
I remember the people that influenced me and I think made a big impact in our industry is one woman, Mary Jane Wilson. She was the first woman graduate from Stanford in Petroleum Engineering. She started as a [reser] engineer, petroleum engineer, and she converted to what then became her lifelong interest in the environment. She in fact set up her own consulting company later.
But there is an example there of what we recognized early on, that you had two groups of people in the industry in the HSE business. You had the specialists. We did have biologists and we did have air pollution specialists, but the important thing for us was to get the operating engineers to understand why health, safety, and environment was important in their job and to integrate health, safety, and environment into their work.
That means the drilling engineers really needed to understand what they were doing, why they had to maybe develop a different mud because it was less toxic, why they had to dispose of it differently. [Reser] engineers, even the geophysicists they would say, “Well, what can I do?” Well, when they run geophysical lines through the jungle, they used to cut just huge swathes of trees down to run these seismic lines. They’ve now learned to have minimal impact on the ecology, and they can take these.
Today we have a really big problem running seismic surveys offshore because the sound pulse, the acoustic sound pulses can disrupt the marine mammals. So what we found early on was we needed to get this message into the operating people, into their mindset so they could incorporate it rather than have the specialists take the responsibility to do it because they did not have the knowledge of the operations.
And sometimes a person would come up to me and say, “Well, I’d like to be an environmental engineer.” And I would very often say, “Well, look Chevron is not going to employ many environmental engineers. What they really want are [reser] engineers, drilling engineers who are very environmentally conscious.” And I think that was a big distinction that we could make.
What do you think?
I think it’s great. We got a lot.
We definitely have a lot.
You’re going to have a lot of work to sort it out, right?
That’s our job.
Do I get to see it?
Gosh I would like that.
I’m going to ask you one more question. Lyn, what’s been fun about your life in petroleum safety, been really fun? Something that has really impacted you that is completely off-topic here?
What has been fun and rewarding to me in my career is when I started, I did not know I was going to get in the environmental business. And I was an operating manger. I had every expectation that I would continue operating oil fields until I retired, until that fateful day when the man calls you into his office and said, “Do you want to be the HSE manager?” At that time, HSE was not regarded as a real staging point to success. But it was the right time at the right place, and I learned to really understand and respect the environment and people.
It was, I think, always part of my basic values, but it came out. And when people would commend Chevron or myself on the work I was doing to help the environment, that really made an impact on me, and it stimulated me because it was part of my value system. And I’m sort of pleased in a way that I had that detour in my career, and I’ve tried to make it work. I’ve made it happen.