Oral-History:Ken Arnold

About Interviewee

Kenneth E. Arnold has over 40 years of industry experience in facilities design and management. He has taught facilities engineering at the University of Houston, and has written two textbooks and over 50 technical articles on project management and facilities design. He has received an American Petroleum Institute citation for his work in promoting offshore safety, and was recognized by the Offshore Energy Center for his pioneering work in helping to develop API RP 14C.

Further Reading

Access additional oral histories from members and award recipients of the AIME Member Societies here: AIME Oral Histories

About the Interview

Ken Arnold: An interview conducted by Fritz Kerr for the Society of Petroleum Engineers, June 27, 2013.

Interview SPEOH000103 at the Society of Petroleum Engineers History Archive.

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Interview

INTERVIEWEE: Ken Arnold
INTERVIEWER: Fritz Kerr
OTHERS PRESENT: Mark Flick, Paige McCown
DATE: June 27, 2013
PLACE: Houston, Texas

Background, Education, and Entry into the Petroleum Engineering Profession

FLICK:

Okay so, Ken, tell me your name and how do you spell it?

ARNOLD:

My name is Ken Arnold A-R-N-O-L-D.

FLICK:

And where do you live?

ARNOLD:

I live in Houston.

FLICK:

Okay, what do you right now currently?

ARNOLD:

I am a senior technical advisor to WorleyParsons here in Houston in the field of facilities engineering.

FLICK:

Very good so, the rest of it is up to Fritz now.

KERR:

And everybody else. I just facilitate. So elaborate on how you got interested and became interested in the petroleum engineering field.

ARNOLD:

Originally I had no idea that I wanted to be interested in the petroleum engineering field. I grew up in The Bronx and went to school in New York State. I had never seen an oil well... had no idea about it. But I wound up needing a job and I looked, I’m a civil engineer and I looked in the civil engineering magazine and look for jobs and there was a Sonic Power Driving Company in Rhode Island and that sounded like an interesting thing to do, and I called up the recruiter and it turned out that that company was owned by Shell. And the recruiter was a Shell recruiter in Manhattan in what was then the RCA building in Manhattan. And he said, “Well send in your resume.” Well at that time my wife and I were living in my parent’s apartment in Manhattan. I needed a job desperately and so I said well I’ll just bring it over, and that kind of floored him, he never had that response before because we were only several blocks away. And so I went over to the RCA building and I gave him my resume and we sat down and we talked. And the more we talked he, then he said, wait a minute are you are free for lunch, and I said, “Yeah sure, you’re paying I’m free for lunch for sure.” And he called upstairs and got the general manager of mechanical engineering in Shell E&P, in production department, to come down and join us for lunch. We had... in that time Shell’s head office was in New York but there were very few people there. And so we had a nice lunch, and when lunch was over they both turned to me and they said, “You don’t really want that job in the Rhode Island,” he said “We got a better job for you in the New Orleans, when can you go on a location visit?” And I said, “How about tomorrow?” And they said, “Well that’s a little too quick but how about the day after tomorrow?” And that’s what happened. I went on a location visit to Shell in New Orleans and was down there and it just so happened it was right after a hurricane had come through New Orleans, come through the Gulf of Mexico actually in 1964. And there had been some damage offshore, and I went on this location visit and I met some people, and they’re very nice, and I was impressed. And at the end of the day you went in to see the general manager for the production department in New Orleans and his, this guy by name of Pittman. And he was out of central casting for oil man, including a patch on his eye. And walked... we went to walk in with the location host and we opened the door and he’s on the phone and he motions, “come on in”, okay and then he continues talking on the phone and he’s talking about how someone screwing him over a drilling rig deal and using some pretty colorful language and I was sitting there, and then he says, you know I’m here, he’s supposed to be impressing me I guess or he’s supposed to be showing me and I’m just waiting there and then he hangs up the phone and turns around, and puts out his hand and says, “I am glad to see you, now let me talk to you about the oil industry”, and he got me right then and there. I mean I just felt if this guy is in charge in New Orleans this ought to be a good company. Maybe I would have not take... I had another job at the time, when building a bridge in a story of Portland. And I always wanted to build bridges, I’m a civil engineer that’s my goal in life, I never have by the way. And so I was about ready to take that job and it turned me around right then and there so, I went in to oil industry never having seen an oil well, never having thought about being in the oil industry but because I wanted a job with the Sonic Power Driving Company in Rhode Island.

Changes He Saw in the Petroleum Industry During His Career

KERR:

Obviously there has been a lot of changes in the couple of decades that you have been in the business. What are some of the main things that have changed since you started in New Orleans till, say, you know, now?

ARNOLD:

There have been so many changes in this industry since I first came here that it’s hard to pin them down. But one that’s close to my heart, maybe two that are close to my heart but let me start with one. Is when I first came to work in this industry there was no such thing as a facilities engineer, as a matter of fact, up until late 1950’s and early 1960’s, there was no need for facilities engineers in the production department of most companies. We had unit engineers, people who were in charge of all the engineering within a production unit, and they were also responsible for whatever was needed to gather surface equipment and hooking together and hook up wells. Even offshore that was being done pretty much the same way; there wasn’t a recognized need for a specialty, a recognized need that there was even a technical especially with a technical discipline associated with it.

I came to work in 1964, in October of 1964 and for most of the 10 years prior to that, the oil industry hadn’t hired new people. And so I was in the forefront on the surge of hiring. I came to work, and Shell had decided that there really was a need for something called the mechanical engineer. And the mechanical engineer, what we would now call facilities engineer, was in charge of designing and project management and construction of major surface facility projects and offshore platforms. This really came about as a result of the institution of water flooding, onshore, and the need for more serious design. More attention to safety for offshore design, that really drove the industry into this, and I have a famous, favorite story if you will about this. A couple of years later I was working for Shell in New Orleans and a guy by name of Randy Elkins was an experienced mechanical engineer who was one of the project managers who reported to me. I learned a lot from Randy over the years and, but one of his favorite stories was he was essentially one of the first mechanical engineers in the Midland operating division of Shell Oil Company. And his job was to design the production facilities as central facilities for a major installation in Shell’s Denver unit facility in West Texas. And part of that was to design an office building in warehouse. Randy was a chemical engineer okay, he did not take Office Building Design 101 in college, but he knew how to lay out an office building in a warehouse and he knew he had to have a bathroom in the office area. But he didn’t know how big to make the bathroom, so what do you do? As a good engineer, and Randy was one of the best I know, he took his ruler, went into the men’s room, and started to measure the various fixtures in the men’s room to go in to so that he could lay out his bathroom. And just then the vice president of production for Shell for Midland, a guy by the name of Bert Eastern walked in, looked at Randy sitting there measuring the toilet, okay and said, “Now I know why we need these damn mechanical engineers in the oil patch” and he turned around and walked out. And we were a necessary evil, they really didn’t want us but they realized they couldn’t produce the oil without us and that there really was a technology here. It was something that you couldn’t just go to the jack of all trades engineer and say, “Design one of these” and come up with a good design and come up with something that was efficient and safe.

KERR:

Okay we are going just to do a quick little reset. So I’m going to ask you again so tell me what some of the other changes there are since you started?

ARNOLD:

Another major change besides the idea of understanding the Facilities Engineering as a recognized specialty is the attention to safety and the intention to sustainability and especially in the environment in lumping that all together in one item. When I first went to work for Shell in 1964 the water outlet of free water knockouts in Eastbay went directly overboard. There was no free oil in there but there was a lot of oil, the oil concentration in the produced water was high enough that if you were to take an airplane flight from New Orleans to Florida and fly over the Gulf of Mexico, you might not be able to see the platforms because they were just little dots but you could see where the sheens started in the gulf of Mexico at a dot and then spread out downstream because in essence we were dumping a water that had oil in it into the Gulf of Mexico. It wasn’t that we recognized that there is a problem we didn’t recognize there is a problem remember it was in the 1960’s that the environment was invented by Rachel Carson is that right, is that the right name? But you know we really didn’t think about the environment as being that fragile. And we knew there were natural sips occurring in the Gulf of Mexico and so we didn’t think we were adding anything to it.

We were also at that point in time one of the jobs of a young engineer was to go out with the safety man for the annual safety inspection of the platforms and I spent a week with him on the annual safety inspection of the production facilities in East Bay. And what it consisted of was me as the young engineer climbing on top of the production vessels and saying yes indeed there is a relief valve here and the tag on it says it’s set to go off at 1200 PSI thank you very much. Check that we are now done with the check of the safety relief valves. It was a very insignificant check. We weren’t thinking in terms of the kinds of, well, did anyone ever test that relief valve? When was the last time it was tested? Do we have any shut down systems? In those days our shut down systems were highly unreliable and even so they were hardly ever tested and not really maintained because they interfered with production.

We’ve come along long way since then, I hate to say this but one of the reasons we have is because of three disasters that occurred simultaneously, within the same time period around 1960. I’m sorry around in the late 1960’s. One of them was the Unocal blow-out in Santa Barbara Channel, which up until Macondo, was the worst oil spill we had created in the US from production operations you know. And worst of all, the oil came ashore in yacht basins at the Santa Barbara Channel and those people are very wealthy and very out spoken. But also Shell had a problem, and I want to say it was in the time frame of ‘64 to ‘67 in Bay Marchand, where we had a blow-out and about 13 people were killed. And within a year there was, I think it was Chevron, had a major fire in the main pass area of Gulf of Mexico so at least three catastrophes happened together and all of a sudden industry and the government... industry and the government works fairly well in this all of a sudden said, “My God we have a problem. We need to understand better how to keep this from happening."

And I feel that I’m very lucky that I was there. I was involved in that from the very beginning when in those days it was called the US Geological Survey but then became known as the Minerals Management Survey and today it’s BSEE, Bureau of Safety and Environmental Enforcement. But the predecessors of BSEE said you know our rules are just not right and I was involved as a Shell employee in helping them rewrite those rules and as a Shell employee in trying to figure out how we’re going to make them work and how we are going to make shutdown systems that truly are reliable that we can count on. We have come a long way since those days. We’re never perfect. When it comes to safety there is always something else you can do. There is always a way to improve it and I hope I will continue to be involved in improving it.

Discusses His Work in Projects Facilities and Construction

KERR:

Thank you that was really good. So your focus... your discipline is in projects facilities and construction?

ARNOLD:

Correct.

KERR:

Tell us about your expertise and why that discipline is so important.

ARNOLD:

Let me talk a little bit about PFC; Projects, Facilities, and Construction. And here I want to talk about SPE, too, at the same time. As I said, up until the late 50’s or early 60’s it wasn’t recognized as a discipline with the expansion offshore and the need to put bigger and bigger facilities in smaller and smaller spaces as we went to deeper and deeper water. With the institution of water floods onshore and steam floods onshore, the production equipment became much more complicated and oil companies began to create specialties. And Shell was called mechanical engineering and Conoco was called infrastructure engineering. A number of different names. It doesn’t matter what the name was. And we began to develop the technology and codified the technology.

Up until the early 1970’s, API had basically one document that talked about a recommended practice for design of offshore facilities. Document called API2G and it actually resided, if you know the API system, in the civil engineering group within API--the structural guys, okay? But it actually (it) was a document about offshore production facilities. It was the only one they had. That point in time, Pat Dunn, who was my boss at a period of time in Shell--he was no longer my boss, but he was the head of the Shell head office construction design group. Pat Dunn approached me and said, "Ken it’s been a long time since we updated 2G. I need a chair of a committee to look at it and update it." So I agreed to do that and we looked at 2G and what we decided was, you know, what we can update this document. It is so far out of date. It is so incomplete that we need a whole series of documents to replace this. Also in that time frame maybe a little bit before this was the accident I talked to you about that had concentrated the industry on the need to do something. And luckily Shell took the lead as one of the companies that took the lead. They weren’t alone, but they were strongly involved, and my boss was strongly involved in doing this.

At the time, I was what we call Division Mechanical Engineer, which meant that anybody involved in any production facilities in the Gulf of Mexico reported to me, and we decided we needed to create a whole series of offshore safety... what we called OSAPE: Offshore Safety and Anti-Pollution Equipment [1] specifications to recommended practice. That’s what has now become known as the API 14 series, API 14 A, B, C et cetera. The ones that had to do specifically with production facilities... the key ones were API 14 C and API 14 E. C had to do with design of shut down systems and luckily I became very involved with committee that put together the first draft of that. 14 E had to do with the design of the piping systems that are part of the production facilities. And a guy by name of Jay Frank Davis was really the chair and the guy who pushed that for Shell in the API but I was a member of that committee as well and actively involved in making sure it was done correctly…

KERR:

Let’s stop there. Okay standby and we’re all set.

ARNOLD:

And there were other API documents as well that were written in that period of time and they became the focal point of specific documents for offshore safety design of production facilities was the first time the industry had done this and I was deeply involved... either I was involved or people reporting to me at Shell were involved in every one of those committees. But we were still missing something and it wasn't until about the early 1990s that we decided we needed an overall, an overreaching recommended practice on the safety aspects of design, and that’s when we threw out this to Jay and said, "No, we are not going to use API 2 G anymore," and we created API 14 J, which has a hazard analysis and designs of offshore production facilities.

And I was the chair of that committee, putting that together. And it was really the first time anyone came up with a recommended practice for the industry, on how one is to evaluate a design to make sure it’s safe. First, here are some concepts to include when you’re making the design, but then how do you do a hazard analysis? Once you have the design, how do you analyze it just solely for safety? This was a big step change for the industry because many of us, including me in the beginning, said, "Wait a minute, we always consider safety while we’re doing the design, so why do we need a separate effort just to focus on hazard analysis?" I mean we have been thinking about that all along.

And what we came to realize is, you have to stop and you have to just think about safety and not think about how it works or how to optimize the way it works. But just to approach the design and analyze it purely from a safety standpoint. And that’s what hazard analysis does, and that’s what we did with 14 J, and it’s a document [2] that’s lived on to this day, just as this other API documents have as well and so you know these are major inputs in the facilities realm.

And I’d like to talk about a little about what SPE had to do with any of this. Sometime--I want to say it was the early 80s--SPE approached me, and I don’t remember who it was, it was someone who was on the board of SPE but also knew me through Shell. By this time I no longer worked for Shell. I own my engineering company called Paragon Engineering Services. And I left Shell in 1980 and started Paragon in 1980. They approached me and said you know we have very few facilities as Members, everybody thinks of SPE as a down whole organization. "Would you put a committee together and do a study on is there a need for SPE to be involved in the (what we now call PF&C) Project Facilities and Construction Committee?" So I chaired the committee. Unfortunately, it was in the days before I had a computer, and I don’t have the document anymore. I don’t where it exists. And we created a document by looking at major oil companies and what percent of their staff was actually involved in PF&C activity. And it turned out to be a very substantial percent, not to also include all the engineering companies’ staff.

So there were many engineers involved in PF&C. Those engineers, at the time of my society commitment was to ASCE (American Society of Civil Engineers). They had disciplines society that they lived within that helped them but the oil industry was not an important part of the society, if you are a member of AIChE it’s a small percentage of the American Institute of Chemical Engineers who work in the oil industry. And so the problems of the oil industry are not really generic enough, it’s similar like with all the other specialty, say ASME, IEEE, et cetera. And basically, what we concluded in our report is what we really needed to do was find a home for this facilities engineering specialty and SPE was the natural home. Because we really didn’t have a home anywhere else. Every time we tried, we didn’t quite get there. And that’s when the whole idea of having Production Facilities as a separate listing of technical competence within SPE was born, and I was put on several committees within SPE to try and make that happen. It was a struggle because the Facilities subtopic was always, within SPE, considered a subtopic of Production Engineering. And it was a hard sell to get the SPE staff to understand that Facilities Engineering was a topic in it’s on own right, as Production Engineering was. And there were different disciplines. We were not a sub-discipline of Production Engineering. We had different concerns and different technology that we were dealing with.

Now, several years passed, and I got a call from Bruce Bernard, who was then president of SPE. Don’t ask me what year it was because I can’t remember. Now I had known Bruce because he was a Shell employee and we had worked together in Shell, but he was a reservoir engineer so I only talked to him when I had too. Okay, but we worked together very nicely and Bruce called me up and said, “Ken we’ve decided to create technical specialties within SPE and instead of just having regional directors, we’re going to have technical directors as well. And we’ve come up with six different technical specialties. And we’re going to put two technical directors, first year we’re going to add to the next year and to the third and then we will have a rotation where technical director changes out every three years. And the first two technical directors we need because we have underserved membership and we think there is more membership that’s needs to be served are Drilling and Completions and Projects Facilities and Construction. And we decided we want you to be the technical director of PF&C."

And so I thought about it and said, “Well jeez that’s quite an honor. I’ll try that." So John Thorogood, who worked for BP at the time, became the first technical director of Drilling and Completions. And I became the first technical director of PF&C at a time when SPE only knew they had this concept: we need technical directors, but no one had defined what a technical director does. And it was up to John and me to figure that out and we had a ball. I couldn’t ask for a better partner. Initially, it was everybody was going to dump everything on us. Everything was a take of directors responsible and he would say, “wait a minute, you know we’re here to help, we’re not here to take over the organization.” And we developed a modus operandi, and it’s been improved upon over the years now that we’ve had success. We're up to, in September, we’ll have our fourth technical director of PF&C. So you know this has been a growing thing and I’ve been very fortunate that SPE focused on PF&C and put me in charge and then we started to create programming for this technical specialty and I think we’ve made a significant impact.

Discusses His Contributions to the Petroleum Engineering Industry

KERR:

What do you believe Ken, are some of your most significant contribution to the petroleum engineering industry?

ARNOLD:

I find it difficult to say that anything I’ve done is been significant because everything I’ve done is built on something somebody else did. I told somebody the other day, "I don’t think I’ve ever had an innovative thought in my life." I’ve just taken thoughts from other people and kind of put them together in a different way maybe. But the things that I think I’m most proud of and I hope it’s been a significant contribution have to do with actually codifying and promoting the codification of this technical discipline we call PF&C and part of that, I started, when I started teaching in Master’s Program at University of Houston and it’s a night school program that I started teaching in the mid-1980s.

Now this is a little bit unusual because here I am, I’m the CEO of a mid-size engineering company. I really ought to be spending my time with my clients and playing golf and going on clay shoots and – I really shouldn’t be spending my time teaching Masters level students at the University of Houston, but it’s what I love doing, it’s what I wanted to do. And I put together two courses on the basic technology of facilities engineer, you know two semesters worth and wound up eventually teaching for seven years and then finally had to give it up. But a friend of mine by name of Morris Stewart was doing a similar thing first at Tulane University in New Orleans and then at the University of New Orleans when Tulane stopped their petroleum program. He moved over to UNO. And Morris approached me and said, "Look, you have all these lecture notes, it ought to be easy, to just write a book." Okay? And you know, that made sense to me. I said, ‘Hey you know, we can go do this!’

So what I did is, I had my secretary come with me when I was teaching a course – a session and video tape it and then transcribe what I said. And what I quickly came to understand is, there is a technology behind videotaping and there is a technology about writing that’s different in all our expression and that didn’t really work at all. But we did, between the two of us, Morris and I basically put out a textbook. Then, when we finished with the first textbook, this was in the mid-80s, maybe 85. We decided, well that covered about half of it, let’s do another textbook and we’ll cover the other half. So those textbooks the – Volume One is now in its second edition and its fourth printing. Volume two, we only have one edition, we never – we keep promising we are going to update it and we’ve got good hopes of doing it but we are not there yet. And I think some of the things we did within those volumes, some of the things I’ve put together, I’m very proud of and in coming up with, kind of overarching theory that took a little bit from here and a little bit from there and showed how they were really all tied together and it wasn’t magic.

I’ll give you just a brief story in writing the section on pressure drop in gas pipelines. I had known from my Shell experience that there was a Weymouth equation for pressure drop in pipelines and it looked like this and there was a Panhandle equation and it looked like this and they didn’t look the same. They just didn’t look the same. Some of the same parameters in them, but they didn’t look the same. And that was always a puzzlement to me, and so I started writing about pressure drop gas pipelines and I did most of my writing on field trips and airplanes and things like that. And I was on a field trip in Morgan City, I never forget this, I was looking at those two equations and all of a sudden I kicked like a lightning ball hit me. And I said, “Wait a minute, if I look at the one with the equation and manipulate it, I can back manipulate it into figuring out the assumption they must have made for coming up with an equation for the friction factor." And it falls in this realm where the friction factor is a function of Reynolds number and then if I look at the panhandle equation, I can figure out what they must have meant for the friction factor and it falls in the realm where the friction factor is independent of Reynolds number. And it turns out if you know something about friction factors, there is a Reynolds number where it is dependent on – where the friction factor is dependent on Reynolds number and Reynolds number where it’s not. And like a lightning ball hit me and I can remember where it was, it was on route, the old route 90 between Morgan City and New Orleans, I’m sitting in the back seat of a car. Two of my guys are in the front seat, and we are coming back from a field trip, and all of a sudden I shout out, ‘I got it!’ and realized that you could manipulate these two equations come to that conclusion and the reason for the difference was the panhandle equation was looking at long pipelines – gas pipelines, panhandle was a pipeline gas transfusion company where the – well I got that backwards by the way. They were looking at long where the velocities were relatively low and therefore the friction factor was a function of Reynolds number whereas Weymouth was looking at in-plant piping where the velocities were relatively high and therefore the friction factor was independent of Reynolds number and was able to put that all together and that what’s in the book. And so that’s the kind of thing.

The other thing that I remember distinctly was coming to an understanding of by back calculating from field data, a way of calculating the size of separators for droplets settling which is – it’s a theory we don’t need to go into here and also by looking at existing oil treaters coming up with a design parameter for treating oil treaters and all those are in the books. And you know they’ve been modified since then. Some people use them. Some people use improvements on them. But the idea of actually coming to presenting a technology that engineers could use, rather than an engineer just calling a vendor and the vendor telling me enter without – by keeping the technology proprietary. I think it’s a major accomplishment I hope in what I’ve done.

The other thing that I think has been a major accomplishment has to do with safety. I’ve been involved in the industry’s ever improving attitude toward safety since my early career at Shell. I’ve been lucky to be involved in many of the committees that wrote documents either as a chair or as a member. I’ve been involved in three different studies by the National Research Council on how to improve the inspection of offshore safety. Most recently, one that was just published a year ago while I was chair of that committee, and safety management systems and evaluating them. And I think I’ve had some input into all that. I think that I’ve seen the effects of that in industry.

Discusses the Formation and Management of Paragon Engineering Services

KERR:

Can you tell us the next thing that you excited and proud of?

ARNOLD:

Another thing I’m very proud of is forming and managing Paragon Engineering Services. In 1980 I left Shell, and I left Shell on a Friday, Monday morning I woke up and sitting on my dining room table was a Paragon box of business cards and a telephone and an answering machine. And a partner with me by name Guy Carey and I had decided we would start two companies. One is Paragon Engineering Services, the other one was Modular Production Equipment. And Modular Production Equipment was a manufacturer’s rep company. And that was Guy he was a salesman and I had known him my whole career. Okay and I knew I didn’t know how to sell engineering but I knew I knew how to do engineering. So the idea was we would start both companies I’d run Paragon, he would run MPE and probably one would survive and we would be able to feed our families. But we were lucky they both survived and 1988 we separated MPE and Paragon Guy took MPE eventually he sold it to NATCO which is now Cameron's Process System. And he’s retired and he lives in Temple. Okay and then me and three other guys took Paragon I was – there was there were two majority owner in Paragon and two minority owners and we created Paragon and I was the CEO and the spiritual leader if you will of Paragon. When I formed Paragon, my goal was to from a company that I thought was truly technically competent in this field of PF&C. I think you can see a strain going through this. Okay but I also wanted to form a truly ethical company and it’s not that other companies weren’t ethical but it’s just I have a strange idea of what ethical is. And I work really hard at both of those and I think Paragon over the 25 years that I run in, built that reputation of being a very technically competent company, being very ethical company not necessarily being a very profitable company because I don’t think you can do all three of those by the way. But that’s okay with me, I don’t tell my old board of directors I’m saying that but I never felt like I was running Paragon just to be profitable. I was running Paragon to create a technically competent engineering and ethical engineering group where people enjoyed working, as well as I wanted to make enough money to support all this of course but that’s… I had to balance all of that in running it. I think I did a fairly good job, I look back on it now I can think of hundreds if not of thousands of decisions I made incorrectly that knowing what I know now I probably shouldn’t have done what I did but that’s an hindsight. In general we did fairly good and I think we had you know at one point we were named one of the best companies to work for in Houston by the Houston Business Journal. We were honored for the work we did in the community by Spring Branch Independent School District and by the Houston West Chamber of Commerce and I’m very proud of that. I’m very proud of what our people did it’s not just me doing it was the stuff and very good competent stuff and very committed stuff that made this happen.

KERR:

That was great I think you can be profitable and ethical and capable at the same time.

ARNOLD:

Let’s debate that later okay? I give you examples where that doesn’t work okay?

Discusses His Daily Inspirations and Motivations

KERR:

What inspired you daily to get up put your shoes on, put your pants on and go to work and stay with it for the duration that you still have?

ARNOLD:

I was inspired and I’m still inspired by this great industry we work in. We are doing important work bring energy to the world, bringing it in a safe way in an environmentally sound way in an efficient way that motivates me. It gets me up in the morning today, it got me up in the morning in 1964 it got me up in the morning in 1980 when I formed Paragon. It’s this is important work we do. It’s important that we do it right so that people lives are at stake. It’s part of a lecture I gave just this afternoon I was talking to a bunch of young engineers within WorleyParsons I do some training in-house training for them. Was talking about the importance of the way in which we design our facilities can have an impact over whether people live or die. This is not a game we’re playing and I give example when I give this lecture and I used to give it in Paragon to every new engineer so that they understood how important it was. And I gave examples of where the way something was designed lead to someone dying. We can have all kinds of excuses and we all make mistakes, I understand that and this is we’re dealing when you’re dealing in energy, you’re dealing with something that can kill people there’s no question about it. No matter, I don’t care whether you talking about solar power or wind power or hydrocarbons or coal. Our job is to keep that possibility to the absolute minimum that we can. So I’m motivated by that constantly and I’m really constantly trying to do what I can to transfer whatever knowledge I have to those younger than me the ones just starting out in the industry. So that they can improve on what we’ve done. I don’t want them to do as good as we did, I want them to improve on what we’ve done, there has to be a continuous improvement in this area.

KERR:

That was good.

ARNOLD:

And I may have strayed off the question, I forgot the question.

KERR:

But the question was about what inspired you, to go to work and the important of work that can decide whether people live or die and that you’re inspired to help other help remember how and that you’re not just trying to stay status quo that you trying to develop improvements throughout did I hit it?

ARNOLD:

Yep you got it.

Discusses the Importance of Mentorship

KERR:

You sound like a mentor, Ken.

ARNOLD:

I do. I got several people I’ve mentored over the years as matter of fact there’s two young women right now who call me on occasion.

FLICK:

Tell us why what’s the reason for you? Tell us why mentorship is important?

KERR:

Checking on that mentorship thing there I want to ask you a question about, you guys want to go on that thing on that mentorship?

ARNOLD:

Well yeah but that’s, that’s apple pie kind of stuff you know mentorship is important I mean everybody says that.

KERR:

Go ahead with that question Paige.

MCCOWN:

Why do you think, or wait what do you think about it, why is mentorship important to the further development of the industry?

ARNOLD:

One of the things that excites me and one of the things that I think is responsibility of every professional engineer is to give back to his profession and to help those who are entering the profession. I got it in two ways, I got it through my teaching in which I still do on occasion in which I did in University of Houston, and have always taught, I have taught within Shell, I have taught within Paragon, I do now within WorleyParsons. But in other thing that is very important is mentoring, mentoring young people giving them, it’s not just a technical aspects when you doing mentoring as a matter of fact they, the two people, two young engineers that I’m mentoring right now are not even in my specialty.

But both of them will call me on occasion with a problem they are facing in business and just want to have somebody they can talk to. Tell me how should I handle this, here is the situation or, jeez, I have a potential job offer do I really want to change jobs, let’s talk that out. What does it mean, you know, where am I going, what am I doing? And I think this interaction with young people is great I mean it energizes me, I, when I teach the worst thing in the world that can happen is to have a class that doesn’t ask me questions, gosh that’s so boring. But when I ask you questions sometimes it makes you really think through and understand something in different line. And so I think every time I have taught and every time I have mentored someone, I have learned from that experience, I have gained from that experience but I also think it’s a responsibility that as professional engineer. You do have a responsibility to your profession and it’s not just doing a good job, it’s helping others do a good job.

KERR:

That was good, Stephen R Covey’s Seven Habits of Highly Effective People is.

ARNOLD:

Yeah, I have never read his book; I refuse to read his book because everyone else was reading it. This is aside but one of the things that I’m not good at is paying attention to and reading management theory books. I have never really done that in my life because I find them boring.

KERR:

Fair enough…

ARNOLD:

Maybe that’s why Paragon wasn’t so profitable.

Discusses the Evolution of the PFC Discipline

KERR:

So you helped in creation of project facilities and construction discipline within this organization, it was originally looked at as really just a blue collar type of a job and then this evolved into its very own discipline, can you just talk to us about the creation of the PFC discipline, you know where, how it started, where it was and then where it is now as its own unique discipline. I know it’s multi part question, see if you can ask, you know repeat my question within your answer, in the develop…

ARNOLD:

Yeah I understand what you are saying, I think I have addressed most of that already; I’m trying to figure out what else I can say.

MCCOWN:

Where is it today maybe, is that what you are talking about?

KERR:

Why don’t we just go over that, tell us where the PFC discipline was, and then where it is today.

MCCOWN:

The scope, that’s what, sorry.

ARNOLD:

Okay, I got something I can say.

KERR:

When I first went …

ARNOLD:

Okay I got it.

KERR:

The idea of PFC discipline, first start out, it was here and now it evolved, has evolved to…?

ARNOLD:

Okay, as we went offshore as we had these big water floods, as we had steam floods, as we had improved oil recovery technology. Then production facilities became much bigger, much more complex, much harder, and more difficult to design. But in my early career even though this was true, PF&C was necessary evil. The real assets of the production department was the reserves and the wells, and the real costs were in drilling the wells and producing the reserves. Not the stuff on the surface, and so we were like a stepchild. We were a necessary evil; they knew they needed us but we weren’t the core business. Let me contrast that with a refinery or a chemical plant. In a refinery or a chemical plant the asset is the plant itself, and that’s the core business. And so the design and operation and maintenance of the plant is what the business is about. In the production department the business was about the finding and operation and development of the reservoir and other little thing was just sitting there. One of the reasons I really pushed for putting PF&C and SPE and I made this in a report that I wrote earlier on for SPE, I said you know all our bosses are members of SPE. We need to be part of SPE as well so that they recognize who we are. And so that they recognize that we have this technology, and that they need it. And that was early on. You look at developments today in very deep water, very, very harsh environments and the cost is in the surface facilities, it’s not in drilling the wells necessarily and it’s not in the reservoirs. Now we still, the production department still... the main asset is the oil and gas in place. Okay finding it and producing it is very, very important but when you look at projects like Hebron Offshore Canada, or you look at projects like Perdido in the Gulf of Mexico for Shell. You look at many of these projects worldwide now and the share of the total development cost that is in the control of the PF&C discipline, may actually be more than 50%. And all of a sudden that becomes very important. So I think there is been a big change in the industry in paying attention and this goes not only to the design and the construction of the facility but the maintenance of the facility. It used to be when I was a young engineer they would typically when dealing offshore we had production foreman who worked 7 and 7 or 14 and 14. And typically those guys you find one was the down whole guy who really worried about the wells, he didn’t give a damn about the production facility. And I could never talk to the guy because he never had time for me, but luckily he would have a counterpart who cared at least a little about the production facility, still cared about the wells. Boy that’s changed. We have asset managers now who care about that production facility and realize its importance, and realize the need to look after that. I don’t think we are as far along on that path, as we should be if you look at the path that engineers have to get to asset manager and get higher into the realms of management levels within oil companies I think you will find that it’s down hole people doing that. Okay, it’s not PF&C people. That may change; we may come into our own right with time. But I certainly remember when I first came on board and Shell as a mechanical engineer when people talked about us; well you just a bunch of plumbers, just screw some pipes together, hook up the equipment and we are done and we have come a long way baby.

KERR:

Very good.

Discusses His Involvement with SPE

KERR:

When we get back to SPE and the reciprocation of your work roll it.

ARNOLD:

SPE has helped me quite bit in my career. It has helped me through programming first of all in reading technical journals, and I have been involved as a technical editor but, I have read the technical journal for PF&C since the day it was established. I read JPT items where I understand more about what is going on in industry but also more about specific topics, technical topics. I use OnePetro all the time to look up something. I was looking up something on HIIPS systems today – high integrity pressure protection systems – HIPPS. And I wanted to just get some quick information on that. But besides... and then going to conferences and workshops and forums; I have loved the SPE forums. I think they are the greatest thing ever and they take a whole week of your time and they are very expensive and I don’t have a company that it is paying for it anymore but it is well worth it. I mean I think it is a great idea to meet others in your field and exchange technology in very informal basis. And so, the programming in SPE is outstanding and I have to mention Oil and Gas Facilities Magazine. This is a rather new development. I’m on the editorial board and I had some effort involved in getting it started but, I think it is really the best magazine in our field and it is becoming recognized that way now and I just... it blew my mind when Georgeann Bilich agreed to make it available for free to PF&C people will identify themselves as being in the PF&C discipline within SPE because this has been running joke between Georgeann and me for 20 years about whether the journal should be free or not whether we should pay for it so that really blew my mind. I think from that stand point it has helped but it is my involvement in SPE at the board level and the international group and at the board level in the Gulf Coast section as well and in the committee work that I have done where I have meet lots and lots of people with a lot of different perspective, especially people I would not normally meet from international locations where I wouldn’t necessarily go. So SPE is kind of give and take you don’t get out of SPE everything that SPE can help you with unless you also involved in giving back to SPE and I think people who are just taking and they are not involved in the committee activities of SPE and putting the workshops together. I learned more helping to put the human factors workshop on human factors. I thought I knew a lot about human factors but we had a two-day workshop that was dynamite and the people I met, and the things I learned, I think, were very important and that was last year. So it is not something that you grow out of it is something that keeps going with you forever.

The Challenges Facing the Petroleum Engineering Industry and the PFC Discipline

KERR:

What challenges do you see in going forward both in the petroleum engineering industry and also specifically in the PF&C discipline?

ARNOLD:

The biggest challenge I see going forward is people and it has to do with making sure that we have enough people... both engineers and operating people in training them, educating them, making sure they have the capability to meet the technical challenges that they face. I’m not worried with the technical challenges. We have plenty of technical challenges, we always have had, we always we will have, we always have a need to do things better. Deeper water, heavier crude oil, more problems with gas whatever, it doesn’t matter. I don’t think those are the big challenges that I worry about. The challenges I worry about is, are we developing people in the way that we should? And let me give you an example. When I went to work for Shell in 1964, the first thing that you did was you went into a year-long training program. Okay you weren’t an engineer; you did not do engineering for an year. You were assigned to spend two months with this group, two months with that group a month with this group. You know nine weeks of training at the training center, of classroom training, go offshore, you know, spend time with a drilling foreman. I loaded sacks of cement on the drilling rig in the marsh of Louisiana as part of my training program. The benefit of that is I got to meet everybody and I got to meet real people, who had real problems, who were dealing with them on a daily basis. I got to know what it was like to be a lease operator, what it was like to be a maintenance foreman. Those were important to me when I then started having to design the things that these guys were going to operate and maintain. We don’t do as much of that any more as we used to. We have a tendency to think “Well, we’ve got engineers and they know the technology and they are going to apply the computer programs and that is all that we have to do.” I think that’s a big problem. I think it is even a bigger problem because when it comes to the detailed design of PF&C projects and the detailed carrying out of those projects, most oil companies have decided that they can buy those buy that service from engineering companies like the one I work for now. But engineering companies because they’re man-hour companies they don’t have an asset other than people, have to billable and they don’t have a way of providing that hands-on operating training unless an oil company allows them to do that. And the oil companies are not allowing them to do that. They are not allowing engineers to take trips offshore for two days unless it’s... it’s got to be justified in a very difficult way especially if it is an engineering company engineer. Even their own facilities engineers they put constraints in a way. So that is to me a big challenge. It is how do we get practical experience and you know we talk about tactical knowledge or technical knowledge. Let me talk about two different kinds of knowledge’s. I’m going to steal this from a guy by the name of Dick Westney who is a friend of mine. Okay he talks about two types of knowledge’s; there’s technical knowledge and the engineers who are graduating today are technically a hell of a lot smarter than I was. So that’s not a problem and boy do they know computers, they can really do good. Okay and they can delve into that technology, but then there’s experiential knowledge. The knowledge you gain by being around problems and being around their solutions and I’m really worried that that’s something we’re not transmitting and we don’t have a good way of doing that of pushing that forward for our employees especially the employees of engineering companies who the oil companies are relying on to have that knowledge. I don’t think the oil companies really realize they’re relying on that. They think the engineering companies are doing more training than they are and they don’t realize because of the need to be billable and because of the lack of access to operations, the engineering companies aren’t doing as much as they should be doing.

KERR:

That was good.

ARNOLD:

There are so many people in my career who have had a lasting impression on me, who have impacted me, who have taught me so much, who have made my life enjoyable that it’s hard just to single out different people and whenever I single out now, probably if you ask me the same question tomorrow, I’ll have a different group to single out. Some things I remember, some things that strike me right at that moment. My first division mechanical engineer was a guy by the name Frank Portman. I was a brand new engineer working for Shell. We were in a very active production division in the shallow water marsh areas around the mouth of the Mississippi River and I was the only civil engineer on the staff. Everything had to be put on a platform; I was the only guy who could design those platforms. These are small little platforms not very big offshore platforms. And one day a facilities engineer came to me and said, “You know I need a platform for a glycol-dehydration unit, it is going to go in this spot in East Bay next to these compressors.” So, I said how big is it, how much does it weigh, and I designed a platform. Okay, a bunch of piles and a concrete slab, some beams no big deal. And then I went on doing other business. And then this facilities engineer was a guy by the name of Frank Dezuto. He came back to me about a month or so later and he said, “You know Ken, remember that glycol-dehydration unit I wanted I wanted a platform for?” “Yeah, Frank, I remember that.” He said, ”Well, we decided to add a little bit more equipment and it is a little bit bigger and it weighs a lot more and do you think that platform will support it?” And I said, Hell no, Frank. I designed it for the loads and size you gave me. Now you are giving me, you know the weight just went up by 50 per cent, the size is bigger.” And he said, “Well, in order to meet the compressor shut down, I have to go out for bid tomorrow. What can you do?” Okay so, I thought about and I said, the only thing you can do at this point is what any college student would do and luckily I wasn’t that far out of college, you pull an all-nighter. Okay. And I grabbed one of the Shell draftsmen, because in those days we didn’t have computer drafting. We did things in sepias and I said, “Ollie,” a guy by the name of Ollie Jung and I said, “Ollie, we are going to redo these drawings, get them ready by the morning.” We worked until who knows... one o’clock or two o’clock in the morning. And by the time we were done the sepia looked terrible, there were white outs all over the place, but it showed the new platform. And when you are doing something like that and you have a time constraint, a good engineer knows what you do is you just, it’s a concrete slab, I going to throw more rebar than I think I need and more concrete than I think I need and just make it hell first out, okay? So, I’m not going to optimize anything, I’m just going to make sure that it will stand up, okay? And then I forgot about it. Okay? Several months later, I get a call on the radio; we didn’t have cell phones in those days. I get a call on the radio from the Shell inspector in the field a guy by the name of Richard Johnson. He says, “Ken, I got to check in with you.” He says, “We got this slab for the dehy platform, and I have got the Biso such and such crane out here and he is lifting up on slab and he is getting pretty close to his load limit, according to his load indicator. And the material bar is just still riding kind of low in the water, which means we are not ready to lift off yet.” He says, “What do you think? Should I keep pulling up on this or what?” And as soon as he said that, it was like this light bulb lit over my head in a cartoon. And I knew exactly what the problem was and I said, no, Richard, shut them down. That crane cannot lift that slab. I’ll call you back in an hour, okay. So, I did some calculations to figure out what the weight of the slab is, and I called him back. What happened was, we had made all these changes in the drawing, in the lower right hand of the drawing was a note, weight of slab equals so many tons. We had not changed that; that was the weight of the original slab. This slab weighed a lot more than that. I called him back with the right weight, he had to send that crane back to New Orleans, get another crane down. It was going to cost Shell $150,000, which was a lot more money in those days. I knew I was sunk. But luckily, I did the right thing, I don’t know why I did the right thing but I did the right thing. I went into Frank Portman’s office and I said, “Frank, you’re going to hear about this soon or later, so let me tell you what happened today.” And I explained what happened; I said it’s my fault. I know we have a statement in our contract, with the construction contractor that says, if there is anything wrong with the drawings, it’s your fault, you are supposed to check them out, but we can’t really expect him to do that. We gave him a weight and the weight’s wrong and I did it. And I didn’t blame Frank for coming in at the last minute, I did it. And Frank looked at me; I knew I was going to get fired. And he said, Ken, as much work as we are asking you to do right now, if you didn’t make a mistake from time to time, you wouldn’t be human. But, don’t you ever make that mistake again. And that is one mistake I’ve never made again. I learned from Frank, speak up, take responsibility and hope to hell you have a boss like Frank Portman. And that helped in good state ever since. I’ll give you another example of someone who comes to mind real quick. And that is Ron Gear. And Ron is a true icon in this industry. Anybody who knows anything about the history of deep water offshore knows the name of Ron Gear. Ron was my mentor and my hero at Shell. And there was a point in time where I had been promoted into a job as the head of what was called production operations research department at Shell’s Bel Air research facility, and that included deep water research. It included some other research as well, but let’s talk about deep water research. And the problem was that my boss who is head of production research, and I won’t give you his name because he is actually very; he was, he is no longer with us, he was a very nice guy. But he didn’t believe that Shell should be doing deep water research. He thought that that was for the benefit of the industry, it wasn’t for the benefit of Shell, why are we wasting our money. So, for two and a half years, I was putting budgets together and I had to fight him all the way to head office to get the budgets approved and whatever it is that I wanted to do he was against me. He was my boss. But Ron Gear had the job of overall guru for deep water for Shell in head office and the Vice presidents and President of Shell respected Ron. And so, I would use Ron as a sounding board of what was going on or what was happening and he would advise me what to do, and save me from making some pretty big mistakes and creating confrontations which didn’t need to be made because Ron could handle the politics for me and all I had to do was sit back. At the end of the day when my boss left and he was a very good operations manager and he got an assignment as the operations manager in Aberdeen, I’m sure he did a bang up job with that. He was just not a researcher but he was an operations guy. When he left he said, “You know, Ken, we have had many disagreements, but you fought correctly, you disagreed with me when you felt like I was wrong and you brought it up to my face,” which I did, “and I really appreciate the work you have done for me.” And that just blew me away. But it was really Ron who helped me do that. And Ron just understanding the need for offshore, the need for deep water, the need for subsidy development, all of that, he was my hero.

Discusses the Benefits of Writing Textbooks and Technical Articles

KERR:

That was good too, I like that a lot. And what are the benefits?

ARNOLD:

One of the benefits about writing and publishing a lot and by writing the textbooks that I co-authored is that you run into people all over the world who have read your stuff. Just the other day I was in a meeting with some Shell people and this young Shell walks in and he gets introduced to me as Ken Arnold, he says are you THE Ken Arnold? And that, you know, I feel I kind of taken back by that. But the best story about my fame or my having written a book is one that occurred in Cote D’Ivoire, the Ivory Coast. We were; I was working with a small independent oil company that wanted to produce a gas field they had found offshore the coast of Cote D’Ivoire and feed the gas to the power plants that were generating electricity for the Ivory Coast. And there was a competing group that also had gas and that was actually run by a French company which was very, very influential in the Ivory Coast, a former French colony and they were trying to pull a fast one over the department of public works in the Ivory Coast who were in charge. And the guy who was in charge of the department of public works had a meeting and he turned out... I kind of liked him. He didn’t speak English, I didn’t speak French but we grew to like each other over a series of meetings and finally we had this one meeting. It was the meeting where the decision was going to be made. And the other; we are sitting on our side of the table, the other group is sitting on their side of the table and they are poking holes at our proposal of what my client is proposing to do and the technology associated with it. And they start asking questions and I got into teaching mode and I got up at the blackboard and I started explaining things. And their technical expert started asking me questions and you could see that he had a book open underneath the table. And he was asking me a question and challenging me on this and challenging on that. And finally, I walked around the table because was curious what he was reading and it was my textbook. And he had asked me a question, and I grabbed the textbook and I said, here, go to this page there is the answer. I said, “I wrote that book.” And Surrey Ewell, who was the minister of Public Works for Ivory Coast said that is it, we’re done. These guys are technically competent; if you have to refer to his book to challenge his work then we don’t have a discussion anymore. And we won the contract for our client.

KERR:

Been beaten over the head by your own text book.

ARNOLD:

And turning it.

KERR:

He obviously knew.

ARNOLD:

No, he did not know.

KERR:

Even though he was reading your book?

ARNOLD:

He had never put the name together.

KERR:

All right. Okay, that was interesting.

MCCOWN:

But he knew that book was what you would do?

ARNOLD:

He knew how to use the book; he just didn’t put the two together.

MCCOWN:

Okay and we’re quite berating you.

KERR:

That was really good.