ConocoPhillips executive says collaboration, not competition key to more Gulf drilling

In the midst of a North American oil and gas production boom, energy companies must collaborate to make drilling safer and more successful in the Gulf of Mexico and around the country, a top ConocoPhillips executive told New Orleans business leaders Tuesday (Dec. 10).

Dan Smallwood, ConocoPhillips manager of technology and development in the Arctic and deepwater Gulf of Mexico, offered his vision for the future of oil and gas drilling during a meeting organized by the World Trade Center New Orleans. The gathering of about 60 businesses leaders was the latest in a series of meetings highlighting corporate executives.

Smallwood said the United States has moved into the top spot in natural gas and oil production due in large part to increased drilling in unconventional shale plays such as the Bakken in North Dakota and Eagle Ford in Texas. Renewed drilling activity in the deepest waters of the Gulf of Mexico could cement that standing for years to come and prompt more exports, he said.

The United States is churning out about 25 million barrels of oil equivalent every day, pushing it past Saudi Arabia and Russia in 2013, according to the U.S. Energy Information Administration.

"Oil independence, at least from an American standpoint, is right in front of us," Smallwood said. "It's not a mirage."

But Smallwood noted a number of challenges stand in the way of harnessing that potential to the fullest.

The number of skilled trade workers in the oil and gas industry has dropped from about 5 million to 4.5 million over the past decade. That gap continues to widen as experienced workers retire and younger workers choose other industries.

"The majority of our focus is trying to find petroleum technicians and geologists and working with the universities to get certification programs that can graduate students in as little as 2 years, potentially," Smallwood said. "Demand for that ramp up is greater than ever."

At the same time the cost of tapping oil and gas in remote areas and deep under the ocean floor is also growing more costly and technically demanding.

Smallwood said even though competition is at an all-time high among oil and gas firms, companies must work together to confront industry-wide problems.

He suggested that the industry start by standardizing the technology used to tap oil and gas in the deepwater Gulf.

Deepwater exploration is still so new that most oil and gas companies are developing drilling technology on their own.

Smallwood said companies could lower costs, better train workers and improve safety if equipment is consistent from well to well.

He added standard equipment would also make it easier for technical colleges and universities to start petroleum engineering programs.

Smallwood pointed to the Marine Well Containment Company as a model for such collaboration. ExxonMobil, Chevron, ConocoPhillips and Shell formed the Houston-based company in July 2010 to provide well containment equipment in order to address an incident on the scale of the 2010 BP oil spill. Smallwood previously served as chief operating officer for the company.

Smallwood said the industry needs to focus on making drilling and production safer if it wants the U.S. drilling boom to continue.

"We need to do a better job at industry collaboration and risk assessment," Smallwood said. "The bottom line is this is the type of stuff we need to keep focused on every day."