Vol. 59 No. 5

May 2007

Kenneth E. Arnold, Senior Executive Vice President, AMEC Paragon

Editor’s Note: In recognition of SPE’s 50th anniversary this year, JPT is conducting interviews with several Society luminaries about their careers, their relationship with SPE, and the changes they have seen in the oil and gas industry and the Society over the past several decades.

When and why did you join SPE?

I came to SPE rather late in life. I am a facilities engineer by background, and most of the time in my early career at Shell I associated SPE with drilling and production and reservoir engineering. But, on the other hand, I was aware that SPE existed, and I became aware that there was information being published in JPT on facilities-related topics, most of it probably associated with the Offshore Technology Conference. The other thing that I was aware of was that facilities engineers were treated almost like second-class citizens in the oil industry in those days. The emphasis in career development was on people who had downhole and drilling experience, rather than people who had project and surface experience. In those days, facilities were not very big or very expensive; they were a small part of the overall development cost. Therefore, it was easier to get ahead if you were a downhole specialist rather than a project specialist.

I got to thinking that, since my bosses belonged to SPE, it would be a good idea for me to belong as well. There was really no technical society for facilities engineers. There were other societies that you could belong to, but they were not really focused on providing the kind of information exchange that facilities engineers needed. It looked like the only logical place for facilities was within SPE.

What was your first involvement with the Society?

My first activity was as a technical editor, doing peer review of papers that were facilities-oriented. There were not that many of us who had the capability of reviewing these papers, so it started very slowly. In the early 1980s, Roger Hite, who was with Shell at the time, had done a quick study and determined that there were a lot of facilities engineers at Shell but none of them belonged to SPE. So SPE put together an ad hoc committee on facilities engineering to try to determine if this was something that SPE should worry about, and I served as Chairperson of that committee. We discovered that about 25% of the engineers within the oil companies represented on the committee were facilities engineers, so, basically, we were not providing much service to this group.

We presented to the SPE Board a plan outlining how we could provide more service to this group, with hopes of increasing its membership. In those days, facilities engineering was not even considered a specialty; it was part of production operations. Some of our recommendations were implemented, and some were not. One of the key ones that was implemented was the creation of a committee within SPE, which still exists, for facilities. It started to create programming for at least three or four sessions at each SPE Annual Technical Conference and Exhibition (ATCE), and that began to generate papers. Another thing we did was, when the Production & Operations technical journal was first put together, we added a review chairperson and a technical editor committee for facilities topics to make sure that journal had facilities content. I became one of the first review chairs and eventually became the executive editor of the journal.

Were all of these changes well-accepted at SPE at that time?

I think they were, but what we wanted to do was separate facilities from production, which has since been done, and that was something that took a long time to resolve. There were constituencies with inertia built into them. For instance, in the call for papers for various conferences, we wanted to have a separate listing for facilities topics, but it took years to get that done. The SPE Board of Directors was extremely supportive of what we were trying to do, but there was a lot of inertia in the system, and you were dealing with other people’s turf.

But I think that we have come a long way. I do not think that we have come as far as we need to, and do not think that we have done it as fast as we could have, but we have come a long way. And within SPE now—with the six technical directors—facilities engineering has all of the power it needs. What we need to do is increase the facilities membership by exciting more facilities engineers about joining SPE. 

What is the major roadblock to getting more facilities engineers to become members?

It is a chicken-and-egg thing. We do not have enough volunteers to develop the programming that we need to attract more volunteers. We are doing more and more programming, but if you look at the topics that are presented at an annual meeting, even though we have three sessions that are identified as facilities sessions, unless those sessions are in a single day, it is pretty hard for a facilities engineer to come to the conference for three separate days just to attend those sessions. Now, for someone who is engaged in SPE and has some committee meetings to go to as well as the sessions, it is a very worthwhile thing to do. To the extent that we could get the scheduling bunched up, we could probably attract more facilities engineers.

Is there management support for facilities engineers joining SPE?

It is the same as in any other area: In some cases, there is plenty of support, and in other cases, there is not. It depends on the specific management. One area that we have not been successful in tapping is the engineering companies like my company, AMEC Paragon. Our company happens to be very active in SPE by any measure. If you look at the Gulf Coast Section statistics on attendance, AMEC Paragon ranks pretty high, certainly higher than most of our competitors. Part of that is just because of my involvement and my getting other people involved and excited about what SPE has to offer. Our company has been very active in the Emerging Leaders Program, and our guys love it. It has been a boon and has attracted some of our brightest people, and it keeps them involved in SPE.

But we are really losing a bet in not being able to attract more facilities engineers from other engineering companies. They do not see the benefit, and it is hard for me, as a competitor, to sell it to them. What we need is more support from the oil companies’ facilities engineers. There are a lot of people doing facilities work in this business who have a rather narrow view of the oil industry, and they could benefit greatly and become more much effective as project managers if they had a broader perspective through involvement in SPE activities.

We have done extremely well in the Gulf Coast Section. It has a very active facilities study group that is well attended. And what we have been trying to do for a long time is to take that model and bring it to other sections where there is a cadre of facilities engineers. We were having some success in New Orleans just before Hurricane Katrina hit, and then we lost our momentum. Outside of North America, we are beginning to have some real traction in Perth. We had a very active member of the Gulf Coast Section get transferred there, and we had other people in Perth who expressed interest. We have tried in Calgary, but were not quite able to pull it off. It is very difficult to do until you find the one key person who is going to make it happen. Aberdeen is another place where we would like to get something started.

What does SPE offer those in the facilities engineering sector?

We offer some really good programming that is worth paying attention to. Within the facilities e-journal, we are offering information that one should read concerning what is happening with technology. I think the Applied Technology Workshops (ATWs) and the study groups, where they exist, provide an excellent way to exchange information and allow one to figure out who the players are in the industry and to see what is going on. SPE could offer more programming in all of the ways that SPE does programming, but SPE is also doing more than any other technical society for this particular specialty.

What is your most memorable or valuable SPE experience?

Becoming the first Technical Director for Projects, Facilities, and Construction. What was even more exciting was that SPE decided to have six technical directors, and the first two they chose were John Thorogood, for drilling and completions, and me. We were the first two technical directors that SPE ever had, and part of our job was to figure out the job. SPE chose the two specialties that it thought to be the most underserved. 

What did you take away from that experience?

I concentrated on the facilities engineering committee. It was focused on putting together the three sessions at ATCE, but I wanted to get participation in the Distinguished Lecturer Program and the Forum Series and ATWs and reprints. So I created a new international facilities and construction committee, and then we put those members on the various working committees of SPE, such as the Forum Series Committee, and we worked with them to help create programming within the committees on which they were serving. I think that is probably the best thing I did. We also tried to get some study groups going, and we put together a manual on how to do a study group, based on work done by the Gulf Coast Section study group.

One of the things I took away from this is that serving on the SPE Board of Directors, whether as a technical director or at-large director or regional director, gives you vast exposure to people all over the world. The committees I have served on in SPE, but particularly the board experience, have given me a better understanding of the breadth of the industry, what is happening in the industry, and where it is going. It made me a more knowledgeable leader of my company.

What was the value of your experience as a Distinguished Lecturer?

That was a great experience. I was able to travel to places I had not been, meet people I otherwise would not have met, and, at the same time, I learned how small this community really is. Everywhere I went in the world, there was someone there whom I knew. I would be in Thailand, for instance, and I would walk into the room and there were two people I knew; they saw me on the meeting agenda and showed up.

I also learned what was going on in detail in those locations. I cannot think of a single place that I went to where I did not have a substantial conversation with someone who gave me new insight into what was going on in that area. I started in SPE thinking that, as a professional, I had an obligation to give something back to my industry and to my profession. That is what motivated me to start writing technical papers—the belief that I was learning stuff and I could share that with other engineers in my profession and advance the technology of facilities engineering. But by the very act of doing these things with SPE, I have learned quite a bit myself.

The industry seems to be placing more emphasis on projects that require a high level of facilities expertise, such as deepwater and liquefied-natural-gas (LNG) projects. Does the industry have enough trained personnel in this area, and is facilities engineering struggling with demographic changes like other sectors of the industry?

I have perhaps a different feeling on that than most people. I was hired by Shell in 1964. From the mid-1950s to the mid-1960s, the oil companies had been pulling in on staffing and not hiring much. All of a sudden there was a need to hire people quickly, train them quickly, and put them in jobs they really had no business being in.

Guys like me benefited from that. Early in my career, I was given responsibilities that probably made my managers shudder. But we did the job, and look at what happened to the offshore industry from 1965 to 1980. I am optimistic that we as an industry will somehow be able to recruit and be able to carry out the programs that need to be carried out. We will find a way to do it, although it may not be pretty. I do not think we will take safety risks, but it will probably cost us more money than if we had planned correctly for this 10 years ago. I am not afraid of not having enough manpower. If we want it done badly enough, we will find a way to get it done.

Back in the 1970s, facilities engineering was thought of as a necessary evil—it was not very important in the grand scheme of things. But our projects now are becoming so huge and so complex that the facilities and construction portion of the capital expenditure is really significant. Not only that, but the timing of getting a project on line has become very important to the overall performance of the project. That means that project, facilities, and construction people can have a significant impact on the profitability of a development, not only on the cost but on the lifespan of the facility and its future capability.

More and more we are looking at LNG terminals, compressed-natural-gas transportation, gas-to-liquids—these are all highly facility-oriented projects. That is why it is really important for SPE to focus on helping us do more programming and recruit more facilities engineers into SPE. I think that is a growth area for both SPE and the industry.