For a century, oil and gas producers have been challenged by the complexities of coaxing oil and natural gas from Permian Basin rocks.
But they have never faced a challenge like the one they encountered last March as the novel coronavirus began to tear through the nation. As the virus spread, businesses of all kinds sent employees home and shut down, forcing them to figure out how to continue operating in this new environment.
Companies across the energy spectrum told the Reporter-Telegram that as the pandemic took hold, safety became a top consideration.
Chevron reacted by announcing a capital reduction of nearly $2 billion the Permian in order to balance short-term cash flow with preserving long-term value, Catie Matthews, public and government affairs advisor, told the Reporter-Telegram by email. She said the company reduced its operated rig count from17 to four over three months. Production was curtailed in the second quarter but returned to levels seen in early 2020 during the second half of the year.
Matthews said Chevron also rushed to support the communities where it operates by contributing over $700,000, including in-kind donations, to partners and programs across the Permian to support food security, education and frontline operations.
A year later, she said, “Every decision we make starts with the core belief that people always come first. The health and safety of our workforce, their families and communities where we do business are Chevron’s primary concerns. We continue to take precautionary measures to reduce the risk of exposure, including referring symptomatic workers for testing and screening workers and visitors at company facilities. Business continuity measures, including alternative work arrangements, are being implemented as needed.
“Our thoughts continue to be with those affected by COVID-19 and the healthcare workers on the front lines.”
Occidental Petroleum implemented a work-from-home policy for those employees able to work from home. For those performing essential duties at the company’s worksite, best practices for safety and health were implemented, including social distancing, wearing face coverings and other personal protective equipment. Company officials and internal health and safety experts continue to monitor guidance from the Centers for Disease Control and Prevention, the World Health Organization and local health officials where Occidental operates.
Vicki Hollub, chief executive officer, commented during recent earnings calls that “No matter how favorable or challenging the environment in which we operate, we never take our eye off safety. Many of our teams tied or set new safety records last year, while our company-wide performance was our best ever as we simultaneously work to minimize the risk from COVID. The capability of our outstanding employees to consistently deliver remarkable results safely was key to our ability to navigate the challenges of the last year as well as the challenges presented by the winter storm.”
She continued, “While much has changed during this pandemic for our company and our industry, the quality of our asset base and the skills of our teams will support success in 2021 and beyond. We’ll continue to apply and build our knowledge and continuously improve our track record of operational excellence. Our teams worked diligently to advance our development technologies and technical operations to ensure we emerge from this challenge stronger than before. The innovation and ingenuity of our workforce, combined with our differentiated low-carbon strategy, will drive our success and sustainability long into the future.”
Coping with the pandemic could be more challenging for those unable to work from home, like drilling companies, service companies and midstream companies.
Reflecting on how Patterson-UTI reacted, Diana Dotolo, senior vice president of human resources, told the Reporter-Telegram by email, “In a word, collaboration.”
She went on to comment that, “When things first started, our immediate priority was to establish a representative cross section of leaders across all aspects of our company to collaborate on putting together a COVID-19 risk mitigation plan. That plan was the driver for all other actions and activities. The team we pulled together included Legal, HR Marketing, Operations, IT, and Supply Chain (full company representation) – all the major functions and internal stakeholders. We assessed where we were against what we knew about the virus and its trajectory and then overlaid that information with what we needed to consider doing – in priority order overall, as well as to meet needs at individual locations. Given all the uncertainties for each state where we operate and changing dynamics with CDC guidance, we had to (and still do) revisit the plan periodically as the situation developed and changed.”
Because it was classified as an essential business, she said the company remained open and operational but had to develop guidelines and protocols for office workers versus on-site teams. That included allowing individuals the option of working remotely and providing computers if needed. Visitors to company facilities were limited and Patterson worked with leaning companies at its offices to establish protocols and standards and engaged with sanitizing companies to dispatch them were exposures occurred.
“What we discovered is how hard it is for managers to check in and manage teams remotely, so we had to develop protocols and trainings to ensure teams were running effectively,” she said.
The last year “has probably been the most challenging year in my 30+ year career as an HR professional -- especially when considering we were managing a people health pandemic alongside a market health pandemic. However, it also came with some very gratifying moments watching people step up and work together to tackle the challenges that were in front of us. When I look back on the past year, I am stunned at all we accomplished. The major changes we made would have been challenging in a “normal” year, but the addition of the pandemic dimension, makes what we were able to do truly amazing. We leaned heavily on our team and as things kept changing rapidly, we were able to adjust and manage on the fly.”
What Patterson has learned from its experiences is that people can be very effective working remotely, she said, though many missed the personal interaction. Another lesson was the need to manage people differently remotely than onsite. Managers must be more intentional and individualized in their outreach, she said, which is critical when it comes to bringing new people onboard.
For Warrior Technologies, the pandemic resulted in the shutdown of an entire division that cleaned only large storage tanks, Tripp Wommack, chief executive officer and president, told the Reporter-Telegram by email. He said this was in response to midstream budgets being cut to near-zero.
“Thankfully, all the equipment needed for the division was paid for and is back in operation now,” he reported.
The company made large general and administration expenditure cuts as revenues fell by half, he added. Recovery began in November and “has trended nicely since. We are profitable and just exceeded year-over-year revenue in January.”
As a result, he said the company has learned that safety, especially regarding COVID-19 protocols, matters. The company had zero lost team hours due to the pandemic and only a few cases. And, he said, watching costs is a never-ending focus.
EagleClaw Midstream leadership sensed the pandemic could cause significant disruptions as early as January and February 2020, Jim Schwartz, senior director of corporate communications and sustainability, told the Reporter-Telegram by email. By last February, he said, non-essential travel was restricted, changes to cleaning and sanitizing offices had been made and employees showing any symptoms were urged to stay home and self-quarantine.
On March 19, the company implemented its remote work plan and largely remains in place today, he said. Company leadership also began regular communications with employees about how EagleClaw was navigating the pandemic.
Because of the tighter cash flow situation, the chief executive officer and president decided to forego 100 percent of his salary and bonuses and executive leadership took short-term salary reductions, ensuring none of the employees had to be furloughed.
Schwartz said employees joined those of other companies in stepping up to donate to healthcare workers, first responders, school children and educators.
“Overall, it’s been challenging but we’re seeing increasing confidence in our customers to invest in new oil and gas developments and projects,” he said. “The rebuilding may take some time but we’re patient and we are confident in the skills and insights of our customers who include most of the major oil and gas producers in the Permian.”
Asked what lessons have been learned, he said the pandemic and last month’s winter storm brought several important things to light.
“First, there is no substitute for open, transparent and frequent communications. Our CEO increased his communication to everyone – employees, suppliers, customers, lenders, investors and government officials. The payoff was everyone understood what we were doing, and why, and supported our actions.
“Second, relationships matter. We are proud to have built strong, trusting relationships with our employees, customers, suppliers and others we depend on. We called upon those relationships to help us get through some tough times, and we will continue to build and deepen relationships.
“Third, tough times don’t last but tough people do. We saw that our people showed a toughness and grittiness to get the job done, and we’re grateful for their extraordinary efforts. We believe that we came out of the pandemic even stronger, more aligned and more excited about our future together. We are a family and the true bonds of this family have strengthened immeasurably from the experiences of the past 12 + months.”
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March 21, 2021 at 11:02AM
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Energy industry met challenge of addressing pandemic - Midland Reporter-Telegram
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