by Brinda Ramaiya, MBA ’11
“I am not the bad guy,” said Randy Little, owner of HM Oil, an independent exploration and production company. It was a cloudy morning in Houston and the Duke University Hydrocarbons Field Trip class was touring one of his private production sites. A proud, tall Texan in his jeans and white collared shirt, Randy explained further: “I’m merely providing a service that is in demand. People complain about the cleanup and environmental damage that drilling for oil and gas produce. Well… if ya’ll don’t want me to pull it out of the ground, then stop asking me for it!”
This was my first eye-opening introduction to big oil and gas. Having taken professor Lincoln Pratson’s “Energy and Environment” class at Duke the previous year, I had a solid background on the industry and its processes. But I wanted to see the industry first-hand (Texas produces 25% of U.S. oil and 30% of U.S. gas) and get a sense of the emotional attachment to the industry. I didn’t want to be an observer of the industry as I had been in class, but rather see the industry from an insider’s perspective.
The Hydrocarbons Field Trip is a one-credit course offered to Duke students during Fall Break. Besides visiting Randy’s production site in Katy, TX, our trip included a tour of the Energy Hall at the Houston Museum of National Science, an overview of offshore drilling at the Ocean Star Drilling Museum, and a series of panel discussions and site visits with industry experts and executives from companies like Schlumberger, Shell, Classic Hydrocarbons, and ICAP Energy.
I will be honest: as a student interested in sustainability, I came to trip expecting to find more reasons to condemn the oil and gas industry. I expected Texas oil and gas executives to be indifferent to the environmental consequences of their industry, concerned only with profits and pushing our dependency on hydrocarbons further.
What I found was an industry that, in some ways, grew too fast to think through the tools and processes required to take environmental impact into account. The industry’s physical infrastructure was developed rapidly with old technology to meet the swelling demand in the early 1900s and Industrial Revolution (Spindletop kicked the industry in 1901). As the industry is incredibly capital-intensive (the Energy Hall and the Museum brought this home to me with their display of drilling tools/bits and explanation of pricing throughout the years), it is simply too expensive to retool and refit the machinery. Unlike larger companies which can afford to be more technologically nimble, independent oil producers such as Randy can’t afford to retool when they have a functional 35 year-old pump jack. Only when the revenue is high can they justify replacements, which in most cases take a long time to pay off.
I found the individual players to be incredibly cognizant of the environmental consequences of their industry, but powerless to change the larger system, the infrastructure of which was put in place long before these executives came to business. They are simply, like most businesses, trying to capitalize on market demand and make profits. As Randy pointed out “Tell me what you want, I will do it. If it’s not pumping oil, are you willing to accept the consequences of paying six dollars for gas at the pump?”
As a business student, it is important to understand industry perspectives firsthand. I came to Houston with a view of oil and gas as the “villain” and left with a more balanced view. In many ways, the energy industry as a whole is archaic. We should therefore start with a new “clean sheet” instead of building on an outdated one, putting our focus and majority of efforts on clean technology. Gaining independence from hydrocarbons is everyone’s responsibility, not just the producers’.