In a day and age where giant projection screens, PowerPoint presentations and line graphs dominate public speaking, it was surprising, and somewhat refreshing, to hear Steve McNally, general manager, Hess Corporation, say at the North Dakota Association of Oil and Gas Producing Counties Annual Meeting in Williston, he didn’t have a presentation. Rather some candid words for the people in attendance.
He began with some interesting comments regarding the time lapsed facial expressions of North Dakotans.
“While I was sitting around today listening to the other speakers giving you a lot of information in a relatively calm manner, if caused me to look around the room and look attentively at your faces,” McNally said. “When we were on the panel two years ago, as I looked around that room then, what I saw was anxiety and panic.”
McNally continued saying he first arrived in North Dakota in January 2012 and “did a tour around the state.” He said everywhere he went he saw the same manic look, including from his North Dakota staff.
“Today I look around the room and see an entirely different picture,” McNally said.
He then reminded the audience of what the scene looked like in 2012.
“If you cast your mind back to that time, there was a really rampant growth of drill break activity,” McNally said. “If you talk to the teachers, they didn’t know if they would have enough teachers or space. Talk to the mayors and county commissioners, everyone was overwhelmed from my perspective.”
He continued saying the common vibe was uncertainty on how to prepare, navigate and handle the boom.
His next comments acted as a reminder to everyone this Bakken energy cycle is something others have experience working through in other areas. McNally pointed out that every cycle is different, but the basic mechanics and processes are similar.
“Hess is a global company, producing about 110,000 barrels a day and continuing to ramp up. We have 17 rigs running. We have grown in this state from about 200 people to 600 full time staff, 200 full time direct contractors and on any given day several thousand people on our sites working,” McNally said. “We have about 600,000 acres of what we call core acreage, and we know, and I know from my experience, I have been in the industry since 1976, and I know from my experience, from having gone around the world, living and working on every single continent, with the exception of Antarctica, and after last winter in North Dakota, I can cross the Antarctic off the list. But in those experiences, I have been fortunate to help countries, states, assets go through massive growths. And I think you all know we have gone through massive growth here and we are continuing to go through massive growth.”
McNally reverted back to the panel from 2012 recalling the theme then of “don’t worry everything’s going to be OK.”
“The process you go through is very consistent with these booms,” McNally said. “You have a lot of smart people in the good ol’ USA. We have a lot of smart people working in this industry, and we have a lot of smart people in this room who represent businesses in the industry. Landowners, ranchers, farmers, mayors, county commissioners, there’s a lot of smart and capable people working in this country. As we go through these processes, we can come up with solutions as long as we remain calm and work together.”
The director of Mineral Resources Lynn Helms’ presentation was referenced at this point by McNally, stating their has been significant growth, but more importantly there is an understanding of the state’s infrastructure needs, distribution arteries and the basin’s resources.
“By working collaboratively, we have been able to address issues in a prioritized manner,” McNally said. “Two years ago when I was here, I remember going around to some of the meetings and what I saw was not only on top of the panic and anxiety, was at times, aggression. What I mean by aggression is the focus on those problems and because they didn’t see a solution in sight, there was a fair amount of table pounding.”
McNally elaborated on how he could hear and see the emotion emitting from many impacted by the development. He said now everyone from county officials to city government to the state legislature are planning and focused on understanding what future issues are. He then encourage audience members, particularly oil and gas folk, to pay attention to the legislative session and communicate often. He added when discussing issues in the oil and gas counties it is best to remove emotion when possible.
“I don’t know about you but when someone comes to me and rants and raves without actually explaining exactly what they need and what is the business case for it, I actually do not respond to well to that,” McNally said. “And you don’t want your legislative body acting solely on emotion. So I would encourage everyone in the room to continue to approach to legislative body with business cases, rational support for the various things that you need in the way of infrastructure or otherwise.”
McNally then offered support from Hess towards any oil or gas issues this upcoming session.
“We will be doing what we have done in the past which is supporting that effort to provide information to the legislative body so that they can make informed decisions and make informed budget allocations,” McNally said.
The urban legend of North Dakota’s two degrees of separation was acknowledged next as something oil and gas pays attention to as a North Dakota accountability factor.
“I can tell you having worked all over the world, there is something unusual about North Dakota,” McNally said. “I think part of it is everyone knows everyone else. As a result of that, you need to behave in a reasonably rational fashion and fairly fair, otherwise it’s going to come back to hurt you.”
McNally added this attribute is something he has noticed from the local landowner to the governor, and is accounted for when working within the state. He offered an example of an action that became an issue with a landowner, which then became a collaborative and communicable process.
“Although there are some struggles at times with landowners at getting right of ways,” McNally said. “My personal experience, having dealt with many of them, is if you just sit down and listen to them, understand what their issues are. And recognize the fact that all our employees are landowners. They have all the same issues, we all care about the same things, we want the state to be developed in a responsible, safe fashion.”
In his summation, McNally references a radio talk show he was listening to on the drive over to the NDAOGPC annual meeting at The Williston Grand. The show was taking calls on “the bad side of the Bakken” with safety as the topic’s fuel.
“For us, just like StatOil or the Petroleum Council or any other company here, safety is very important to us because we have children that work in the industry,” McNally said. “The most dangerous thing in the oil and gas industry and the thing we address to our staff – we talk about drilling, fracking, we talk about all those execution processes that we use – and the number one thing we tell them is the most dangerous activity is when you get into your car and drive to the site. So keep that in mind when you are hearing how dangerous the industry is.”
On a personal note, and as someone who has been covering the Bakken oil play since March of 2012, McNally’s observations of the facial evolution are spot on. The panic and fear has transitioned to focus and foresight, with little flashes of exhausted enthusiasm. But his view on the perception of western ND safety was one of the most accurate statements I have heard about the Bakken to date.
Truth be told, when taken as a whole, the agriculture industry is historically ranked as one of the most dangerous industries, and North Dakota has accepted that risk for over a century. Additionally, there are increases in texting while driving and other road distractions not related to oil, gas or ag. McNally’s rational approach to the energy industry’s safety record and the ability to view the bigger picture was articulated more comprehensively it truly illustrated how the culture in western North Dakota is still a safe place to raise a family. However, the traffic issues are real, and dangerous.
“When you are hearing stories about how dangerous the industry is, you all are in the same situations as the oil and gas workers,” McNally said. “Your most risky activity on any given day is getting into your car.”