‘Shale gale’ swagger turns into anxious reflection
Talk of cutbacks sets the tone for this year’s conference
Back in the heady days of $90a-barrel crude and sky-high confidence in America’s oil and gas plays, Ong Ye Kung of the Keppel Corp. in Singapore attended IHS Energy’s CERAWeek in Houston and remembers conference cofounder Daniel Yergin’s optimistic talk of the “shale gale.”
Ong was back again this week, among some 2,800 energy industry big thinkers and high rollers who have come to Houston, though the focus of CERAWeek 2015 hasn’t been quite as sexy: cutting costs.
“Two years later, everything has changed,” said Ong, whose company builds offshore oil platforms.
“The mood is a bit more somber.”
One hundred and fifty servers with white napkins draped over their arms are present to serve this global gathering of energy executives salmon and cheesecake for lunch at the Hilton AmericasHouston downtown. And to the casual observer, it’s still a Johnnie Walker Blue Label crowd.
But even James Rosenfeld, a co-founder of the conference, one of the most influential annual energy gatherings in the world, feels a difference. The swagger is gone, replaced with an edge of anxiety.
“A big focus on costs … how can the industry cut costs?” he said. “There’s a great sense of realism. I think there’s a focus on how you lead through the cycle.”
He wore a blue tie with the CERAWeek icons — small oil rigs, windmills, refinery stacks and other energy symbols — a gift IHS gave to speakers several years ago.
Rosenfeld felt uncertainty in the industry gave the conference an added draw this year, explaining: “I think the thing that attracts people is the ability to see the whole picture.”
Attendees paid more than $7,000 a pop to hear from CEOs,
presidents of foreign countries and Cabinet secretaries about everything from reducing costs to how Mexico, Canada and the U.S. are working together on electricity infrastructure, and natural gas development in East Africa.
As Houston oil executives, New York investors and international dignitaries walk into the vast ballroom to hear from North American energy secretaries, Kimberly Vega passes out headsets to foreigners for translations.
Interpreters sit in pairs in the back, speaking in spurts of Russian, Chinese and Spanish as they listen and relay Kinder Morgan CEO Richard Kinder’s outlook on the energy industry’s image, or regulatory changes in Mexico’s electricity market.
Thirty-foot-wide TV screens projecting the speakers across from them reflect off the glass of their small black booths. More headsets go on when Mexican Secretary of Energy Pedro Coldwell goes on, and the interpreters start translating from Spanish to English.
Translators came from as far as Moscow and Beijing to interpret.
Jackie Wang, who also translates at conferences in Beijing, said, “It’s more like a dialogue style here, more interaction, so it’s more difficult.” Interpreting nonnative speakers’ English into Chinese also makes things tricky, she said.
Energy hot shots from around the world come here looking for investors, clients, and what everyone else is thinking as companies slash jobs and budgets amid low oil prices. They come just as much for the speaker and panel sessions — more than 30 a day from 7:30 a.m. breakfasts to dinner keynote speeches that end after 9 p.m. — as they do for the meetings that happen in hotel rooms and hospitality suites.
Sponsors of the conference get private meeting rooms with long wooden tables where they have meetings and private receptions. Concierges at the head of the hallway are there to assist them. They mostly point people to different rooms but sometimes print boarding passes or whatever else a sponsor needs.
On the second floor of the conference, two or three security guards are always there to stop unaccompanied media from passing through, where a row of temporary meeting rooms with sliding frosted glass doors and white leather chairs leads to an espresso bar with glass high-tops.
Security is tight, with police by every escalator, side doors to the session rooms and throughout the lobbies. At least one police K-9 sniffed its way through the hotel.
Police officers and conference organizers would not discuss security concerns or strategy. But personal security details spotted the place, curly cords running from their ears beneath suit collars as they stood quietly to the side of a conversation.
On Tuesday as Marathon Petroleum Corp.’s CEO took the stage inside, refinery workers who have been on strike since February marched around the corner. In jeans and work boots, the workers, who have been negotiating with the company over safety and hour contract terms, chanted, “Hey, hey, ho, ho, Marathon’s greed has got to go.”
American attendees consistently declined to talk to reporters without permission from their corporations. Meanwhile, foreigners were more willing to talk.
Ross Kiener, event director for IHS, said typically 20-25 percent of attendees are European. About 6 percent are from Asia and the Pacific. This year they hosted President Olafur Ragnar Grimsson of Iceland, he said, and a growing number of Indians and Filipinos.
“People are here to figure out where we go from here,” he said.
Simon Sayore and Felix Ngamlagosi arrived last weekend from Tanzania, where they work on energy regulation. They hope that recent discoveries of natural gas and coal deposits will help them spread electricity to more of the population.
“Electricity is growing very fast, and we think that will spur development in the country,” Sayore said.
Suren Batagoda, secretary of power and energy for Sri Lanka, came to CERAWeek to learn how the island country that imports all of its fuel could achieve energy independence, he said.
“We found some deposits and we’re looking for some investors to develop this,” he said of natural gas. He had met with Exxon Mobil and Total at the conference about the possibility. Sri Lanka, he said, is also focused on renewables. Batagoda got his Ph.D. in environmental science from the University of Michigan and was disappointed by the lack of attention to cleaner energy.
Batagoda was trying to fit in a trip to NASA before heading home.
Hidehiro Muramatsu had on his Dallas Cowboys tie for the occasion. Though he lives in Washington, D.C., now, Muramatsu grew up watching the Cowboys on TV in Sapporo, Japan.
He works for the Japanese government and came to Houston to learn about investment opportunities in Mexico and natural gas in the U.S., he said.
“Last year was rosecolored,” he said. “This year there’s a little bit of doom.”