Jon Krome (Host) (00:00.984)
Well, welcome back everybody. This is John Crome with Uncapped with Executive Roustabouts. And today we've got another fantastic guest for everybody. My guest is a former colleague and friend over many years, Dr. John Olson. He is the Cockrell Family Chair Emeritus in Engineering in the Hildebrand Department of Petroleum and Geosystems Engineering at the University of Texas at Austin. My old job. Yes.
BS degrees in civil engineering and earth sciences from Notre Dame and a PhD in applied earth sciences, geomechanics from Stanford. Under-educated as well. This is a tough guest. He spent six years working at Mobile R &D in Dallas on the rock mechanics team, particularly with a focus on hydraulic fracturing and reservoir subsidence and compaction problems, such as in the diatomite in California, which is where we met.
What can you ask for? What more can you ask for?
Jon Krome (Host) (01:00.62)
His 30-year career on the faculty of UT Austin continued work on geomechanics related topics in the energy business, of which there are many. He has published over 100 papers, 1-0-0 papers, including peer-reviewed journal papers, peer-reviewed book chapters, and conference proceedings. These publications have accumulated over 15,000 citations as measured on Google Scholar.
As a supervising advisor or co-advisor, he graduated 18 PhDs and 29 master's students. So that's giving back people. John, welcome to the program. It's fantastic to see you again, my old friend.
Thanks for inviting me. I enjoy being here.
So, you know, I tell everybody that knows you that I taught you how to hydraulically fracture, which is partly true.
That's right. Everything I know about the field work and hydraulic fracturing, plus getting free lunches from service companies, that all was learned from you.
Jon Krome (Host) (02:00.15)
Our time together was not misspent then.
Ha
So let's start with some easy stuff. What do you think about Landman? Are you watching it?
Well, I'm a big Billy Bob Thornton fan and I enjoy his shows. One of the things that gets me though is that there's a lot of gratuitous violence and sometimes, particularly Billy Bob getting tortured and I was just like, oh God, know, it's hard to watch sometimes, it's a lot of fun. I'm encouraged by Andy Garcia being on the cast now. I like he's maybe a calming influence a little bit. I like him.
Well, remember he was the source of the violence. So I'm not sure how bombing that's gonna be.
Jon Olson (02:42.254)
I know, but he was very smooth and charming about it, right? Billy Bob is F this, F that, every other word, so.
He is, he is, he looks completely...
Jon Krome (Host) (02:52.738)
Yeah, mean Andy Garcia is kind of reprising one of his roles they played in The Godfather. You know, he's going to get you, but he's going to be smooth about it. You know, the way that I talk about Landman to my friends and family is it's not a documentary. I had a job in South Texas as the operations manager and he's doing that kind of. I never got beat up with a bag over my head. So, you know, maybe I wasn't doing it right. I don't know.
Yes.
Jon Olson (03:18.005)
man.
Jon Olson (03:22.636)
You didn't have an aircraft land in the middle of the field on the highway and get hit by an oil tanker?
No, but we did have plenty of tankers do bad things. I was, at the time, an eagle for a bit of the Wild West. What about a favorite oil and gas movie besides Landman? What do you like to watch?
Hell yeah.
Jon Olson (03:37.708)
Well, I was thinking about that. you know, we do a lot of outreach at UT and so we take high school teachers. We have a long drive to Houston, so we got three hours to entertain them. So what we started doing was show them giant on the way down and then we show them Hellfighters on the way back with John Wayne. But really the recent stuff, and this is nonfiction, but
I love you, Ian.
Jon Olson (04:05.206)
I really like the movie Hainesville, which is about the boom in Hainesville. it's, I happen to have it right here. It's not circulated anymore. I'm not sure why not, but I'd use excerpts from it for teaching my freshman class because it's got a bunch of talking heads. And I just pointed them when they're talking, I said, look at these guys, they're having fun. This is what you can be, you know? And it's just, it's fun to do that. Plus the message is good. I think it's technical and also,
Interesting, I haven't seen that. I haven't heard of it.
And disc?
Jon Krome (Host) (04:28.343)
Yeah.
Jon Olson (04:35.404)
What's the social and economic impact of the oil business on communities?
So how many kids do you think you graduated, advanced students aside? How many petroleum engineering undergrads do you think you've passed through?
Um, so, you know, just in the, well, we, we've been graduating on the order of 75 to 125 a year for the last 15 years or so, I think. So I've probably, I probably taught in the, you know, couple thousand maybe. Um,
That's That's great. That's giving back, John. Well done, you. Do you have any, do you have any?
Well, thank you. Hopefully I haven't twisted them to make mistakes.
Jon Krome (Host) (05:19.17)
Okay, everybody's gonna make a mistake, right? I mean, we just have to manage the risk and do the best we can. Any students or situations particularly stand out to you that are kind of difficult or inspirational or anything like that? Any students when you think of your teaching experience, names aside?
That's right.
Jon Olson (05:35.406)
Yeah, think, well, think that students who go out and, well, this is, I guess this is way to say it. As a department chair, I was department chair for eight years. And as department chair, main part of my job was to go out and talk to alumni. So people after they've graduated and visited with people from two years out to 40 or 50 years out.
And one of the fun things about being department chair, if you're an alumni who gets visited, you know there's a staff person there who's there about the money. But the department chair is just there to entertain and to ask interesting questions and to chat people up about what their industry background was. And so, you know, there's a lot of cases where people have just incredible stories and it's just a lot of fun.
Hahaha
Jon Olson (06:32.942)
to listen to them talk about their history. And I can give you one example of, and can I name a name of a retired CEO? Okay, so, and this is somebody we invited to campus to give back. And that's what's exciting is to see people give back. So we had Scott Sheffield of Pioneer, and it was actually, we invited him as an alumni in residence.
Please, one example. Yeah.
Jon Krome (Host) (06:43.8)
Sure.
Jon Krome (Host) (06:54.763)
yeah.
Jon Olson (07:01.44)
and he had retired at the time in the fall and he was going to come in January. And between us inviting him and him coming, he got called back to be CEO again. So now he's in the company. He's got a huge to-do list because he's trying to rejuvenate things and stuff like that. And so can imagine hyper busy and executive, doesn't have time for anything but the company. But when he came to campus and he would have lunch with our students, we had him come like,
three times for three days a piece. would have lunch with our students. He would take his telephone. He would turn it off, stick it in his briefcase, put his briefcase in a storage room where we kept his stuff secure. And he would walk to a different room, totally detached from being connected. And I thought, this is a guy of a multi-million, multi-billion dollar company is willing to completely detach from the company.
to give back to our students. It was just really inspiring, I thought.
That's a great example of leadership right there too. Great role modeling.
Yeah, no, he was great and he was he was just you know always engaged He was always listening and and many other people are like that too, but that's really what's that's really what? Tips you off that these people are really sincere is when they listen to you not just are are talking back back to you So and I you know, I feel like I have a hard time meeting that that standard myself a lot of times So I try to work on it
Jon Krome (Host) (08:31.602)
you can work on it today. So you're in school, you're an undergrad, you did choose grad school. But why did you choose the oil and gas industry? Because you probably had more than a few options as you're plowing your way through your senior year and then in your PhD studies. Why oil and gas?
So, you know, I grew up in a big oil and gas state, right? Minnesota. I mean, it's, I guess we're probably maybe we're sorry.
Minnesota in the news. We'll get to that later.
Well, yeah, there's that. yeah, so I didn't even know what the oil business was. But I did have, I mean, there are a lot of rocks around and I was interested in that. being in geology, obviously, more so back in the 80s than today, maybe the obvious job track was oil and gas. But I was also in civil engineering and my dad built roads, so I was thinking I might want to do that as well.
What really partly turned my head was I had a summer job in 1982 at Unicow because Bill said
Jon Krome (Host) (09:41.59)
Unical, dust ring a bell. What is Unical? that's right.
Union Oil Company of California. I think it was of California. And so they had a, there's a Union 76 building in downtown LA near the Bonaventure Hotel. And that's where I have my summer job. And the reason why we got it, I mean, Notre Dame is not where I went undergrad, is not a place big on oil and gas either. But one of our graduates, his name was Bill Sachs, was a vice president at Unical. And he came to campus to give back to interview
It was.
Jon Olson (10:14.072)
some undergrads to see if we could get a summer internship. And so I got a summer internship with him. Well, not with him, but hired by him and then worked for one of his underlings working on the Gulf of Thailand, which actually was kind of interesting. So that kind of inspired me. We got to go offshore to a platform in the Santa Barbara Channel. And that was just really amazing to me. The other part of this was my
It is deep.
Jon Olson (10:43.19)
my girlfriend at the time and then fiance and ultimately wife was also a geologist and her dad was an independent oil man. And so that, that kind of had a little bit of an influence too. So yeah.
Win-win, I mean that's called convergence. Well, I lived when I was in grad school at SC, I lived in Sherman Oaks. Where did you live when you were a summer hire? Sherman Oaks, yeah. wow, it's a whole world.
Sherwin Oaks was where my boss lived, I think. And he would he would ride his motor. That's that's out Northish, right? Yeah, it was a long commute. And so he'd come in at like four or five o'clock in the morning on his motorcycle. Yeah, to downtown L.A. And he had been well, what the story he told us was he had been he had been with the CIA in Vietnam. And so he was a tough guy and he would take us out.
It's in the valley, that's right.
Jon Krome (Host) (11:17.742)
I a motorcycle.
Jon Olson (11:32.056)
for Thai food and Vietnamese food where basically the hot sauce would just burn your tongue off. But he was very interesting guy. that whole idea of, I mean, I'm a small town kid. I grew up in a town of 10,000 in Minnesota. I'd never been to California before, much less a metropolis of 10 million people. And I survived a summer in LA. It was quite the experience.
That is great too. Your first time kind of independent living from home, you know? So, you know, today's workplace is so different than when you and I were younger engineers. I mean, what kind of advice would you give folks today about how to manage their career, about how to manage their behavior in the workplace, knowing how different the technology is, the social norms are, the level of remote work, all of it? What would you tell them?
yeah. Yeah.
Jon Olson (12:25.384)
I mean, think one thing is, you said things are not as permanent as they used to be. I thought when I went to work for mobil, I was going to work there for 30 years. Of course, I've only worked for two workplaces, mean, a company and then the university. yeah, so it's unusual. But I would say because of this mobility, you never want to burn any bridges.
You're so lazy. You're so lazy.
Jon Olson (12:52.75)
And this is true about life no matter what, but even if you have a big altercation with somebody, you just really want to be careful about burning bridges because you never know when you're going to come across somebody again. And then the other thing, the flip side of that is don't just try not to do bad things. Try to be kind and helpful to people. mean, it makes you feel better and it's good for you going down the line.
And the thing I talk, since I teach freshmen, I have to talk a little bit about ethics and I just say, you know, just really you need to operate with integrity because you have to live with yourself for the rest of your life. So I think those are really important things. I thought working for a big company was really exciting. And so I hear a lot of people say, you know, working for ExxonMobil or Chevron or those big corporations is just innovation killing and all that kind of stuff. And it's like, no, you can
You can be an entrepreneur in a big company. Don't shy away from big companies. I mean, they've got capital that's just astounding and they can do incredible things.
That's right. They've got resources. They've got smart people. They've got networks and contacts. Absolutely.
Yeah. And so it was a lot of fun. He might even run into some, did you actually have a petroleum engineering degree from Johns Hopkins or?
Jon Krome (Host) (14:11.906)
So undergrad in geology, master's in petroleum engineering.
Okay. And your master's with that SC. That's right. That's right. Okay. Okay. Yeah, I knew Johns Hopkins is the... Yeah. Well, I forgot. Johns Hopkins has an incredible reputation for geology. So I was just saying that, know, petroleum engineering on the East Coast? I don't know.
I that's right. That's right. I like how you said that though, didn't you actually?
Jon Krome (Host) (14:35.574)
Yeah, there was no petroleum there. We had some great sedimentologists and some people that did wonderful geophysics, but it was somewhat academic. One of the groundbreaking geologists and sedimentary rocks came from Johns Hopkins. Eddie John, that's exactly right. And his student, guy named Laurie Hardy, who was one of my professors as well.
Pettijohn, right? Yeah, yeah, I know all about that stuff.
Jon Krome (Host) (14:57.942)
So every executive since there have been executives has always been pounding the table about less regulation, less regulation, less regulation. And I kind of get it. Regulation represents a rule, a constriction, a boundary condition. But there's also a bigger world out there, the consumer, the community, et cetera. Do you think more regulation would be stifling or would more regulation level the playing field and give us all an
better understanding so we could innovate around well-known boundaries. Where do you stand on more or less regulation being good for the industry?
Yeah, think, well, I mean, you know, I guess this is a cliche, but sensible regulation, I think is important. I think the idea of, you know, don't regulate this, we'll take care of it ourselves is, that's not a good path because, you know, some companies, yeah, I mean, some companies have, really do truly have an altruistic mission statement and things, but...
That's folly. That's folly.
Jon Olson (16:03.494)
There's some people that are out there just to make money and you want to make sure that there's some guardrails to keep them on the straight and narrow. I don't know, I think we're clearly on the trend towards less regulation. I mean, I'm not up to date on exactly what the regulations are, but I feel like we need to keep some fundamental things out there to keep the environment safe and to keep people safe. But...
But I have a lot of respect for regulators because we do some training for fundamental engineering and science training for field inspectors. And just, pardon?
Railroad Commission in particular? At the Railroad Commission in Texas?
Well, across the country. I think we have regulators from 35 states, including the Railroad Commission of Texas. And actually, thing, speaking of California, this is not me. I participate. It's actually run by Dr. Hillary Olson, who happens to be that woman that I met who is a geologist at Notre Dame. But I work for her most of the time.
Okay.
Jon Krome (Host) (16:55.651)
Great.
Jon Krome (Host) (17:10.062)
She's in there, everyone's flopping.
Jon Krome (Host) (17:14.584)
So I do think there's a distinction between regulation and bureaucracy. And sometimes I think the two get confused. Where I think that there are lots of good boundary conditions for lots of good reasons. New companies that are immature that jump in need to know what good looks like. People need to be held to account in the communities in which they work, but they might not stay very long. That's different than three different agencies stepping on each other, duplicating the same thing.
Yeah, yeah.
Jon Krome (Host) (17:43.264)
and kind of torturing the operator. So I do think sometimes we get confused between what is good regulation in the spirit of community and self-interest in the long term versus the bureaucratic machinery that we've used to execute on it.
Yeah. And I think that's partly, you know, what you're talking about having different agencies, even possibly with different purposes and different directions, you need to have good leadership at the state and county level to make sure that there's not that competition and overlap of adjudication divisions, because then people have to fill out the same form for seven different people. Yeah.
Exactly. That's bureaucracy.
Yeah.
Alright, so I'm going to change gears a little bit. And for you, I want to define core work for an oil company as the work that creates sustainable competitive advantage. Sustainable competitive advantage. What do you think the core work of an oil and gas company really is or should be?
Jon Olson (18:53.55)
I mean, I think that the competencies, the technical competencies that allow them to find the oil and gas, although exploration is not as big a deal as it used to be, although the offshore world internationally is booming right now, but that being able to drill wells effectively in repeated, safe and economic efficiency fashion
and basically trying to work that, you guess a lot of companies are trying to get the balance between acquisition versus creating new opportunities. And I think, I mean, it depends on who the company is, but it seems like a mix between the finding new things versus doing better with the old than other people can do is a place to be. but,
I sometimes worry that, and I saw this when we worked at mobil, the drive for efficiency sometimes forgets about the need to generate revenue with good production. And so we're proud that we drilled a well for cheap, but then don't worry about whether it actually produced as much as it could have. And in order to balance those things, need to have different personalities in your workforce. Some people who are
shooting for the stars all the time. if you did that all the time, you'd go bankrupt. But you need to have some of that in the mix. People that can imagine how things could be better and how things could excel in ways that you never imagined before. So you need to have a diverse workforce. They can't all just be carbon-cutter, cost-efficient people, cost-efficiency people.
And we saw that, I mean, particularly in the 90s when benchmarking became all the rage, everybody was so concerned about dollar per barrel or operating costs, which is fantastic. But we did absolutely forget a little bit about production growth, reserve replacement, things that actually preserve or even grow with a company. So I hear that loud and clear. But just to sum up, mean, and I've heard this from other executives, generally, it's a lot of the subsurface skills.
Jon Krome (Host) (21:13.57)
that help you identify and exploit oil and gas reserves.
No, I totally agree. I mean, I think we need good subsurface skills. Of course, you know, I'm slightly biased being a petroleum engineering professor. But yeah, and you know, these companies are very diverse. They've got computer scientists and other people working, you that aren't in the core geology, petroleum engineering fields that significantly contribute. But I think you need to be strong in that realm.
slightly.
Jon Olson (21:50.027)
to really be a core oil and gas company. That's where you make your profits predominantly. That's where your niche is.
Yeah, I mean, I'll say it a different way. You can be great at all that other stuff. You can be great at operations, maintenance. You could have great process engineers, great payables people, great procurement, great age. That's fine. That's a choice you can make. But if you don't honor the core of the subsurface world to find and exploit the reserves, that's a problem. And I would put absolutely, you think about a bullseye and I think about a three ring bullseye and the center ring has got to be
Certainly for long-term success.
Jon Krome (Host) (22:27.384)
those subsurface skills related to finding and exploiting the reserves. Now, here's a related question. Let's agree that's the core work. Does it have to be insourced and company run or could you outsource core work or is that a contradiction?
Well, I mean, I would like to say it needs to be in company, I think. But that's the conservative job protection attitude, right? If you outsource everything. If the person at the top has really got all of the disciplines covered himself or herself,
and they can really judge things very accurately. They don't need any advice, which, you know, that that would be a rare person. Yeah, but they could outsource it all. But I think you need to have excellence and you can't maintain an excellent staff if all they get to do is look over other people's work. They need to be able to be allowed to create and produce themselves. They can't just be experts looking over other people's shoulders.
It would be a rare position.
Jon Olson (23:44.982)
In order to do that, you need to have in-house expertise that is doing in-house work. I mean, I feel like that's really important.
I think there's a word you want to use, but you haven't yet, is there's a level of ownership that's quite different amongst employees than even dedicated contractors. And I think that does make a difference.
Yeah, yeah. And yeah, and I think outsourcing stuff, surely, certainly in many situations, you're going to outsource as a country that has much lower labor cost. And you can have a big, big boost in your profitability for a while. But I think long term, you know, I just don't see long term that as being the best way to go. But again, I'm down at the bottom. I'm not actually one of these ex executives. I'm trying to educate the
the technical staff. I see them as being a major force and success of a company. And they can't do that if they're not allowed to have the ownership, like you said.
Yeah, yeah, I would agree with that. So, you know, this last 20 years, we've all gotten very good at an adoption cycle time of technology in our personal lives. Think about our streaming services. Think about our cell phone, the use of Bluetooth, our vehicles, you name it. Do you think that our experience as consumers has had an impact on reducing the adoption cycle time of technology and innovation in the workplace? In other words,
Jon Krome (Host) (25:17.666)
has the adoption cycle time of new methods and innovations in the workplace gone down over time largely because of our personal experiences at home? Or another reason?
Yeah, I mean, I've never really thought of it that way that the consumer cycle is pushing the high tech or technical cycle. But I think that's probably true. That's a great insight because, I mean, yeah, your phone, your media that you get, all of that stuff is just revolutionized every few years. And if you're thinking, I can do this in my house and do this at home,
but I can't do it in the workplace, you're gonna say, what's wrong with this? We need to change the workplace. And we can't wait for three years to implement new technology. We need to be able to get it out there right away. And a huge part of that is adoption of really, mean, not to focus too much on buzzwords, but being able to handle data, collect data, store data, search data. I mean, that's a huge, huge difference. I mean, I can remember,
when I worked with you in California, having to go into the file room and dig for logs and just, mean, and somebody had, you sometimes it's somebody took the copy of the log and it's gone and you can't find it. And it's just, just archaic the way we did some of those things. now...
Some of that is better. It's not always true. It's not always true. Yeah, it's not always true you can find stuff.
Jon Krome (Host) (26:47.253)
HAHAHA
You were troubled towards it than that. You were troubled towards it. That's funny. Yeah, I mean, with more data comes more data management problems and data numbness and data quality and corruption issues and data access and formatting. So more to data hasn't always equated to a more effective or efficient outcome. Although that is always the goal. Even 10 years ago,
I was doing a project with one of the super majors and they were quoting internal numbers that their reservoir and production engineers spent 35 % of their time managing data in some regard. And I'm curious if you've heard numbers like that from your students current and former about how they spend their time related to data. Has it really gotten better or is it just morphed into something different?
Yeah, can't, I mean, I can't think of students coming back to talk about that, but I can say for myself as a, you know, as a professor, sometimes I do consulting and I don't have, I'm not the owner of the data. So I got to find what's publicly available oftentimes. And I mean, it's really astounding. Some of the stuff you can find online that places like the railroad commission of Texas or the oil and gas division in Ohio, that's one of the.
areas where I did a consulting project have GIS based web based web web provided information. You can click on a site and find all the wells nearby and get data from the wells. It's it's it's it's better. It's it's it's better. I mean, that that spatial geospatial organization of information in the the serving of digital data, I think, is really improved. Now, maybe it's
Jon Olson (28:33.708)
you just have higher standards of what kind of data you need to get. So you still spend the same amount of time collecting the data, but.
Interesting. mean, the data you have creates an appetite for more data. So it's a never-ending appetite that you're trying to extinguish. And I agree. think, and maybe it's not so much data, but it's clearly the visualization tools are far and away superior. And I love the geospatial stuff, the ESRI stuff and the things related to that. Really powerful stuff for geospatial learning. All we got to talk about AI and AGI. And I'm sure this is...
a body, a domain of interest in the petroleum engineering students for sure. What do you think are the most far out or the most compelling potential use cases that you see for AI and AGI?
Well, mostly I'm pondering the risks of the development of the human workforce. yeah, well, there's that too. I was just thinking of lack of development of human capital. But if you think about the potential, mean, there's some things that machines can do at a time scale that humans just can't. And so if you're detecting problems,
Skynet, Skynet.
Jon Olson (29:53.528)
You know, I've heard stories that are drilling folks have talked about, you know, interpreting vibrations and other sorts of things. Real-time data and drilling can help you prevent a problem later in time. And that kind of data is really hard for the human mind to sort through. But the human is still very necessary to make sure that you're not just looking at noise and...
and it's a true signal. But I think the speed at which you can absorb information and have it served up and visualized to an expert, I still feel like the experts are needed though. I mean, even when I was young in the industry, just looking at the same data and hearing people with experience make interpretations, I was like, where did that come from?
I didn't even have a clue what they were talking about. And I think experienced people are really, really key to the process. And you can't get experienced if you don't get to do that at the lower level, which that's the problem. AI can replace a lot of us at the lower level. But then we never get that experience in order to become an expert.
That's an interesting point. if you're not, if you don't have that pipeline of young people suffering and learning and growing, that's right. That's exactly right. You kind of run out of the pipeline of future experts. That's a great point. Interesting.
and making mistakes.
Jon Olson (31:27.822)
Yeah, yeah. And I know at Mobile at the research lab when I was there, they were trying to capture the, we were doing knowledge system work and expert system work and trying to capture the knowledge of our senior people so that when they're gone, that they would replace us, I guess, through the machine. And that was 35 years ago.
Expert systems. Yeah.
Jon Krome (Host) (31:54.178)
I mean, I remember one of our PhD students at USC was working on an expert system for drilling mud management. And really it was just a very long coding effort of if then, if then, if then, if then, if then. And the idea was you take a rookie mud logger or drilling engineer and they use it as an expert support system to help them make heads or tails of some unusual condition at the rig site. And you can kind of see the wisdom of that.
But today you might use AI or something very simply to do it.
When I think I'm just if I can tag on to that that idea, something that I've seen that that it's not an it's not AI per se, but it's bringing, you know, one of the things is I've only worked in Southern California. I don't know what happens elsewhere in the world. My limit, my experience is limited. A lot of companies now have these real time operating centers where, know, the offshore Guiana and offshore Africa and onshore Texas, everybody's together and they can turn around and say, hey,
Has anybody ever seen this? And you've got people from all over the world in the same room pulling all that information together. So it's an expert cluster as opposed to a computer expert system.
And those venues, those remote centers have gone through pillar and post. They collapse, they disappear, they come back. So the industry is constantly testing the boundaries and starting over every five years or so. But one of the things about our conversation about core work, it seems to me that ultimately, if we want AI to make a difference or AGI, and I'm cutting the hair between artificial intelligence and artificial general intelligence.
Jon Krome (Host) (33:38.2)
but we've got to be able to get the core work done by AI and AGI. In other words.
If you want to make a difference with AI, it's got to help you find and exploit reserves. So it's got to come up with the new reservoir. It's going to identify the reservoir development scheme. It's got to figure out the drilling schemas. It's got to figure out the mud program and the frac programs. So this is the fantasy, but you push a few buttons and a week later, you've got the entire development plan that's optimized on NPV or any other measure based on your AI tools.
That's the golden fleece. That's what we're looking for. That's the holy grail. All this personal productivity stuff is useful and maybe it's serving as a foundation for learning, but unless we get AI to work on the big stuff, everything else feels like a distraction. And so.
Yeah, mean, I mean, if you take your story, to the end point, none of us are needed anymore. And so I would argue that I would push more for things that we know that work and also that results in a world that I would want to live in is that the personal productivity part of it, right? I mean, I know one of our faculty says,
Hahaha!
Jon Olson (34:56.844)
The tools that you can have for programming are just astounding. He said he can program like a team of five programmers with AI support.
Yeah, and some of that is really machine learning, again, I'm not gonna cut the inheritance. What do you think, is a bit, I mean, speaking of Skynet, once we talk about humanoid robots becoming more commonplace, more ubiquitous, and I'm sure you've seen reels on Facebook and Instagram that we're getting dangerously close to.
Yeah, yeah. Well, yeah, yeah. AI versus machine learning,
Jon Krome (Host) (35:29.43)
some really big breakthroughs with humanoid robots combined with AI. How do you think that's going to affect the oil industry specifically?
you know, I don't have that much experience with the humanoid part in the oil field. I mean, I know the, the automated drilling, equipment that I've seen, which is, you know, incredible for repeatability, safety, predictable performance. None of that's, there's no attempt to make that humanoid. That's just machines that are automated and, and they, they look like machines still.
Yeah.
The humanoid side, you know, I just thinking I've been doing a lot of carpentry lately. Boy, if you've got to train a robot to hold a nail and hammer a nail and, you know, and be able to...
It's coming. It's coming. I've seen robots cook meals in kitchens and handle eggs like a human being.
Jon Olson (36:23.211)
is coming.
Jon Olson (36:31.778)
Yeah, well...
So consider, I think you're right.
I wouldn't mind having somebody dust my house for me.
So I think there's going to be a series of dilemmas. And I think on one hand, you've got copious amounts of automation and mechanization. And an example of that would be a self-driving vehicle. Self-driving long haul truck is a great example. On the other side, screw it. You don't mess with the automation and the mechanization. You buy a fit-for-purpose human-owned robot and stick it behind the wheel. And you train it to drive. So I think at some point, mechanization and automation
Right, right.
Jon Krome (Host) (37:07.404)
will compete with or at least be an alternative to a humanoid robot that's cheap and trainable. Now the only caveat is that humanoid robot is still a machine. Every machine has got a maintenance routine, it's got a failure mode, and adding another machine to an existing machine does increase the risk of failure in some way. It's still a machine. So I think.
Yeah.
Well, mean, us humanoids fail too, so, and require maintenance, I don't, I mean, I haven't thought much about that. just, I worry, like I said, I worry about that's a world, whether that's a world I want to live in, but.
That's right. Just no doubt. No doubt.
Jon Krome (Host) (37:48.43)
We both know that's not going to be a choice. mean, people were. Yeah. I mean, that's coming. All right. Let's talk a little bit about LNG, which is about to explode. In particular, with Russia's invasion of Ukraine, Europe is looking for other places for LNG. combined with the fact that the US has a tremendous amount of unmonetized gas, LNG is a good business. And there's probably five to 10 various
Yeah, nobody's going to be asked. Elon Musk hasn't asked me about that lately, so.
Jon Krome (Host) (38:18.326)
companies and new plants underway in the Gulf Coast to satisfy that need. Talk to me about where you think the future of LNG is going. Good, bad, ugly. Blood, guts, and sweat.
Well, think, yeah, I think, well, it's an interesting story. Europe is an interesting story because they were thinking they were going to solve this problem with renewables and have found that that's not working so well. But they are still demanding sustainable benchmarks for US gas if they're going to buy it, or at least some countries are. And so that puts a sustainability
Motive motivation for US companies, which is probably a good thing in some some regards. I think some of that's good the the
The rise of the LNG market, LNG export capability in the United States is just astounding. It's like a repeat of the shale gas boom. To go from being a near to be importer nation to being a leader in export is, again, unbelievable. I'll just tell you, it's great stories to tell to freshmen in petroleum engineering. It's just amazing the successes we've had. Yeah, yeah.
Thank you.
Jon Krome (Host) (39:38.136)
George Mitchell and the Barnett. What a story.
But I guess I worry what I worry the challenge is going to be is what kind of price pressure is that going to put on the domestic gas market in the United States? And are we going to run into the time where the federal government intervenes again and limits our export capability? mean, there's political uncertainty that you have to deal with as well as a technical uncertainty. I think the hardware, the equipment that's been built for the exporting is going to help guarantee that
I think that's a great.
Jon Olson (40:12.418)
The government won't mess with it too much, maybe, hopefully.
But I think you're right. That's probably something that hasn't been explored enough and it works its way in a couple of different ways. So if the feedstock gas comes under pressure and becomes somewhat scarce, the laws of supply and demand mean that the price goes up. Okay. So I don't use that much gas in my home. It's the stove, you know, I have a water heater, but the sneaky part is for states in particular to have thrown their weight with natural gas fired electricity,
that's where it's going to hit the consumer very hard. And places that are unregulated, where the market works, well, market sword cuts in two directions. So if you're in a regulated environment, like most states, you've got a public utilities commission and there's approvals to have prices. If you're in a place like Texas, it's supply and demand. So in a place like Texas, particularly if you're going to siphon off some for LNG, you're going to siphon off some for AI data centers,
yeah, yeah.
Jon Krome (Host) (41:15.51)
and then you've got the poor little consumer left, you can bet your bottom dollar that electricity prices have to go up.
Yeah, I mean, you have that pressure of exporting the gas and LNG and the AI companies just building their own gas-powered power plants and pulling the resources to themselves. Well, I guess you need to just have faith that the market will sort it out, right? Yeah, yeah.
Isn't it always? Sometimes yes, sometimes no. The market always works if you let it, but there are always winners and losers. And the consumer might be on the losing end of this one.
Yeah, no, definitely. Yeah, well, and the reason why, for instance, to bring climate into it, the reason why natural gas replaced coal in the United States is not because it emitted less carbon per energy. It was because it was cheaper.
That's exactly right. Now, the other unintended consequence of tremendous gas production in the future that leads to either LNG or use in AI data centers is that we both know that methane leaks are much more damaging to the environment than CO2. And boy, being in the industry, both know, excuse me, that there are methane leaks everywhere, partly by design, regulators and actuators and flanges and venting.
Jon Krome (Host) (42:36.832)
So even if you were to monitor that like crazy, I'm not sure you can get it down to the ratio of 80 to one or whatever that ratio is of methane to CO2 damaging in the atmosphere. In other words, even with a more pro-gas economic environment, we still may be building greenhouse gas because of methane leakage, even if we try to mitigate it.
Yeah, think, I think, I mean, I'm more optimistic about, at least for, you know, new operations and stuff. There people are talking about tankless. well that that's on the oil side, but, tankless facilities and things like that, where you get rid of the risk of having a hatch that's open or, but also the valves and stuff that there's technology to improve on those things. So yeah, yeah, it's all, it's, it's all about money. That's right. That's right. And,
Yeah, you can get there. can get there. It's all about money, right? It's all about money.
Jon Olson (43:27.948)
And that's the competition between, you are we in business to make money or how much of our resources are we willing to do to be sustainable? And that's where government needs to come in and help hopefully reasonably navigate that fine line.
We've come full circle. Okay, I'm looking at the clock. We're getting a little close. Make a couple of predictions about the oil company of the future five or 10 years from now.
man. Well, I think, I think, you know, every employee is going to be another level higher of computer literacy, being able to use, I think using AI type tools, data, data management tools, to make them personally more productive. see, I see that as a big boon. think, automation is going to continue to advance.
Partly, really, efficiency is the reason why it's happening, but it'll also increase the safety of the work environment. I hope that we will continue to have a very robust and growing domestic supply, but I see internationalism coming back, it seems like. Again, some of these offshore discoveries are encouraging for that market.
But I think there's still a lot to go in the unconventional world. A lot of it's just, know, well, okay. I think the biggest potential for growth in the US is to go back and recapture some of the resources that have been left behind when we produce 5 % or 10 % of the resource out of shale.
Jon Krome (Host) (45:18.168)
California Diatomite, Monterey Formation.
Well, yeah, well, that hasn't even been started really with the horizontal wells and hydraulic fracturing, right?
I can't even agree more. All right, my friend. Well, thank you very much. This has been a great and robust conversation. Thank you very much for taking the time. I want to encourage all the listeners out there to repost and to forward this to your friends, families, and colleagues.
Please leave a comment as well and maybe even a guest suggestion. I'm taking all comers. I do have a certain demographic, but maybe you've got a couple of great suggestions as well. And I will see you next time on Uncapped with Executive Roustabouts. Bye now.
Bye bye.
Well, welcome back everybody. This is John Crome with Uncapped with Executive Roustabouts. And today we've got another fantastic guest for everybody. My guest is a former colleague and friend over many years, Dr. John Olson. He is the Cockrell Family Chair Emeritus in Engineering in the Hildebrand Department of Petroleum and Geosystems Engineering at the University of Texas at Austin. My old job. Yes.
BS degrees in civil engineering and earth sciences from Notre Dame and a PhD in applied earth sciences, geomechanics from Stanford. Under-educated as well. This is a tough guest. He spent six years working at Mobile R &D in Dallas on the rock mechanics team, particularly with a focus on hydraulic fracturing and reservoir subsidence and compaction problems, such as in the diatomite in California, which is where we met.
What can you ask for? What more can you ask for?
Jon Krome (Host) (01:00.62)
His 30-year career on the faculty of UT Austin continued work on geomechanics related topics in the energy business, of which there are many. He has published over 100 papers, 1-0-0 papers, including peer-reviewed journal papers, peer-reviewed book chapters, and conference proceedings. These publications have accumulated over 15,000 citations as measured on Google Scholar.
As a supervising advisor or co-advisor, he graduated 18 PhDs and 29 master's students. So that's giving back people. John, welcome to the program. It's fantastic to see you again, my old friend.
Thanks for inviting me. I enjoy being here.
So, you know, I tell everybody that knows you that I taught you how to hydraulically fracture, which is partly true.
That's right. Everything I know about the field work and hydraulic fracturing, plus getting free lunches from service companies, that all was learned from you.
Jon Krome (Host) (02:00.15)
Our time together was not misspent then.
Ha
So let's start with some easy stuff. What do you think about Landman? Are you watching it?
Well, I'm a big Billy Bob Thornton fan and I enjoy his shows. One of the things that gets me though is that there's a lot of gratuitous violence and sometimes, particularly Billy Bob getting tortured and I was just like, oh God, know, it's hard to watch sometimes, it's a lot of fun. I'm encouraged by Andy Garcia being on the cast now. I like he's maybe a calming influence a little bit. I like him.
Well, remember he was the source of the violence. So I'm not sure how bombing that's gonna be.
Jon Olson (02:42.254)
I know, but he was very smooth and charming about it, right? Billy Bob is F this, F that, every other word, so.
He is, he is, he looks completely...
Jon Krome (Host) (02:52.738)
Yeah, mean Andy Garcia is kind of reprising one of his roles they played in The Godfather. You know, he's going to get you, but he's going to be smooth about it. You know, the way that I talk about Landman to my friends and family is it's not a documentary. I had a job in South Texas as the operations manager and he's doing that kind of. I never got beat up with a bag over my head. So, you know, maybe I wasn't doing it right. I don't know.
Yes.
Jon Olson (03:18.005)
man.
Jon Olson (03:22.636)
You didn't have an aircraft land in the middle of the field on the highway and get hit by an oil tanker?
No, but we did have plenty of tankers do bad things. I was, at the time, an eagle for a bit of the Wild West. What about a favorite oil and gas movie besides Landman? What do you like to watch?
Hell yeah.
Jon Olson (03:37.708)
Well, I was thinking about that. you know, we do a lot of outreach at UT and so we take high school teachers. We have a long drive to Houston, so we got three hours to entertain them. So what we started doing was show them giant on the way down and then we show them Hellfighters on the way back with John Wayne. But really the recent stuff, and this is nonfiction, but
I love you, Ian.
Jon Olson (04:05.206)
I really like the movie Hainesville, which is about the boom in Hainesville. it's, I happen to have it right here. It's not circulated anymore. I'm not sure why not, but I'd use excerpts from it for teaching my freshman class because it's got a bunch of talking heads. And I just pointed them when they're talking, I said, look at these guys, they're having fun. This is what you can be, you know? And it's just, it's fun to do that. Plus the message is good. I think it's technical and also,
Interesting, I haven't seen that. I haven't heard of it.
And disc?
Jon Krome (Host) (04:28.343)
Yeah.
Jon Olson (04:35.404)
What's the social and economic impact of the oil business on communities?
So how many kids do you think you graduated, advanced students aside? How many petroleum engineering undergrads do you think you've passed through?
Um, so, you know, just in the, well, we, we've been graduating on the order of 75 to 125 a year for the last 15 years or so, I think. So I've probably, I probably taught in the, you know, couple thousand maybe. Um,
That's That's great. That's giving back, John. Well done, you. Do you have any, do you have any?
Well, thank you. Hopefully I haven't twisted them to make mistakes.
Jon Krome (Host) (05:19.17)
Okay, everybody's gonna make a mistake, right? I mean, we just have to manage the risk and do the best we can. Any students or situations particularly stand out to you that are kind of difficult or inspirational or anything like that? Any students when you think of your teaching experience, names aside?
That's right.
Jon Olson (05:35.406)
Yeah, think, well, think that students who go out and, well, this is, I guess this is way to say it. As a department chair, I was department chair for eight years. And as department chair, main part of my job was to go out and talk to alumni. So people after they've graduated and visited with people from two years out to 40 or 50 years out.
And one of the fun things about being department chair, if you're an alumni who gets visited, you know there's a staff person there who's there about the money. But the department chair is just there to entertain and to ask interesting questions and to chat people up about what their industry background was. And so, you know, there's a lot of cases where people have just incredible stories and it's just a lot of fun.
Hahaha
Jon Olson (06:32.942)
to listen to them talk about their history. And I can give you one example of, and can I name a name of a retired CEO? Okay, so, and this is somebody we invited to campus to give back. And that's what's exciting is to see people give back. So we had Scott Sheffield of Pioneer, and it was actually, we invited him as an alumni in residence.
Please, one example. Yeah.
Jon Krome (Host) (06:43.8)
Sure.
Jon Krome (Host) (06:54.763)
yeah.
Jon Olson (07:01.44)
and he had retired at the time in the fall and he was going to come in January. And between us inviting him and him coming, he got called back to be CEO again. So now he's in the company. He's got a huge to-do list because he's trying to rejuvenate things and stuff like that. And so can imagine hyper busy and executive, doesn't have time for anything but the company. But when he came to campus and he would have lunch with our students, we had him come like,
three times for three days a piece. would have lunch with our students. He would take his telephone. He would turn it off, stick it in his briefcase, put his briefcase in a storage room where we kept his stuff secure. And he would walk to a different room, totally detached from being connected. And I thought, this is a guy of a multi-million, multi-billion dollar company is willing to completely detach from the company.
to give back to our students. It was just really inspiring, I thought.
That's a great example of leadership right there too. Great role modeling.
Yeah, no, he was great and he was he was just you know always engaged He was always listening and and many other people are like that too, but that's really what's that's really what? Tips you off that these people are really sincere is when they listen to you not just are are talking back back to you So and I you know, I feel like I have a hard time meeting that that standard myself a lot of times So I try to work on it
Jon Krome (Host) (08:31.602)
you can work on it today. So you're in school, you're an undergrad, you did choose grad school. But why did you choose the oil and gas industry? Because you probably had more than a few options as you're plowing your way through your senior year and then in your PhD studies. Why oil and gas?
So, you know, I grew up in a big oil and gas state, right? Minnesota. I mean, it's, I guess we're probably maybe we're sorry.
Minnesota in the news. We'll get to that later.
Well, yeah, there's that. yeah, so I didn't even know what the oil business was. But I did have, I mean, there are a lot of rocks around and I was interested in that. being in geology, obviously, more so back in the 80s than today, maybe the obvious job track was oil and gas. But I was also in civil engineering and my dad built roads, so I was thinking I might want to do that as well.
What really partly turned my head was I had a summer job in 1982 at Unicow because Bill said
Jon Krome (Host) (09:41.59)
Unical, dust ring a bell. What is Unical? that's right.
Union Oil Company of California. I think it was of California. And so they had a, there's a Union 76 building in downtown LA near the Bonaventure Hotel. And that's where I have my summer job. And the reason why we got it, I mean, Notre Dame is not where I went undergrad, is not a place big on oil and gas either. But one of our graduates, his name was Bill Sachs, was a vice president at Unical. And he came to campus to give back to interview
It was.
Jon Olson (10:14.072)
some undergrads to see if we could get a summer internship. And so I got a summer internship with him. Well, not with him, but hired by him and then worked for one of his underlings working on the Gulf of Thailand, which actually was kind of interesting. So that kind of inspired me. We got to go offshore to a platform in the Santa Barbara Channel. And that was just really amazing to me. The other part of this was my
It is deep.
Jon Olson (10:43.19)
my girlfriend at the time and then fiance and ultimately wife was also a geologist and her dad was an independent oil man. And so that, that kind of had a little bit of an influence too. So yeah.
Win-win, I mean that's called convergence. Well, I lived when I was in grad school at SC, I lived in Sherman Oaks. Where did you live when you were a summer hire? Sherman Oaks, yeah. wow, it's a whole world.
Sherwin Oaks was where my boss lived, I think. And he would he would ride his motor. That's that's out Northish, right? Yeah, it was a long commute. And so he'd come in at like four or five o'clock in the morning on his motorcycle. Yeah, to downtown L.A. And he had been well, what the story he told us was he had been he had been with the CIA in Vietnam. And so he was a tough guy and he would take us out.
It's in the valley, that's right.
Jon Krome (Host) (11:17.742)
I a motorcycle.
Jon Olson (11:32.056)
for Thai food and Vietnamese food where basically the hot sauce would just burn your tongue off. But he was very interesting guy. that whole idea of, I mean, I'm a small town kid. I grew up in a town of 10,000 in Minnesota. I'd never been to California before, much less a metropolis of 10 million people. And I survived a summer in LA. It was quite the experience.
That is great too. Your first time kind of independent living from home, you know? So, you know, today's workplace is so different than when you and I were younger engineers. I mean, what kind of advice would you give folks today about how to manage their career, about how to manage their behavior in the workplace, knowing how different the technology is, the social norms are, the level of remote work, all of it? What would you tell them?
yeah. Yeah.
Jon Olson (12:25.384)
I mean, think one thing is, you said things are not as permanent as they used to be. I thought when I went to work for mobil, I was going to work there for 30 years. Of course, I've only worked for two workplaces, mean, a company and then the university. yeah, so it's unusual. But I would say because of this mobility, you never want to burn any bridges.
You're so lazy. You're so lazy.
Jon Olson (12:52.75)
And this is true about life no matter what, but even if you have a big altercation with somebody, you just really want to be careful about burning bridges because you never know when you're going to come across somebody again. And then the other thing, the flip side of that is don't just try not to do bad things. Try to be kind and helpful to people. mean, it makes you feel better and it's good for you going down the line.
And the thing I talk, since I teach freshmen, I have to talk a little bit about ethics and I just say, you know, just really you need to operate with integrity because you have to live with yourself for the rest of your life. So I think those are really important things. I thought working for a big company was really exciting. And so I hear a lot of people say, you know, working for ExxonMobil or Chevron or those big corporations is just innovation killing and all that kind of stuff. And it's like, no, you can
You can be an entrepreneur in a big company. Don't shy away from big companies. I mean, they've got capital that's just astounding and they can do incredible things.
That's right. They've got resources. They've got smart people. They've got networks and contacts. Absolutely.
Yeah. And so it was a lot of fun. He might even run into some, did you actually have a petroleum engineering degree from Johns Hopkins or?
Jon Krome (Host) (14:11.906)
So undergrad in geology, master's in petroleum engineering.
Okay. And your master's with that SC. That's right. That's right. Okay. Okay. Yeah, I knew Johns Hopkins is the... Yeah. Well, I forgot. Johns Hopkins has an incredible reputation for geology. So I was just saying that, know, petroleum engineering on the East Coast? I don't know.
I that's right. That's right. I like how you said that though, didn't you actually?
Jon Krome (Host) (14:35.574)
Yeah, there was no petroleum there. We had some great sedimentologists and some people that did wonderful geophysics, but it was somewhat academic. One of the groundbreaking geologists and sedimentary rocks came from Johns Hopkins. Eddie John, that's exactly right. And his student, guy named Laurie Hardy, who was one of my professors as well.
Pettijohn, right? Yeah, yeah, I know all about that stuff.
Jon Krome (Host) (14:57.942)
So every executive since there have been executives has always been pounding the table about less regulation, less regulation, less regulation. And I kind of get it. Regulation represents a rule, a constriction, a boundary condition. But there's also a bigger world out there, the consumer, the community, et cetera. Do you think more regulation would be stifling or would more regulation level the playing field and give us all an
better understanding so we could innovate around well-known boundaries. Where do you stand on more or less regulation being good for the industry?
Yeah, think, well, I mean, you know, I guess this is a cliche, but sensible regulation, I think is important. I think the idea of, you know, don't regulate this, we'll take care of it ourselves is, that's not a good path because, you know, some companies, yeah, I mean, some companies have, really do truly have an altruistic mission statement and things, but...
That's folly. That's folly.
Jon Olson (16:03.494)
There's some people that are out there just to make money and you want to make sure that there's some guardrails to keep them on the straight and narrow. I don't know, I think we're clearly on the trend towards less regulation. I mean, I'm not up to date on exactly what the regulations are, but I feel like we need to keep some fundamental things out there to keep the environment safe and to keep people safe. But...
But I have a lot of respect for regulators because we do some training for fundamental engineering and science training for field inspectors. And just, pardon?
Railroad Commission in particular? At the Railroad Commission in Texas?
Well, across the country. I think we have regulators from 35 states, including the Railroad Commission of Texas. And actually, thing, speaking of California, this is not me. I participate. It's actually run by Dr. Hillary Olson, who happens to be that woman that I met who is a geologist at Notre Dame. But I work for her most of the time.
Okay.
Jon Krome (Host) (16:55.651)
Great.
Jon Krome (Host) (17:10.062)
She's in there, everyone's flopping.
Jon Krome (Host) (17:14.584)
So I do think there's a distinction between regulation and bureaucracy. And sometimes I think the two get confused. Where I think that there are lots of good boundary conditions for lots of good reasons. New companies that are immature that jump in need to know what good looks like. People need to be held to account in the communities in which they work, but they might not stay very long. That's different than three different agencies stepping on each other, duplicating the same thing.
Yeah, yeah.
Jon Krome (Host) (17:43.264)
and kind of torturing the operator. So I do think sometimes we get confused between what is good regulation in the spirit of community and self-interest in the long term versus the bureaucratic machinery that we've used to execute on it.
Yeah. And I think that's partly, you know, what you're talking about having different agencies, even possibly with different purposes and different directions, you need to have good leadership at the state and county level to make sure that there's not that competition and overlap of adjudication divisions, because then people have to fill out the same form for seven different people. Yeah.
Exactly. That's bureaucracy.
Yeah.
Alright, so I'm going to change gears a little bit. And for you, I want to define core work for an oil company as the work that creates sustainable competitive advantage. Sustainable competitive advantage. What do you think the core work of an oil and gas company really is or should be?
Jon Olson (18:53.55)
I mean, I think that the competencies, the technical competencies that allow them to find the oil and gas, although exploration is not as big a deal as it used to be, although the offshore world internationally is booming right now, but that being able to drill wells effectively in repeated, safe and economic efficiency fashion
and basically trying to work that, you guess a lot of companies are trying to get the balance between acquisition versus creating new opportunities. And I think, I mean, it depends on who the company is, but it seems like a mix between the finding new things versus doing better with the old than other people can do is a place to be. but,
I sometimes worry that, and I saw this when we worked at mobil, the drive for efficiency sometimes forgets about the need to generate revenue with good production. And so we're proud that we drilled a well for cheap, but then don't worry about whether it actually produced as much as it could have. And in order to balance those things, need to have different personalities in your workforce. Some people who are
shooting for the stars all the time. if you did that all the time, you'd go bankrupt. But you need to have some of that in the mix. People that can imagine how things could be better and how things could excel in ways that you never imagined before. So you need to have a diverse workforce. They can't all just be carbon-cutter, cost-efficient people, cost-efficiency people.
And we saw that, I mean, particularly in the 90s when benchmarking became all the rage, everybody was so concerned about dollar per barrel or operating costs, which is fantastic. But we did absolutely forget a little bit about production growth, reserve replacement, things that actually preserve or even grow with a company. So I hear that loud and clear. But just to sum up, mean, and I've heard this from other executives, generally, it's a lot of the subsurface skills.
Jon Krome (Host) (21:13.57)
that help you identify and exploit oil and gas reserves.
No, I totally agree. I mean, I think we need good subsurface skills. Of course, you know, I'm slightly biased being a petroleum engineering professor. But yeah, and you know, these companies are very diverse. They've got computer scientists and other people working, you that aren't in the core geology, petroleum engineering fields that significantly contribute. But I think you need to be strong in that realm.
slightly.
Jon Olson (21:50.027)
to really be a core oil and gas company. That's where you make your profits predominantly. That's where your niche is.
Yeah, I mean, I'll say it a different way. You can be great at all that other stuff. You can be great at operations, maintenance. You could have great process engineers, great payables people, great procurement, great age. That's fine. That's a choice you can make. But if you don't honor the core of the subsurface world to find and exploit the reserves, that's a problem. And I would put absolutely, you think about a bullseye and I think about a three ring bullseye and the center ring has got to be
Certainly for long-term success.
Jon Krome (Host) (22:27.384)
those subsurface skills related to finding and exploiting the reserves. Now, here's a related question. Let's agree that's the core work. Does it have to be insourced and company run or could you outsource core work or is that a contradiction?
Well, I mean, I would like to say it needs to be in company, I think. But that's the conservative job protection attitude, right? If you outsource everything. If the person at the top has really got all of the disciplines covered himself or herself,
and they can really judge things very accurately. They don't need any advice, which, you know, that that would be a rare person. Yeah, but they could outsource it all. But I think you need to have excellence and you can't maintain an excellent staff if all they get to do is look over other people's work. They need to be able to be allowed to create and produce themselves. They can't just be experts looking over other people's shoulders.
It would be a rare position.
Jon Olson (23:44.982)
In order to do that, you need to have in-house expertise that is doing in-house work. I mean, I feel like that's really important.
I think there's a word you want to use, but you haven't yet, is there's a level of ownership that's quite different amongst employees than even dedicated contractors. And I think that does make a difference.
Yeah, yeah. And yeah, and I think outsourcing stuff, surely, certainly in many situations, you're going to outsource as a country that has much lower labor cost. And you can have a big, big boost in your profitability for a while. But I think long term, you know, I just don't see long term that as being the best way to go. But again, I'm down at the bottom. I'm not actually one of these ex executives. I'm trying to educate the
the technical staff. I see them as being a major force and success of a company. And they can't do that if they're not allowed to have the ownership, like you said.
Yeah, yeah, I would agree with that. So, you know, this last 20 years, we've all gotten very good at an adoption cycle time of technology in our personal lives. Think about our streaming services. Think about our cell phone, the use of Bluetooth, our vehicles, you name it. Do you think that our experience as consumers has had an impact on reducing the adoption cycle time of technology and innovation in the workplace? In other words,
Jon Krome (Host) (25:17.666)
has the adoption cycle time of new methods and innovations in the workplace gone down over time largely because of our personal experiences at home? Or another reason?
Yeah, I mean, I've never really thought of it that way that the consumer cycle is pushing the high tech or technical cycle. But I think that's probably true. That's a great insight because, I mean, yeah, your phone, your media that you get, all of that stuff is just revolutionized every few years. And if you're thinking, I can do this in my house and do this at home,
but I can't do it in the workplace, you're gonna say, what's wrong with this? We need to change the workplace. And we can't wait for three years to implement new technology. We need to be able to get it out there right away. And a huge part of that is adoption of really, mean, not to focus too much on buzzwords, but being able to handle data, collect data, store data, search data. I mean, that's a huge, huge difference. I mean, I can remember,
when I worked with you in California, having to go into the file room and dig for logs and just, mean, and somebody had, you sometimes it's somebody took the copy of the log and it's gone and you can't find it. And it's just, just archaic the way we did some of those things. now...
Some of that is better. It's not always true. It's not always true. Yeah, it's not always true you can find stuff.
Jon Krome (Host) (26:47.253)
HAHAHA
You were troubled towards it than that. You were troubled towards it. That's funny. Yeah, I mean, with more data comes more data management problems and data numbness and data quality and corruption issues and data access and formatting. So more to data hasn't always equated to a more effective or efficient outcome. Although that is always the goal. Even 10 years ago,
I was doing a project with one of the super majors and they were quoting internal numbers that their reservoir and production engineers spent 35 % of their time managing data in some regard. And I'm curious if you've heard numbers like that from your students current and former about how they spend their time related to data. Has it really gotten better or is it just morphed into something different?
Yeah, can't, I mean, I can't think of students coming back to talk about that, but I can say for myself as a, you know, as a professor, sometimes I do consulting and I don't have, I'm not the owner of the data. So I got to find what's publicly available oftentimes. And I mean, it's really astounding. Some of the stuff you can find online that places like the railroad commission of Texas or the oil and gas division in Ohio, that's one of the.
areas where I did a consulting project have GIS based web based web web provided information. You can click on a site and find all the wells nearby and get data from the wells. It's it's it's it's better. It's it's it's better. I mean, that that spatial geospatial organization of information in the the serving of digital data, I think, is really improved. Now, maybe it's
Jon Olson (28:33.708)
you just have higher standards of what kind of data you need to get. So you still spend the same amount of time collecting the data, but.
Interesting. mean, the data you have creates an appetite for more data. So it's a never-ending appetite that you're trying to extinguish. And I agree. think, and maybe it's not so much data, but it's clearly the visualization tools are far and away superior. And I love the geospatial stuff, the ESRI stuff and the things related to that. Really powerful stuff for geospatial learning. All we got to talk about AI and AGI. And I'm sure this is...
a body, a domain of interest in the petroleum engineering students for sure. What do you think are the most far out or the most compelling potential use cases that you see for AI and AGI?
Well, mostly I'm pondering the risks of the development of the human workforce. yeah, well, there's that too. I was just thinking of lack of development of human capital. But if you think about the potential, mean, there's some things that machines can do at a time scale that humans just can't. And so if you're detecting problems,
Skynet, Skynet.
Jon Olson (29:53.528)
You know, I've heard stories that are drilling folks have talked about, you know, interpreting vibrations and other sorts of things. Real-time data and drilling can help you prevent a problem later in time. And that kind of data is really hard for the human mind to sort through. But the human is still very necessary to make sure that you're not just looking at noise and...
and it's a true signal. But I think the speed at which you can absorb information and have it served up and visualized to an expert, I still feel like the experts are needed though. I mean, even when I was young in the industry, just looking at the same data and hearing people with experience make interpretations, I was like, where did that come from?
I didn't even have a clue what they were talking about. And I think experienced people are really, really key to the process. And you can't get experienced if you don't get to do that at the lower level, which that's the problem. AI can replace a lot of us at the lower level. But then we never get that experience in order to become an expert.
That's an interesting point. if you're not, if you don't have that pipeline of young people suffering and learning and growing, that's right. That's exactly right. You kind of run out of the pipeline of future experts. That's a great point. Interesting.
and making mistakes.
Jon Olson (31:27.822)
Yeah, yeah. And I know at Mobile at the research lab when I was there, they were trying to capture the, we were doing knowledge system work and expert system work and trying to capture the knowledge of our senior people so that when they're gone, that they would replace us, I guess, through the machine. And that was 35 years ago.
Expert systems. Yeah.
Jon Krome (Host) (31:54.178)
I mean, I remember one of our PhD students at USC was working on an expert system for drilling mud management. And really it was just a very long coding effort of if then, if then, if then, if then, if then. And the idea was you take a rookie mud logger or drilling engineer and they use it as an expert support system to help them make heads or tails of some unusual condition at the rig site. And you can kind of see the wisdom of that.
But today you might use AI or something very simply to do it.
When I think I'm just if I can tag on to that that idea, something that I've seen that that it's not an it's not AI per se, but it's bringing, you know, one of the things is I've only worked in Southern California. I don't know what happens elsewhere in the world. My limit, my experience is limited. A lot of companies now have these real time operating centers where, know, the offshore Guiana and offshore Africa and onshore Texas, everybody's together and they can turn around and say, hey,
Has anybody ever seen this? And you've got people from all over the world in the same room pulling all that information together. So it's an expert cluster as opposed to a computer expert system.
And those venues, those remote centers have gone through pillar and post. They collapse, they disappear, they come back. So the industry is constantly testing the boundaries and starting over every five years or so. But one of the things about our conversation about core work, it seems to me that ultimately, if we want AI to make a difference or AGI, and I'm cutting the hair between artificial intelligence and artificial general intelligence.
Jon Krome (Host) (33:38.2)
but we've got to be able to get the core work done by AI and AGI. In other words.
If you want to make a difference with AI, it's got to help you find and exploit reserves. So it's got to come up with the new reservoir. It's going to identify the reservoir development scheme. It's got to figure out the drilling schemas. It's got to figure out the mud program and the frac programs. So this is the fantasy, but you push a few buttons and a week later, you've got the entire development plan that's optimized on NPV or any other measure based on your AI tools.
That's the golden fleece. That's what we're looking for. That's the holy grail. All this personal productivity stuff is useful and maybe it's serving as a foundation for learning, but unless we get AI to work on the big stuff, everything else feels like a distraction. And so.
Yeah, mean, I mean, if you take your story, to the end point, none of us are needed anymore. And so I would argue that I would push more for things that we know that work and also that results in a world that I would want to live in is that the personal productivity part of it, right? I mean, I know one of our faculty says,
Hahaha!
Jon Olson (34:56.844)
The tools that you can have for programming are just astounding. He said he can program like a team of five programmers with AI support.
Yeah, and some of that is really machine learning, again, I'm not gonna cut the inheritance. What do you think, is a bit, I mean, speaking of Skynet, once we talk about humanoid robots becoming more commonplace, more ubiquitous, and I'm sure you've seen reels on Facebook and Instagram that we're getting dangerously close to.
Yeah, yeah. Well, yeah, yeah. AI versus machine learning,
Jon Krome (Host) (35:29.43)
some really big breakthroughs with humanoid robots combined with AI. How do you think that's going to affect the oil industry specifically?
you know, I don't have that much experience with the humanoid part in the oil field. I mean, I know the, the automated drilling, equipment that I've seen, which is, you know, incredible for repeatability, safety, predictable performance. None of that's, there's no attempt to make that humanoid. That's just machines that are automated and, and they, they look like machines still.
Yeah.
The humanoid side, you know, I just thinking I've been doing a lot of carpentry lately. Boy, if you've got to train a robot to hold a nail and hammer a nail and, you know, and be able to...
It's coming. It's coming. I've seen robots cook meals in kitchens and handle eggs like a human being.
Jon Olson (36:23.211)
is coming.
Jon Olson (36:31.778)
Yeah, well...
So consider, I think you're right.
I wouldn't mind having somebody dust my house for me.
So I think there's going to be a series of dilemmas. And I think on one hand, you've got copious amounts of automation and mechanization. And an example of that would be a self-driving vehicle. Self-driving long haul truck is a great example. On the other side, screw it. You don't mess with the automation and the mechanization. You buy a fit-for-purpose human-owned robot and stick it behind the wheel. And you train it to drive. So I think at some point, mechanization and automation
Right, right.
Jon Krome (Host) (37:07.404)
will compete with or at least be an alternative to a humanoid robot that's cheap and trainable. Now the only caveat is that humanoid robot is still a machine. Every machine has got a maintenance routine, it's got a failure mode, and adding another machine to an existing machine does increase the risk of failure in some way. It's still a machine. So I think.
Yeah.
Well, mean, us humanoids fail too, so, and require maintenance, I don't, I mean, I haven't thought much about that. just, I worry, like I said, I worry about that's a world, whether that's a world I want to live in, but.
That's right. Just no doubt. No doubt.
Jon Krome (Host) (37:48.43)
We both know that's not going to be a choice. mean, people were. Yeah. I mean, that's coming. All right. Let's talk a little bit about LNG, which is about to explode. In particular, with Russia's invasion of Ukraine, Europe is looking for other places for LNG. combined with the fact that the US has a tremendous amount of unmonetized gas, LNG is a good business. And there's probably five to 10 various
Yeah, nobody's going to be asked. Elon Musk hasn't asked me about that lately, so.
Jon Krome (Host) (38:18.326)
companies and new plants underway in the Gulf Coast to satisfy that need. Talk to me about where you think the future of LNG is going. Good, bad, ugly. Blood, guts, and sweat.
Well, think, yeah, I think, well, it's an interesting story. Europe is an interesting story because they were thinking they were going to solve this problem with renewables and have found that that's not working so well. But they are still demanding sustainable benchmarks for US gas if they're going to buy it, or at least some countries are. And so that puts a sustainability
Motive motivation for US companies, which is probably a good thing in some some regards. I think some of that's good the the
The rise of the LNG market, LNG export capability in the United States is just astounding. It's like a repeat of the shale gas boom. To go from being a near to be importer nation to being a leader in export is, again, unbelievable. I'll just tell you, it's great stories to tell to freshmen in petroleum engineering. It's just amazing the successes we've had. Yeah, yeah.
Thank you.
Jon Krome (Host) (39:38.136)
George Mitchell and the Barnett. What a story.
But I guess I worry what I worry the challenge is going to be is what kind of price pressure is that going to put on the domestic gas market in the United States? And are we going to run into the time where the federal government intervenes again and limits our export capability? mean, there's political uncertainty that you have to deal with as well as a technical uncertainty. I think the hardware, the equipment that's been built for the exporting is going to help guarantee that
I think that's a great.
Jon Olson (40:12.418)
The government won't mess with it too much, maybe, hopefully.
But I think you're right. That's probably something that hasn't been explored enough and it works its way in a couple of different ways. So if the feedstock gas comes under pressure and becomes somewhat scarce, the laws of supply and demand mean that the price goes up. Okay. So I don't use that much gas in my home. It's the stove, you know, I have a water heater, but the sneaky part is for states in particular to have thrown their weight with natural gas fired electricity,
that's where it's going to hit the consumer very hard. And places that are unregulated, where the market works, well, market sword cuts in two directions. So if you're in a regulated environment, like most states, you've got a public utilities commission and there's approvals to have prices. If you're in a place like Texas, it's supply and demand. So in a place like Texas, particularly if you're going to siphon off some for LNG, you're going to siphon off some for AI data centers,
yeah, yeah.
Jon Krome (Host) (41:15.51)
and then you've got the poor little consumer left, you can bet your bottom dollar that electricity prices have to go up.
Yeah, I mean, you have that pressure of exporting the gas and LNG and the AI companies just building their own gas-powered power plants and pulling the resources to themselves. Well, I guess you need to just have faith that the market will sort it out, right? Yeah, yeah.
Isn't it always? Sometimes yes, sometimes no. The market always works if you let it, but there are always winners and losers. And the consumer might be on the losing end of this one.
Yeah, no, definitely. Yeah, well, and the reason why, for instance, to bring climate into it, the reason why natural gas replaced coal in the United States is not because it emitted less carbon per energy. It was because it was cheaper.
That's exactly right. Now, the other unintended consequence of tremendous gas production in the future that leads to either LNG or use in AI data centers is that we both know that methane leaks are much more damaging to the environment than CO2. And boy, being in the industry, both know, excuse me, that there are methane leaks everywhere, partly by design, regulators and actuators and flanges and venting.
Jon Krome (Host) (42:36.832)
So even if you were to monitor that like crazy, I'm not sure you can get it down to the ratio of 80 to one or whatever that ratio is of methane to CO2 damaging in the atmosphere. In other words, even with a more pro-gas economic environment, we still may be building greenhouse gas because of methane leakage, even if we try to mitigate it.
Yeah, think, I think, I mean, I'm more optimistic about, at least for, you know, new operations and stuff. There people are talking about tankless. well that that's on the oil side, but, tankless facilities and things like that, where you get rid of the risk of having a hatch that's open or, but also the valves and stuff that there's technology to improve on those things. So yeah, yeah, it's all, it's, it's all about money. That's right. That's right. And,
Yeah, you can get there. can get there. It's all about money, right? It's all about money.
Jon Olson (43:27.948)
And that's the competition between, you are we in business to make money or how much of our resources are we willing to do to be sustainable? And that's where government needs to come in and help hopefully reasonably navigate that fine line.
We've come full circle. Okay, I'm looking at the clock. We're getting a little close. Make a couple of predictions about the oil company of the future five or 10 years from now.
man. Well, I think, I think, you know, every employee is going to be another level higher of computer literacy, being able to use, I think using AI type tools, data, data management tools, to make them personally more productive. see, I see that as a big boon. think, automation is going to continue to advance.
Partly, really, efficiency is the reason why it's happening, but it'll also increase the safety of the work environment. I hope that we will continue to have a very robust and growing domestic supply, but I see internationalism coming back, it seems like. Again, some of these offshore discoveries are encouraging for that market.
But I think there's still a lot to go in the unconventional world. A lot of it's just, know, well, okay. I think the biggest potential for growth in the US is to go back and recapture some of the resources that have been left behind when we produce 5 % or 10 % of the resource out of shale.
Jon Krome (Host) (45:18.168)
California Diatomite, Monterey Formation.
Well, yeah, well, that hasn't even been started really with the horizontal wells and hydraulic fracturing, right?
I can't even agree more. All right, my friend. Well, thank you very much. This has been a great and robust conversation. Thank you very much for taking the time. I want to encourage all the listeners out there to repost and to forward this to your friends, families, and colleagues.
Please leave a comment as well and maybe even a guest suggestion. I'm taking all comers. I do have a certain demographic, but maybe you've got a couple of great suggestions as well. And I will see you next time on Uncapped with Executive Roustabouts. Bye now.
Bye bye.
