“May you live in interesting times,” goes the old Chinese curse. It’s a curse that we all would like to avoid in our lives, since history tells us the most interesting times we experience tend to be ones of conflict and chaos of one form or another.
Jeff Miller, the President and Chief Environment, Health and Safety Officer for Halliburton, knows better than most what it means to live through such times. Having spent the last two decades serving in a variety of leadership roles for one of the world’s largest oilfield service firms, he has experienced all manner of interesting times in an array of locations across the globe.
For Miller, who spent his younger years as a PRCA calf roper, this is not his first rodeo. But the last two years, as the price of crude oil has crashed on the world market, have been especially interesting for him, and for Halliburton.
During downtimes, oil and gas producers tend to look to service firms as an early source for cost reductions, and the last two years were no exception. Thus, the latter half of 2014 and early 2015 saw a series of news stories announcing staff reductions coming mainly from the service sector. As the bust has continued, ultimately resulting in more than 100 industry bankruptcy filings, the pressures to further reduce costs and other impacts have kept flowing down the value chain, ultimately leading Halliburton to a series of location closures and further staff reductions that no executive ever wants to have to oversee.
Earlier this year, the company sustained an added blow when, facing objections from federal antitrust regulators and a severe industry downturn, the company decided to terminate its proposed merger with rival service company Baker Hughes. Halliburton officials recently conceded that the resulting $3.5 billion breakup fee the company was required to pay to Baker Hughes contributed greatly to its reported large second-quarter loss.
Through it all, Miller remains upbeat and optimistic about the future, stemming from a strong belief in the company that he speaks of as an extension of his own family, and for the industry it serves.
A Collaborative Family
“Halliburton is a family,” Miller says as he looks out the conference room window over the sprawling Halliburton campus adjacent to Houston’s Sam Houston Tollway. “When you move as many times as we have, living all around the world where we operate and becoming friends with Halliburton employees in very different cultures, the company becomes a part of your family.”
During his 20 years at the corporation, Miller, his wife, Rhonda, and his children have experienced the Halliburton family environment in Venezuela, Angola and Indonesia. Miller chuckles as he reflects on the nature of some of these stops: “I’ve kind of made a career out of taking jobs that other people didn’t want.”
Miller is a 1982 graduate of McNeese State University — he enrolled at the school on a rodeo scholarship — and his collegiate career had an auspicious beginning: “I met my wife, Rhonda, in college — first day of school, in fact. I’ve always told her that she chose to marry an itinerant calf roper, which is what I was at the time, and that that was a way-long investment,” he laughs, “I not only didn’t have a job, I wasn’t even looking for one when I met her.” They’ve now been married for 29 years and managed to raise two sons as Miller’s career took them to the far corners of the earth.
As mentioned earlier, Miller sees Halliburton as an extension of that family, for reasons that will sound familiar to almost anyone. “The close relationships we have built with the company and the compassion the company has for individuals makes Halliburton a different kind of place to work,” he says, “A good place to work.
“We care a lot about people and how they fit together. And, like any family, we argue and disagree plenty, too. But we have a lot of room in the family for different talents, for a lot of differing perspectives and views. And also like a family, when we get to the right answer, we’re all aligned around what that answer is. Then we’re out the door and ready to go.
“We take this all very seriously, so when I say that Halliburton is a collaborative organization, what I mean is that that’s in our DNA as a company.”
Working Around the World
Following his undergraduate work at McNeese State, Miller went on to obtain an MBA from Texas A&M University. From there, he began his career in public accounting with the Arthur Andersen firm.
Looking back, Miller realizes that his time at Arthur Andersen served as a valuable training ground for what was to come in his roles at Halliburton. “You know, in public accounting, you take care of customers. It isn’t so much accounting as it is client service,” he says, “So I was steeped very early at Andersen for what it means to take care of a customer, to provide deliverables on time, to give them what they need to succeed. And a lot of that translated very well at Halliburton.
“When I joined Halliburton as Director of Financial Reporting, that was really the first time I had been engaged in accounting,” he chuckles, “and I realized I loved doing that at Halliburton.”
Ironically, that initial job with Halliburton grew out of an overseas assignment with Arthur Andersen. “Early in my career I had been engaged in a project overseas — doing it for Andersen but engaged by Halliburton as the client. It was in Venezuela, and I was absolutely fascinated by the business of what Halliburton did.
“That was 1993, early ’94 when I was on that assignment, and we ended up spending six months down there working with Halliburton. I got to spend a lot of time with the Halliburton Country Manager and was just fascinated by everything they did, in terms of the services they provided, the breadth of what they were capable of doing for their customers. It made me feel fairly limited after that as an accounting guy, compared to the scope of all the things Halliburton could get done.”
When that assignment ended, Miller remembers looking at Rhonda and telling her, “I don’t know how or when, but someday I think we’re going to want to go and try that, you know, working overseas and selling all of that kind of stuff.” As fate would have it, Miller got his chance to go to work for Halliburton less than two years later, and he’s been there ever since.
“I started with Halliburton in accounting and went to Venezuela [in] my first posting as what they used to call the back-office manager. I started calling on customers, kind of like I had done at Arthur Andersen, and then went from that to becoming the head of business development for Venezuela. At that point, I was effectively getting to do what that Country Manager I’d met a few years before had been doing. And I loved it.”
From there, Miller’s next assignment was in Angola, a country located in southwestern Africa. “That was an assignment that caught me by surprise and was probably the biggest step change I’d had career-wise to that point.”
Recalling the move to Angola brings Miller to a favorite story. “We’d been in Venezuela for all that time, we were in year No. 4 of what was supposed to be a two-year assignment, and Rhonda was expecting us to be heading back to Houston next.”
When he found out where they were headed, Miller relates, “I had to go to her and say, ‘Well, guess what, honey, we’re moving!’” “And she said, ‘Great, where?’”
“So I told her, ‘We’re going to the West Coast,’ to which she said, ‘I didn’t think Halliburton had all that much out in California.’”
“Then I had to tell her, ‘I mean the other West Coast — the one in Africa.’”
As things turned out, Miller found that the Angola assignment was another of many learning opportunities he’s experienced at Halliburton. “We met such great people — my wife would tell you today that that was one of her very favorite postings.”
From Angola, Miller next went to Indonesia as Country Vice President, and then to “a range of other assignments, and here I am.” What he modestly refers to as a “range of other assignments” includes stints as Vice President of the company’s Baroid product service line, Senior Vice President of the Gulf of Mexico region, and Executive Vice President and Chief Operating Officer prior to the promotion to his current position in 2014.
When asked about what he sees as the keys to his success, he again starts by referring back to family: “When I think about some of the key things I learned along the way, I realize my grandfather had told me most of them before I ever got started:
● Be willing to take the jobs that others don’t want
● Treat every job like it’s the last job you’ll ever have, because no job is a stepping stone — you need to get completely immersed in every role
● Finally, you have to be learning all the time. And that means really learning. That time in Venezuela, and working in the shops and in the fields, learning how we actually do the work that we do at Halliburton — that was some of the most important stuff that I still carry around with me today. You couldn’t have replicated that in any other sort of time or place.”
Safety as a Top Priority
Most of us have an image of Halliburton as a company whose employees spend their days doing heavy, potentially dangerous work in the field: manning drilling rigs; running hydraulic fracturing operations; moving, maintaining and repairing heavy equipment. To a large extent, this image is accurate, and if workers are not properly trained and prepared to manage their jobs on a daily basis, there are plenty of potentially hazardous situations in such an environment.
As Chief Environment, Health and Safety Officer at Halliburton, Miller’s initial response when asked what keeps him up at night is simple and to the point: “Safety is always on my mind. Always.” After a pause, he continues, “Probably the most important thing in my mind is whether or not our people are planning their work and following our processes. We do our best to simplify those processes to make them easier to understand and easier to execute. But if we do one thing to enhance safety, it is to have the work planned well. And that includes the morning safety meeting before we start work — does everybody know what they’re going to be doing?”
Anyone who has ever worked in the oil and gas industry, or has even been lucky enough to tour a plant or drill site, knows the important role safety meetings play on location. At Halliburton, such meetings are ubiquitous and apply not only to field locations, but also to anywhere the company’s employees — at any level of the organization — are gathered. As Miller puts it, “We start our days with safety meetings; we start every meeting with safety reminders; it is always on our minds.”
Highlighting another important safety factor, Miller points to the ability of every Halliburton worker on any job or location to immediately stop work for everyone on-site. “I really do believe that one of the most important things that our people can do is to stop the work if it is not clear to them. Anyone can stop work, at any level in the company. And we do want them to exercise this ability if they see anything they think is not safe or that is not clear to them, because they may or may not recognize something that is inherently unsafe. So if something is not clear, then we stop work, take the time we need to figure it out, and then move on.”
One result of this focus on safety is staggering — the company has seen a 40 percent improvement in worker safety in its hydraulic fracturing operations in the last two years. “But look, we are always striving to do better, because we don’t want anyone hurt. To me, it’s really important to see why this improvement is taking place — what is the cause and effect? We believe it has a lot to do with systematically executing our processes around planning the work, controlling the work at each step.”
Going back to the company’s overarching priority of customer service, Miller sees safety and quality of service as being intertwined. “That focus on planning and executing our processes drives not only safety but also service quality, because today I really don’t think you can differentiate between the two. They’re both connected to what we are doing and we’ve been very clear at Halliburton that when we plan work, we plan it to be safe and of the highest quality. Because if there is a mistake in the quality, that elevates risk from a safety standpoint.”
Oil and gas development is an industrial process, and, as with any such process, there are inevitably going to be environmental impacts. We asked Miller about the steps Halliburton takes to ensure that such impacts are as rare and minimal as possible, given the nature of the work.
“No question that impacts exist, but it’s important to frame our business in the context of what natural gas has meant to emissions for the U.S. and what it could mean for the world,” he says.
Miller refers to the fact that U.S. carbon emissions have fallen dramatically over the last seven years as a large portion of older, higher-emission power generation plants have been retired and replaced mainly by cleaner-burning combined-cycle natural gas-generating capacity. This has allowed the United States to become the only developed nation on earth to actually meet the carbon emissions goals set out in the 1999 Kyoto Protocol on climate change, even though the U.S. Senate rejected the treaty on a unanimous vote at that time.
None of that could have happened were it not for the creation and application of the technologies necessary to be able to produce natural gas from the massive shale formations that have been discovered and developed in the U.S. over the last 18 years. Without such technologies — which Halliburton played a major role in creating and refining — the U.S. would not have had the volume of natural gas necessary to facilitate the transition to cleaner plants. “There is no question that natural gas has done more to improve the emissions outlook than any other factor.”
On more specific solutions and approaches to environmental protection, Miller again goes back to Halliburton’s cultural norms of planning and following processes. “When it comes to doing our work, we think first about footprint — what is our smallest possible footprint on location? A lot of what we think of as our ‘frac of the future’ was designed with two things in mind: how to be more efficient and how to have the least impact on the environment.
“This thought process led us to the development of the Q10TM pump — which is a more efficient pump — and that allows us to have fewer pumps on location. These are also equipped with Tier 4 engines. This is an important milestone in the EPA’s march to reduce emissions. These engines are very expensive, but they are becoming gradually required under [the] EPA’s latest emissions regulations.”
The investment in and transition to this more expensive, more efficient equipment has been both significant and rapid: “Over the last two years, more than 65 percent of Halliburton’s high-horsepower equipment has been equipped with Tier 4 engines. This has been a substantial investment for Halliburton, right into and through the downturn. But this makes us the leader in the industry in investing in this kind of technology.
“Then there is chemistry. The runway is almost infinite with respect to chemistry in terms of what we can do to protect the environment and also reduce costs to make the industry more efficient.”
Development of even more advanced solutions through chemistry is a core part of Halliburton’s business, and it leads into a more general discussion about the role that some of the company’s technological solutions have played in helping its customers control and reduce costs so dramatically over the last two years.
Maximizing Recoveries Through Technology
Miller points to the company’s focus on collaboration, both internally and with the customer, as a major key in ensuring Halliburton’s technological solutions are effectively developed and properly deployed. “I like to preface the technology discussion with recognition of Halliburton’s focus on collaboration and engineering solutions. Because before we start talking about the technological solutions themselves, it’s important to talk about what is the source of the value in those things. In my view, the value is how we collaborate and engineer solutions to maximize our customers’ asset value. We are just fanatical about these things.
“The collaboration is not just with the customer, but also within the Halliburton organization when we reach into the toolbox to help customers solve challenges. The process around how we do that is critical.”
When thinking of specific Halliburton technologies that have worked to improve recoveries and reduce costs during the downturn, Miller points to AccessFrac®, a diversion technology to more efficiently stimulate a higher number of fracture clusters within a wellbore, and to MicroScoutTM, a technological application that allows for better initial penetration and connection of fractures and props them open more efficiently.
“AccessFrac has been very effective both in high-temperature and low-temperature environments. This allows customers to stimulate more rock volume within the target formation through diversion. It’s important to recall again the process we use to assess the rock, how we assess the drivers the customer has, so that when we apply something like AccessFrac, it’s done in a way that is most economical for the customer. And the result has been that they are getting more barrels with less cost.
“After we first induce fractures, MicroScout allows us to better connect these fractures within the formation and prop them open. Again, this has been a very successful product, but not one that you ship in a box. The reality is that it is how the product is used, and that’s why I describe them as systems because there is a lot of shared thought upfront to determine the best way to put these things to work.
“I’m very excited as we look ahead in this industry about the things that can be done to improve recovery factors. So in that context, when we think about AccessFrac, MicroScout and all the things that can be done with chemistry, I’m very encouraged. I really think that, from a recovery factor perspective, we are really in the early innings of unconventional oil. This is what makes these formations so attractive — not only are they the fastest incremental barrel of oil to the market, they are also the shortest cycle return barrel of oil in the market.”
Of course, this reality — that the industry is actually just in the very early stages of unlocking the gigantic volumes of oil and natural gas held in shale formations beneath the United States — isn’t exactly understood by those outside of the oil and gas world. Miller acknowledges that Halliburton and the rest of the industry could do a better job of telling this story.
“What we probably don’t talk about enough relative to other market segments is that runway of opportunity associated with the recovery factor. We are only today beginning to crack the code around why shale formations produce the way they produce, and that’s a very exciting part of our business.”
Downsizing and Ramping Back Up
Everyone associated with Halliburton and the oil and gas industry in general is hopeful that the global market for oil will soon re-balance and that there will then be a fairly rapid increase in the price to a higher level that is healthier for everyone. One consideration such a happy scenario raises in the context of Halliburton and the service industry in general is whether it will be possible to rebuild staff and reactivate stacked rigs and other mothballed equipment rapidly enough to accommodate a sudden increase in customer demand.
Miller reflects on the hardships of the past two years, as the company has found it necessary to reduce staff by upward of 40 percent of its previous level. “Let’s start with the people, who are so important to what we do at Halliburton. As we’ve gone through the downsizing the past couple of years, which has been so disappointing — I mean it just takes such a toll. Many of these folks are the same people I grew up with in the organization. This is nothing any executive ever wants to do.
“Unfortunately, we’ve had to cut through the fat, through the muscle and into the bone here, so there are a lot of wonderful people who aren’t employed today that, if the market would get to where it needs to be, we would love to have back.
“We have to the best of our ability retained a core of experienced people, so that when the time does come to staff back up, that experience is already in place. These are the people who, when it’s time to add equipment and start ramping back up, will provide the leadership necessary to get the job done.
“These are also the same people who know how to find and get in touch with potential employees who were with the company before. Our HR department also keeps up with where many people are after they’ve left. Some will have left the industry, unfortunately, but many are still there, and clearly those would be people that we would like to get back in touch with when the time comes.
“We are accustomed at Halliburton to staffing back up rapidly and training a large group. As an example, during 2014, we actually hired 21,000 new people into the company. That’s also the year we started the downturn, but the gross number of new people who joined the firm was 21,000. So we do know how to reach out and staff up quickly. When you think about hiring 21,000, think of how many resumes were looked at and how many candidates were interviewed to bring in that number of new employees. So we have a lot of confidence in our ability to do that.”
Miller addresses the question of Halliburton’s ability to reactivate the stacks of drilling rigs, pumping equipment, tanks and other oilfield equipment that the company has had to deactivate during this extended downtime. As one might expect, the conversation again turns to the company’s focus on process and collaboration.
“There are two separate stories here, in the sense that, No. 1, broadly in the industry we have seen a lot of attrition and cannibalization for parts that has gone on the last couple of years as companies have wrestled with cash flows and how to simply survive. But at Halliburton, we have been very disciplined around segregating our stacked equipment, keeping maintenance schedules in place — in fact, we have re-engineered our maintenance so that it’s more effective than it’s ever been.
“So the result for us is that the equipment that is stacked today is ready to come back, and the processes we have in place related to equipment are sustainable. We have actually seen through the down cycle improvements in both safety and service quality, which is not necessarily what one would expect.”
The Future of the Eagle Ford
While the oil and gas industry at large remains mired in an extended downturn cycle, 2016 has seen a renewed boom in one major producing area. That, of course, would be the Permian Basin of West Texas and southeastern New Mexico, where, in August alone, more than $7 billion in new acquisitions by major players in the industry were announced. Early in September, the rig count in the Permian rose to more than 200 active drilling rigs. Meanwhile, the Eagle Ford region in South Texas remained comparatively stagnant, with little more than a handful of active rigs; and residents in the area are wondering when an upturn will take place in their part of the world.
“Look, I’m an Eagle Ford bull. I like the Eagle Ford,” Miller says. “Unfortunately, I think that, because the Eagle Ford is now relatively defined and relatively developed, it doesn’t have the same urgency that we see in the Permian Basin and the SCOOP and STACK plays in Oklahoma, where a lot of the drilling taking place right now is still to hold acreage.” This refers to the terms in most oil and gas leases that allow an operator to “hold” the acreage covered by the lease past its original term once a producing well has been drilled on it. Most such drilling requirements were satisfied in the Eagle Ford region during the boom that took place from 2009 through 2014.
“Obviously, the thing that would help most in the Eagle Ford would be an increase in the price of oil. An increase in the price for natural gas liquids would also help — of course, that would help everywhere.
“But the Eagle Ford is a top-tier rate-of-return basin in the United States. Those economics will sustain and be in place with any recovery.”
Miller also believes technology has and will continue to play a significant role in the future development of the Eagle Ford Shale. “Simply because of the recovery factors that we talked about earlier. It’s one thing to drill the core of the core of the core,” he says, referring to the sweetest spots of any oil-bearing formation, which tend to be among the earliest targets for development.
“But as we move away from that, advancing technology will play a big role in continuing to drive costs down and allow producers to make more barrels. I think the Eagle Ford will be a great beneficiary of that.
“[For Halliburton,] it all goes back to our value proposition for our customers: We collaborate and engineer solutions to maximize asset value for our customers. We translate asset value for our customers into more barrels and less cost. It’s really that simple.”
Miller is also bullish on the ability of the domestic oil and gas industry to address the challenge of making more and more Eagle Ford locations profitable to drill once again. “We have a base of incredibly creative customers, a dynamic industry in the United States that loves to solve these kinds of challenges. We have done it over and over again. So I have no reason not to be optimistic. I’ve seen it a couple times just in my career, where the industry goes from ‘What do we do?’ to ‘OK, what do we do next?’ And we’re kind of at another one of those ‘What next?’ points. The resource is there — not just in the Eagle Ford, but in all of the U.S. — the resource will be produced, and technology will play a big role. I always bet on the future, and I always bet on our customers.”
Life Outside the Office
When asked what he likes to do to relax and have fun on days when he manages to actually get away from the office, Miller focuses on outdoor activities. “I like to jog. I’ve run a few marathons. Love to shoot skeet, play golf, do a lot of things when I have time. But mostly I like to get out and run. It helps to clear my head, keeps the heart beating.” Any favorite sports? Miller describes himself modestly at first as an “avid Texas Aggie.” Then he grins and expands on the theme: “I’m a huge Texas Aggie supporter. I love Texas A&M and Texas Aggie football. This year, I’m hoping for the best,” he pauses, and then adds, “like I do every fall.”
As we have seen, that last statement reflects a real contrast between Jeff Miller, the avid fan of Texas Aggie football, and Jeff Miller, the President of Halliburton. The football fan, knowing he can’t do much to control the outcome, hopes for the best to happen every fall. The senior executive plans, innovates and collaborates with fellow employees and customers alike in order to ensure the best thing happens for everyone, every working day of his life.
At Halliburton, he has found, that is the best way to get through interesting times like these.
To learn more about Jeff Miller and Halliburton, visit www.halliburton.com.
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Copyright 2016 SHALE Oil & Gas Business Magazine