Tight profit margins boost internal efficiency at natural gas companies

Unpredictable prices and tight profit margins are boosting the need for teamwork within natural gas companies, while competition spurs innovation, speakers said at  a Houston conference Tuesday.

Natural gas exploration and production have soared as technological advances have opened up unconventional plays including shale, but the erratic price of natural gas keeps profits thin, said Andree Griffin, vice president of geology and geophysics for Exxon Mobil Corp. subsidiary XTO Energy.

She spoke at the Women’s Global Leadership Conference at the Hyatt Regency Houston downtown.

Griffin said departments within natural gas companies once worked in a “siloed environment” — referring to an organizational structure in which  units stand alone with limited collaboration and communication.

But she said fickle natural gas prices now require intracompany  collaboration seldom seen before in energy companies.

“It is because our margins are so low,” Griffin said.

Integrated teams can save money and time, she said, as lawyers and land prospectors work together with engineers, other technical employees and support staff.

“The only way you are going to improve your margins is by becoming more efficient,” Griffin said.

And as teamwork within companies boosts internal efficiency, competition from without has also encouraged innovation that has helped unconventional energy develop fast in the United States than in the rest of the world.

“The one luxury we have domestically is competition,” Griffin said. “We were learning from each other as we evolved.”

Veronica Roa, vice president for onshore land for Statoil, said that while the Norwegian company had no onshore experience when it began working on unconventional plays in the U.S., it quickly learned that projects move much faster, requiring active simultaneous participation from many different company stakeholders.

“The land and finance and legal team all have a seat at the table,” Roa said. “Decisions have to be made quickly. Without everyone present, these projects don’t move forward.”