NOIA 2018 Fall Meeting Washington Report

WASHINGTON REPORT VOLUME XLIX

IN THIS ISSUE Scott Angelle.........................1 KT McFarland.......................2 Mary Cheney.........................2 Richard Kaarlgard................3 Jennifer Martin.....................3

2018 NOIA FALL MEETING REVIEW The National Ocean Industries Association (NOIA) held its Fall Meeting October 3-5, 2018 at the Hyatt Regency Hill Country Resort and Spa in San Antonio, Texas, with 190 members and 36 spouses in attendance.

Service Panel........................4 South America Panel...........5 G&G Panel............................6 HSSE Panel...........................7 Renewables Panel................7 Executive Committee & Board of Directors...............8 Membership Committee....8 Reception Photos............9-12

NOVEMBER 2018

Speakers included current and past members of the Trump Administration, business and policy leaders and industry executives. Meeting sessions examined the policy outlook for the offshore energy industry, the impact of the looming 2018 midterm elections, the outlook for service companies in the Gulf of Mexico and business opportunities for U.S. companies offshore South America. NOIA also welcomed back the NEED Project’s Offshore Energy Workshop for teachers and held the first NOIA Future Leaders Seminar.

NOIA FUTURE LEADERS SEMINAR

NOIA also hosted our first Future Leaders Seminar. Split into four panels – legislative affairs, regulatory affairs, public affairs and education, and state trade associations – the seminar gave NOIA members a look at what trade associations do on a daily basis and an understanding of the benefits of coordinated government and public affairs initiatives. More than 70 NOIA members attended the seminar, consisting of both established energy executives and rising energy leaders. The stellar line up of speakers included thought leaders from other trade associations, law and consulting firms, energy producers and service companies.

GENERAL SPEAKERS DIRECTOR SCOTT ANGELLE

NEED OFFSHORE ENERGY WORKSHOP For the first time in three years, NOIA hosted the NEED Project’s Offshore Energy Workshop. The Workshop provided NOIA members a chance to discuss the offshore energy industry and the types of STEM jobs the industry offers with teachers from the San Antonio area.

BSEE Director Scott Angelle

Through the 25 teachers in attendance, approximately 10,675 students will be reached with materials provided from the conference.

For a majority of the teachers, this was their first time attending an energy-training program. Every teacher said that the workshop increased their own knowledge of the offshore industry and will help them further educate their own students on energy.

In a session sponsored by the NOIA Government Affairs Committee, Bureau of Safety and Environmental Enforcement Director Scott Angelle spoke to NOIA for the first time.

Angelle said that while the Trump administration is focused on energy dominance, it is striving to ensure that it is achieved “safely and responsibly because it supports national security, job security, and energy security.” Angelle reiterated the role offshore energy plays in energy dominance, adding there are six things the industry needs to do if it is going to perform “exceedingly well” over the coming years.

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1120 G Street, NW, Suite 900, Washington, DC 20005 Tel 202-347-6900 Fax 202-347-8650 www.noia.org

NOIA FALL MEETING REVIEW

KT McFarland, Frmr. National Security Advisor

The first is strong safety and environmental standards. Angelle discussed recent BSEE initiatives and process improvements, including riskbased inspections, safety alerts, rule revisions and the near-miss reporting program. The other five items, which he says are essential for energy dominance, are improving access to resources, regulatory and process reform, competitive royalty rates, stakeholder engagement, and tax reform.

While some pundits are concerned about the ongoing U.S. political change, McFarland said the changes have left her optimistic, as it is “living proof” that the “U.S. reinvents itself,” instead of fading away like other global powers.

MARY CHENEY KT MCFARLAND

Mary Cheney, Troy Strategies

Great Depression and the Reagan reforms, suggests that the U.S. is in the midst of another political upheaval.

NOIA members welcomed back former National Security Advisor KT McFarland. Calling her remarks a “coming out party,” McFarland noted this was one of her first public talks since leaving the Trump administration and she provided a slew of political insights for the audience. Diving straight into current foreign affairs, McFarland said that while Russia may dominate the headlines as a superpower, the country is overly dependent on high prices of oil and other commodities. Instead, McFarland argued, China should be the focus of U.S. policy, especially as the Chinese government expands its influence over the major global trade corridor in the South China Sea and seeks to rewrite the “international rules of order.” McFarland also touched on Saudi Arabia saying that the pivot by the U.S. to engage with Crown Prince Mohammed bin Salman over Israel-Palestine peace talks is a clever tactic that could build greater support for a peace deal among younger demographics in the Middle East.

Turning to domestic politics, McFarland said that every 40 or so years, U.S. voters throw out the “establishment.” Her tracking of the Revolutionary War, the Jacksonian revolution, the Civil War, the Progressive revolution, the 2

Veteran corporate and political advisor Mary Cheney brought her considerable expertise to NOIA’s meeting, and gave an update on the current state of Washington, D.C. and projected what the 2018 midterm election and 2020 presidential election could bring. Sponsored by the Government Affairs Committee, Cheney’s update on Washington came amid the fallout of the Kavanaugh nomination fight, which she said illustrates Washington, D.C.’s fall into further “hyper-partisanship and tribalism.”

Looking at the Senate races, a favorable map for Republicans means that it is likely that Republicans will hold the Senate and potentially increase their majority on election night.

However, Cheney noted that both the 2020 and 2022 Senates maps will be much tougher for Republicans.

The House highlights included a number of races to watch on election night and that folks should prepare for a Democrat majority. She focused on five key races as potential bell weathers for election night: Colorado-5; Kentucky-6; Virginia-7; Texas-31; and Michigan-8.

Finally, Cheney discussed the Democrat campaign for 2020, which has already kicked off.

Highlighting the large number of Senators and

WASHINGTON REPORT NOIA FALL MEETING REVIEW other Democratic influencers who are preparing to run, she also touched on her thoughts about a run by former Vice President Biden. In short, her view is that the race will be wide open for President Trump’s challengers, but that the indications are that Democrat primary voters are likely to go more liberal than moderate.

RICHARD KAARLGARD Forbes publisher and global futurist Richard Kaarlgard gave NOIA members a look at where the U.S. economy is heading in the short-term as well as a prognosis for the future global economy. Highlighting strong U.S. economic growth, Kaarlgard said consumer and business optimism are at their highest levels in years, strengthening the economic outlook in the near future. He added that regulatory reform should continue to pay significant dividends for U.S. economic growth for years to come.

Looking long-term, Kaarlgard said there are three megatrends business executives should understand: 1) technology is not slowing down, but speeding up; 2) extreme valuation differences between companies in different sectors create “asymmetric warfare”; and 3) adaptability is guaranteed to become more important.

By simply being aware of the strengths and weaknesses of the company, and being on the lookout for new trends, executive leaders can automatically strengthen the competitive outlook of their company. Since many companies are entirely focused on “daily work,” and do not take time to think strategically, companies that do take the time to “think strategically” are at an immediate advantage.

JENNIFER MARTIN Pivoting to the integral world of cybersecurity, the Technology Policy Committee sponsored the session, Cybersecurity 3.0: The Big, Bad and Ugly, and How to Keep Yourself Out of the Hot Seat. The presenter was Jennifer Martin, Partner, Cyber, Privacy & Data Innovation with Orrick, Herrington & Sutcliffe LLP Cybersecurity continues to grow as an area of importance for individuals, companies and governments. In other words, anyone or anything with an internet connection are rightfully prioritizing cybersecurity. However, in the face of increased public awareness, hackers continue to develop new ways to crack security systems.

Richard Kaarlgard, Forbes

Companies should understand that security breaches result in massive financial losses for companies. The losses of proprietary information and confidential employee information and the downtime businesses face while their systems are offline are tough to recover from.

In addition, along with the immediate financial costs associated with a breach, there are costs that arise through damaged reputations. Martin warned that simply having a Chief Information Officer, or a similar position, does not resolve the problem or the potential ramifications of a breach alone. Continual diligence is required.

Cybersecurity should be a part of board meetings and executive meetings.

Proper cybersecurity systems involve employee training, frequent system updates and monitoring. When asked what would be the first thing she would recommend when returning to your business, she replied to have a third party really test and audit your company’s cybersecurity system to identify where breaches are most likely to occur.

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Jennifer Martin, Orrick, Herrington & Sutcliffe

NOIA FALL MEETING REVIEW NOIA STAFF Randall Luthi President Faith Burns Executive Assistant to the President Franki Stuntz Senior Vice President, Administration & Membership Ann Chapman Vice President, Conferences & Special Events (L-R) Starlee Sykes, President, Gulf of Mexico & Canada, BP; Allen Sanders, Vice President, Gulf of Mexico Operations, Anadarko; John Rynd, President, CEO & Director, Tidewater; Lees Rodionov, President, North American Land Drilling, Schlumberger; Kirk Meche, President, CEO & Director, Gulf Island Fabrication; Craig Broussard, Vice President North America, Subsea 7; and James Wicklund, Managing Director, Credit Suisse, LLC

Nicolette Nye Vice President, Communications & Industry Affairs Jeff Vorberger Vice President, Policy & Governmental Affairs Tim Charters Vice President, Governmental & Political Affairs Justin Williams Senior Director, Digital & Public Affairs Editor, Washington Report

Starlee Sykes, BP

PANEL SESSIONS A SERVICE COMPANY PERSPECTIVE: SURVIVING IN THE U.S. GULF OF MEXICO Focusing on the lagging recovery of the offshore service sector, NOIA held the roundtable discussion, A Service Company Perspective: Surviving in the U.S. Gulf of Mexico. Moderated

by Jim Wicklund, Managing Director, Credit Suisse, panelists included: Craig Broussard, Vice President North America, Subsea 7; Kirk Meche, President, CEO and Director, Gulf Island Fabrication; Lees Rodionov, President, North America Land Drilling, Schlumberger; John Rynd, President, CEO and Director, Tidewater; Allen Sanders, Vice President Gulf of Mexico Operations, Anadarko; and Starlee Sykes, President, Gulf of Mexico and Canada, BP. The panelists discussed how the Gulf of Mexico, following the oil price downturn, has effectively transformed into a different operating region with a different cost environment than what was the norm just a few years ago.

This means that producers and service com4

panies will need to be creative to capitalize on rising oil prices. Producers and service companies should collaborate with each other earlier in the project process to obtain the best cost savings. The panelists noted that it is important that companies are mindful that their earlyphase cost savings do not create bottlenecks further down project timelines. Expenses for things like employee training should not be comprised. Not only would it create more costs in the long-term, it would fundamentally undermine the operational integrity of projects.

One idea is the integration of production and service company costs through the adoption of a risk-profit sharing model. This model could help producers keep vendors “close� and allow more flexibility for both producers and service companies. It would also help both segments be more strongly positioned to survive future downturns. In addition, cost savings should not be treated automatically as a zero-sum game.

Companies may gain cost savings from adopting a collective attitude and sharing assets like facility and production design.

WASHINGTON REPORT NOIA FALL MEETING REVIEW IS IT THE RIGHT TIME FOR SOUTH AMERICA: FEATURING BRAZIL & GUYANA NOIA hosted the panel, Is It the Right Time for South America: Featuring Brazil and Guyana.

Moderated by Martin Stäuble, Vice President Exploration for North America and Brazil for Shell, the panel looked at the rapid growth of the offshore oil and gas sector in South America and discussed areas of growth for firms looking to compete in the region. Joining the panel were: Timothy Chisholm, Vice President, Exploration, Appraisal and Developments – Guyana & Suriname, Hess; Dr. Sarah Courbis, Marine Mammal Specialist, Ecology & Environment; José Firmo, President, Instituto Brasileiro de Petróleo (IBP); Jonathan Landes, Senior Vice President, Subsea, TechnipFMC; and Erik Oswald, Vice President, Americas, ExxonMobil.

Some of the largest oil reserves in the world have been found offshore South America, and the panelists examined the region’s ability to attract investment to capitalize on these finds.

Overwhelmingly, the panelists said the time is right to invest in South America.

Since there is a strong window to invest in the region, the offshore industry is able to achieve quick turnaround times for development projects in the region. More and more projects are coming online, tapping offshore reserves that are vital in meeting growing global energy demand in the coming years.

However, challenges facing South America include a lack of investment in supply chains and infrastructure, as well as local content requirements. Lack of infrastructure investment, including human capital, is particularly challenging, and will limit near-term performance of offshore projects.

The panelists urged companies to adopt a “culture of education” while working with South American regulators. While regulators may also ask industry to cover costs in conducting studies, there are ongoing efforts in Brazil to consolidate data and peer reviewed studies, which should help establish best science and best practices going forward.

Copies of all presentations mentioned in this report and pictures are available on the NOIA member’s section of the website at noia.org

(L-R) Jonathan Landes, Senior Vice President, Subsea, TechnipFMC; Timothy Chisholm, Vice President, Exploration, Appraisal and Developments - Guyana-Suriname, Hess; Erik Oswald, Vice President, Americas, ExxonMobil; Dr. Sarah Courbis, Marine Mammal Specialist, Ecology & Environment; José Firmo, President, Instituto Brasileiro de Petróleo; and Martin Stäuble, Vice President Exploration for North America and Brazil, Shell

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NOIA FALL MEETING REVIEW

David Carmony, EnVen Energy Corporation (L-R) Gary Isaksen, Senior Manager for the Global Ocean Science & Policy Program and the Arctic Science & Policy Program, ExxonMobil; Aileen Kenney, Senior Vice President of Development, Deepwater Wind; Ruth Perry, Marine Scientist and Regulatory Policy Specialist, Shell; and Kristian Johansen, President and CEO, TGS.

COMMITTEE SESSIONS GEOLOGIC & GEOPHYSICAL COMMITTEE The NOIA G&G Committee hosted a panel discussion on the need to reform the offshore seismic permitting process. New G&G Committee Chairman and TGS President and CEO Kristian Johansen moderated the panel, which also included: Aileen Kenney, Senior Vice President of Development at Deepwater Wind; Gary Isaksen, Senior Manager for the Global Ocean Science & Policy Program and the Arctic Science & Policy Program at ExxonMobil; and Ruth Perry, Marine Scientist and Regulatory Policy Specialist responsible for offshore marine environmental policy for Shell Exploration and Production Americas teams.

Aileen Kenney, Deepwater Wind

The overarching panel topic was the need for Congress and the Administration to modernize the Marine Mammal Protection Act (MMPA).

The MMPA is enforced by the National Marine Fisheries Service (NMFS), a relatively small agency within the Department of Commerce to which MMPA grants an outsized role in seismic permitting. The panelists highlighted how the delays caused by NMFS’s current 6

application of the MMPA cascade across all sectors of the offshore industry.

Audience members learned about one of the greatest concerns with MMPA implementation: NMFS’s methodology to estimate so-called “incidental takes” of marine mammals. Plainly speaking, the agency uses an overly broad interpretation to estimate the number of marine life that may be impacted by seismic activities.

The panel also discussed BOEM’s seismic permitting rule, which is being finalized simultaneous to the NMFS standards. Currently, Gulf seismic permits are being issued under a court settlement that expired November 1, 2018. As NMFS and BOEM did not finalize their rules before the deadline, an agreement will need to be reached to extend Gulf permitting authority.

Finally, the panel reported on the similar challenges facing the offshore wind industry when it comes to federal implementation of the MMPA. Wind operators are seeking consistent application of the law with respect to their oil & gas counterparts, as well as communication with those counterparts on lessons learned from their experience in the Gulf and in the Atlantic.

WASHINGTON REPORT NOIA FALL MEETING REVIEW Johansen concluded the session by noting the work of NOIA and fellow trade associations on legislation moving through Congress to make these necessary reforms, which would streamline permitting processes and not allow NMFS to consider permits indefinitely. .

HEALTH, SAFETY, SECURITY AND ENVIRONMENT COMMITTEE The Health, Safety, Security and Environmental Committee hosted presentations from Enven Energy Corporation and Deepwater Wind on their 2018 Safety in Seas wins for Culture of Safety and Safety Practice, respectively.

David Carmony, Chief Operations Officer for Enven Energy, presented an overview of the company’s remarkable safety culture transformation between 2013 and 2017, which resulted in a 75% improvement in their Total Recordable Incident Rate. EnVen’s integrated approach to cultural transformation included improvements in communication, training, job safety analyses, safety and compliance audits, and incident investigation management.

Aileen Kenney, Senior Vice President of Development for Deepwater Wind, described the innovative safety practices the company deployed during and after the installation of Block Island Wind Farm, our nation’s first offshore wind farm. These safety innovations include the design and use of a Crew Transfer Vessel (CTV) and a transfer/ascent/descent system using Self-Retracting Lifeline (SRL) fall-arrest technology. Deepwater Wind logged over 40,000 offshore person-hours without a safety incident during Block Island Wind Farm’s first year of operation.

OFFSHORE RENEWABLES COMMITTEE During a session sponsored by NOIA’s Offshore Renewables Committee, Roy Francis, Executive Vice President, Governmental Affairs and Special Projects, Gulf Island Fabrication and Mike Olsen, Senior Director, Business Development, Equinor described how their respective companies are contributing to and capitalizing on the growth of offshore wind production in the United States.

Roy Francis, Gulf Island Fabrication

A long-time leader in fabrication for the oil and gas industry, Gulf Island fabricated the jackets and decks for America’s first offshore wind farm, Block Island Wind Farm, which became operational offshore Rhode Island in December of 2016. This breakthrough project demonstrated the synergy between the U.S. Oil and Gas Supply Chain and Offshore Wind. With 1,000 offshore wind structures planned for the U.S. over the next 10 years, Gulf Island is now actively “chasing wind,” said Roy Francis.

Equinor, formerly known as Statoil, already operates three wind farms off the coast of the United Kingdom, and is engaged in additional large-scale wind projects offshore the UK, Germany, and the US. In 2016, Equinor paid a record $42.5 million for a lease area offshore Long Island, New York, where the company plans to build Empire Wind, an offshore wind farm that could power about 1 million homes.

Mike Olsen, Equinor

NOIA’s Offshore Renewables committee exists to serve the needs of our member companies interested in this new and growing area of offshore energy. Anyone interested in participating on the committee is encouraged to contact the committee chairman, Robb Erickson at robb.erickson@boskalis.com.

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NOIA FALL MEETING REVIEW EXECUTIVE COMMITTEE & BOARD OF DIRECTORS NOIA Chairman John Gellert, SEACOR Marine Inc., chaired the meetings of the Executive Committee and Board of Directors. The majority of the discussion centered on the negative impact the economic downturn has had on NOIA’s financial position. We last reported that several decades of investing and building reserves coupled with severe cost-cutting measures has allowed NOIA to maintain the appropriate level of service to our members.

While that continues to be the case, it was determined that further measures will need to be undertaken to ensure liquidity and financial strength. Thus, an across the board salary freeze has been instituted. It was further determined that a ten percent (10%) dues increase would be put in place effective January, 2019. The treasury report and 2019 proposed budget was discussed and approved by both bodies of leadership.

NOIA Vice Chairman, Richard Clark, DGE III Management, LLC, a Kosmos Energy Company, proposed that the following NOIA members serve on the 2018 Nominating Committee:

If you have any prospects for new membership, please contact Franki Stuntz or the NOIA staff at (202) 347-6900

• • • •

Pat Bernard, Superior Energy Services Terry Bonno, Transocean (Ret) Kirk Meche, Gulf Island Fabrication Cindy Taylor, Oil States International

The proposal was unanimously approved.

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NOIA President Randall Luthi presented his report on the association’s activities and priorities. Issues and areas addressed were: • • • • • •

Financial/Administrative/Membership Government Affairs Personnel NOIA Outreach – Media & Social Media Meetings NOIA PAC Copies of all financial statements and reports are available to NOIA members and can be obtained by calling the NOIA office.

MEMBERSHIP COMMITTEE Committee Chairman, Erik Oswald, ExxonMobil Exploration Company, chaired the meeting and reported that revenue from new members continues to be significantly offset by industry consolidation activity. Consensus among leadership is that the consolidation trend will continue.

Oswald recapped membership activity for the first three quarters of 2018 reporting nine new members joining with new revenue of $78,650. Two mergers resulted in a loss of $58,600, one member sold their GOM assets for an additional loss of $29,300. Lastly, three companies withdrew from membership citing the economic downturn causing a further loss of $76,700. The end result thus far in 2018 is a loss of $85,950.

While we will be turning to our long-standing and new members to help identify and recruit additional members it was agreed that particular attention must be paid to membership retention as well as outreach to members we have lost during the downturn.

WASHINGTON REPORT

Donnie & Shari Ross, Schlumberger; Tom & Aletha Moyers, Schlumberger

Richie Miller, Spectrum Geo; Brian Reinsborough, Venari Resources

Erik Oswald, ExxonMobil; Martin Stäuble, Shell

Richard Clark, DGE III, A Kosmos Energy Company; Mark Hatfield, Chevron

NOIA FALL MEETING: OCTOBER 3-5

Robert Mulcahy & Jodi Harney, CSA Ocean Sciences; Martin Stäuble, Shell

SAN ANTONIO, TEXAS

Matt Sellers, Kiewit; Allen Sanders, Anadarko

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SAN ANTONIO, TEXAS

NOIA FALL MEETING: OCTOBER 3-5

Cindy & Craig Broussard, Subsea 7; Brian Hotard, Alliant Energy & Marine

Bill New, New Industries; Richard Williams, Fugro; Ronnie Smith, Upstream Engineering

Karthik Annadorai, GATE Energy; Kenny Lang, Ridgewood Energy

Selby Bush, BHP; Dana Sigalos, BHP; Randall Luthi, NOIA

Donnie Ross, Schlumberger; John Rynd, Tidewater; Allen Sanders, Anadarko; Starlee Sykes, BP

Paul Howes, Newpark Resources, Jennifer Medcalf, The REACH Group

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WASHINGTON REPORT

Paul Danos, Danos; Lanis Belaire, Pharma Safe

David & Claire de Roode, Lockton Global Energy & Marine

Chuck Wilson, DistributionNOW; Alan Quintero, Rowan Companies; Loren Singletary, National Oilwell Varco

Laura Logan, ExxonMobil; Andy Knapp, BP

NOIA FALL MEETING: OCTOBER 3-5

Bill New, New Industries; Doug Polk, Vallourec USA

SAN ANTONIO, TEXAS

Ronnie & Melba Murphy, United Vision Logistics; Penny & Cory Kief, Crosby Tugs, LLC

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SAN ANTONIO, TEXAS

NOIA FALL MEETING: OCTOBER 3-5

Kylie & Court Ramsay, Aries Marine Corporation

Jonathan Landes , TechnipFMC; Allen Sanders, Anadarko; Brad Miller, Anadarko

Corey Platt, Alliant Energy & Marine; Tom Hood, Alliant Energy & Marine

Brent Ozenne, Arena Offshore; Steve & Suzie Roussel, Offshore Energy Services

Save the Date: NOIA 2019 Annual Meeting April 10-12 The Ritz-Carlton Washington, D.C. Christopher Sherertz, SNC-Lavalin; Arun Antony, SNC-Lavalin; Byron Church, QMax

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