CERAWeek Diary: Houston humor shows oil industry can be a barrel of laughs

Attendees at IHS Markit's CERAWeek conference watch the keynote address by US Secretary of State Mike Pompeo from the George Brown Convention Center in Houston, Texas, US March 12, 2019. (Reuters)
Updated 15 March 2019

CERAWeek Diary: Houston humor shows oil industry can be a barrel of laughs

You don’t usually associate the oil industry with humor, but a few days at the CERAWeek by IHS Markit forum in Houston will change your mind. Beneath all the talk of pipelines, polymers and energy policy, there is a layer of levity that, much like the substance itself, can be sweet, light and crude.

I’ll leave that last category for another time, but as a sample of the subtle comedy that underlays the proceedings in Texas, here are a few of the best moments from five days of energy entertainment.

William Clay Ford, chairman of the car company and great-grandson of the man who revolutionized the motor industry over a century ago, was talking about the need to satisfy your customers, before he reflected: “But if my great grandfather had consulted people about what they wanted back then, most of them would have asked for a faster horse.”

He will also be in trouble when he gets home, as he revealed to the audience in the Americas ballroom that he had a secret fleet of high-performance Mustangs that he liked to drive from time to time, but he had to keep them in different locations so Mrs. Ford would not find out about his extravagance.

Rick Perry, the US energy secretary, has an engaging informal Texan style that went down well at the press conference that followed his keynote address. He swapped jokes with a Russian journalist who asked him a serious question about the possibility of applying stricter sanctions against Russia because of its support of the Maduro regime in Venezuela, revealing that he had enjoyed a barbecue in St. Petersburg on a recent trip to the country.

This is almost blasphemous for a man from the Lone Star State, which prides itself on the best barbecues in the world. “Intellectual property theft,” he quipped.

Perry also came up with maybe the best line of the whole event, in relation to his willingness to talk seriously to the Democrat opposition about environmental policy. “I’m always ready to talk. Just because we disagree, you don’t have to be disagreeable.” Somebody should tell the president.

Talking of Mr. Trump, the secretary-general of OPEC, Mohammed Barkindo, had a subtly deadpan response to a question about the effect the president’s tweets had on the oil price. “We welcome the president joining the dialogue, after all he is a major producer,” he replied.

Suhail Al-Mazrouei, the UAE energy minister, also had a good line in impromptu anecdote about the price of crude. He was appointed minister when the oil price was above $100 per barrel, but pretty soon after it crashed all the way down to $30. “Some people in Abu Dhabi said that maybe if we change the minister the price would go back up,” he joked.

The smugly self-confident executives from the US shale industry were also very amusing, though I doubt they realized it. They have taken to referring to the prodigious increase in crude output from the Permian Basin and other reservoirs as the “shale gale,” and explained the basic commercial premise of their business as “converting land into cash flow.” The one essential ingredient of their industry, one said, was “great rock”, meaning good geological assets but open to misinterpretation.

My personal favorite moment of the week was the sight that greeted me one morning as I came down the escalators of power to the main entrance of the event at the Hilton Americas, to be greeted by group of protesters dressed as Star Wars soldiers and Grim Reapers, complaining about the damage fracking was doing to the Texan countryside. “Our future needs to be green,” read one banner.

One of the Houston cops who good-naturedly ushered them away from the hotel muttered: “You all look pretty green already to me.”

Frank Kane is an award-winning business journalist based in Dubai. Twitter: @frankkanedubai

US scrutinizing certification of Boeing 737 MAX aircraft

China grounded all Boeing 737 MAX 8 aircraft on March 11, a day after the deadly crash of an Ethiopian Airways plane, which touched off a domino effect worldwide. (Reuters)
Updated 54 min 24 sec ago

US scrutinizing certification of Boeing 737 MAX aircraft

  • The subpoena seeks documents and correspondence related to the plane
  • A criminal inquiry is ‘an entirely new twist,’ said Scott Hamilton, managing director of the Leeham Company

WASHINGTON: Boeing and US aviation regulators are coming under intense scrutiny over the certification of the 737 MAX aircraft after news that two recent crashes share similarities.
On March 11, just a day after the Ethiopia crash left 157 dead, a grand jury in Washington issued a subpoena to at least one person involved in the plane’s certification, according to a Wall Street Journal article citing people close to the matter.
The subpoena, which came from a prosecutor in the Justice Department’s criminal division, seeks documents and correspondence related to the plane, according to the report.
A criminal inquiry is “an entirely new twist,” said Scott Hamilton, managing director of the Leeham Company, who recalled a probe of a 1996 ValuJet crash as the only other aviation probe that was not a civil investigation.
“Unlike France, where criminal investigations into aviation accidents seems common, it is very, very rare in the US,” Hamilton added.
The Transportation Department’s inspector general also is probing the approval of the 737 MAX by the Federal Aviation Administration (FAA), The Wall Street Journal also reported. Neither department responded to requests for comment from AFP.
The probe is focusing on the Maneuvering Characteristics Augmentation System, or MCAS, implicated in the Lion Air crash, which authorities have said shared similarities with the latest accident.
The Ethiopian Airlines crash on March 10 came less than five months after a 737 MAX 8 operated by Lion Air crashed in Indonesia, killing 189.
While it may take months for definitive conclusions, Ethiopian officials said Sunday there were “clear similarities” between the two catastrophes based on information from the flight data recorder.
The two incidents have prompted air transport regulators to ground 737 MAX aircraft worldwide, a surprising setback for a line of jets that has been flying for less than two years and is Boeing’s top seller.
An investigation by The Seattle Times — in the city where Boeing has a large manufacturing presence — showed numerous problems with the MCAS, including that it would repeatedly override a pilot’s actions based on one faulty sensor. The paper asked for a response from Boeing and the FAA at least a week prior to the latest crash.
Shares of Boeing dropped another 1.8 percent on Monday to $372.28. The company has fallen about 12 percent since the Friday before the crash.
FAA officials had no comment Monday on the investigations but reaffirmed that the certification for the plane followed standard procedure.
Boeing said it followed the rules in bringing the plane to the market.
“The 737 MAX was certified in accordance with the identical FAA requirements and processes that have governed certification of all previous new airplanes and derivatives,” Boeing said.
“The FAA considered the final configuration and operating parameters of MCAS during MAX certification and concluded that it met all certification and regulatory requirements.”
Later Monday, Boeing CEO Dennis Muilenburg sought to reassure clients and passengers of the firm’s commitment to safety in a video message.
“Safety is at the core of who we are at Boeing, and ensuring safe and reliable travel on our airplanes is an enduring value and our absolute commitment to everyone,” Muilenburg said.
“Soon we’ll release a software update and related pilot training for the 737 MAX that will address concerns discovered in the aftermath of the Lion Air Flight 610 accident.”
The 737 MAX was certified as a variant of the 737 Next Generation, the plane it replaced, despite major differences in the engine and the addition of the MCAS, according to documents available on the FAA’s website.
The motors on the new plane are heavier than in the 737 NG, posing more of a risk of stalling, so the MCAS was designed to protect against the possibility. But the Lion Air accident showed the system can erroneously correct for a stall when the plane is taking off, based on one bad sensor, and continuously fight the pilot for control.
US pilots complained to Boeing about the issues following the Lion Air crash.
Because of budget constraints, the FAA delegated aspects of the approval process to Boeing itself, according to sources.
Under a program, known as the Organization Designation Authorization (ODA), employees of Boeing are accredited by the FAA to assist in approving the aircraft — including design, production, flight tests, maintenance and other systems — as well as signing off on the training procedures of pilots on new planes.
The FAA last week said it already had ordered Boeing to develop a fix for problems with the MCAS system. But the agency was not able to describe any changes in the plane implemented by Boeing after the Lion Air accident.
According to one aviation expert who requested anonymity, Boeing had readied some modifications for the system by the end of 2018 but the regulatory approval and subsequent installation of the changes were delayed by the five-week US government shutdown.
Legislators Peter DeFazio, chairman of the House of Representatives Transportation and Infrastructure Committee, and Ted Cruz, who chairs a Senate transportation subcommittee, have each called for hearings to look into the 737 MAX’s certification.