Royal Dutch Shell Plc  .com Rotating Header Image

BRW Magazine: ‘WOODSIDE AT WAR’ – ARTICLE PLUS RELEVANT LEAKED EMAILS

Royal Dutch Shell owns 30% of Woodside Petroleum and tries to take the company over from time to time. Like Shell, Woodside has a problem with dodgy management and leaked emails. These ones make an interesting amusing read. They were kindly supplied by a Shell insider.

ARTICLE FROM BRW Magazine: Thursday 10 May 2007

THE MANAGEMENT 0F WO0DSIDE PETROLEUM IS UNDER INCREASING PRESSURE TO PUT ASIDE INTERNAL BICKERING AND GET BACK TO WHAT IT SHOULD BE DOING – CASHING IN ON THE BOOM.

STORY BY DAMON FRITH   

WHEN MICHAEL CHANEY ASSUMES THE chairmanship Woodside Petroleum from Charles Goode on August 1, the first item on his notepad could be this: speak to chief executive Don Voelte about management style.

A poor financial performance over last year and a stream of critical staff departing from the company’s Perth headquarters – one followed by a volley of ill tempered email ripostes – have left a question mark hanging over Voelte’s handling of the senior cadre at the $27 billion company.

In an email response to criticism from Steve Major, a senior oil executive who left the company, a prickly Voelte wrote; “Steve, you made the right choice for Woodside, that is. Your attitude is one I do not want within 100 miles of our company or our workforce.”

There is also concern about the atmosphere in the executive group when other managers feel compelled to chime in. Director of operations Vince Santostefano added his own comments to Major’s departure: “We are far better off without these people – and they are better off without us – it is truly win, win.”

The discord the emails and executive departures reveal within Woodside is particularly disturbing as the company is expected to boost its liquefied natural gas production from 12 million tonnes a year to 40 million tonnes a year by 2015. This growth requires about S20 billion in capital expenditure, If Woodside falters, the Australian economy will feel the repercussions.

Certainly, Woodside’s peers think its performance is at odds with a large company working to extract the most from a once-in-a-lifetime natural gas boom. After the email exchange with Major began circulating around Perth, a copy was tacked to a message board at oil leader Chevron with the note: “How not to run a company.”

Come August, it should become apparent quickly if friction is building between the new chairman and his chief executive. Voelte was brought in to run the company in 2004 when former long-serving chief executive John Akehurst departed after allegedly losing the confidence of the board.

A long-time Mobil executive, Voelte Joined Atlantic Richfield Company in 1997 and remained there until it was bought out by BP in 2000. Voelte spent the intervening years before joining Woodside running Chroma Energy, a small United States technology-based exploration company.

Keith Spence, the company’s chief operating officer, acted as chief executive between Akehurst’s departure and Voelte’s appointment.

Last July, Spence’s position was changed from a clear second in command to the position of director, enterprise capability, meaning he was responsible for ensuring Woodside had the staffing, skills, technology and relationships required to meet its growth strategies.

It could be argued that Spence’s role is vital for Woodside’s performance in the years ahead. In boom conditions, projects can easily get delayed for months or even years if procurement, workforce numbers and other logistics are not planned meticulously. Others may view the shift as a demotion.

One former executive, who had a positive view of Voelte, said that when you went to him with a plan or operational matter, you had to have all the details spot on and be prepared to defend your position. But praise was a rarity among the six former executives BRW spoke to, all of whom felt it was not professional to go on the record about a former employer. Voelte also declined to comment.

One farmer executive says he had been excited when Voelte took the helm.
“You want to believe in a new leader and all aspects of their ability to show leadership. He came in with so much potential and leadership but unfortunately through interpersonal behaviour, he destroyed it. The only tune in town is the tune played by Don.”

Yet another executive says Voelte did not like being pulled up on a path he had chosen and was quick to favour people that he believed supported him.
The executive says the company’s poor performance was hidden behind high oil prices and quality assets. “All new properties have under-performed,” he says. “The company may have made a $1.5 billion profit [in 2006-07] but it should have made a $2 billion or $2.5 billion profit.”

In a Christmas email to staff, Voelte acknowledged that 2006 had been a rough year for the company. An extract from the email read: “I welcome all to a new 2007 Woodside year! (Good riddance to 2006). It presents us a chance to access what is going right and what is going wrong. In essence, it is a time to stop, reflect, calculate, and act. With vigour!” Voelte goes onto brag about his globetrotting and conversations with world leaders. It’s a common theme in his emails.

So what went wrong last year? For starters, there was the Chinguetti offshore oil project in the West African nation of Mauritania. Chinguetti cost more to get into production than expected and is producing about half the anticipated output.

Then there is Enfield, The offshore Western Australian oilfield began operating last July and it nearly 40 per cent below expected output rates due to one of the three producing wells being shut down. In the Gulf of Mexico, production has been curtailed due to low gas prices. In Victoria, there have been delays in getting the Otway basin operations into gear.

The big question mark is the proposed 12 million-tonne-a-year LNG Pluto development in Western Australia, on the back of a relatively modest field containing 4 trillion cubic feet of gas, Woodside has committed billions of dollars to the project. It is taking all of the risk on the project by maintaining 100 per cent ownership. As recently shown by the 25 per cent blow-out in the cost of building the fifth LNG train for the Woodside-managed North West Shelf LNG project, it is a difficult time to be undertaking big construction projects.

If Pluto is a success, Voelte can rightly claim credit for his aggressive stance to bring it rapidly to production. If things go pear-shaped then it will certainly be his bane, even if Chancy has not made a pre-emptive strike to remove him from the field, Woodside’s performance aside, it is the rapid turnaround of executives that belies a deep divide within the company. The conclusion is that Woodside has for years been run by incompetent management or Voelte that is driving away those who built the company.

If the latter is the issue, Woodside could be in trouble, it is a fairly well-known group of companies and executives that operate the LNG businesses globally. If Woodside gains a reputation as an unpleasant place to work, it will become hard to get good managers.

To date, the rapid turnaround of executives has not filtered through to analysts as a serious concern, although some have a watching brief and further departures would set alarm bells ringing. Unfortunately for Voelte, further departures are expected –and he knows it.

When Major resigned as Woodside’s sub-surface leader in North Africa in the middle of last year, he sent this email to Voelte: “When I joined Woodside I believed that the company was moving forward and it would be a dynamic and interesting place to work.

Working in Perth confirmed this belief but co moving to Tripoli, and as time passed, it was a very different picture. After five months of frustration simply trying to get a house finished and move my family out to Libya, my wife and I realised that Woodside just did not have the support capability to move into the overseas arena – there is little point in going into details, but after 15years working indifferent countries I was surprised at the inexperience prevalent.”

Voelte replied: “Thank you for your note. We will incorporate your thoughts.”
And that’s where all correspondence should have stopped. It was the correct response from the chief executive’s office.

Unfortunately, some weeks later, Voelte must still have been hot under the collar. The following is an extract from his missive: “I have pondered your message over the last few days of a gruelling 19-day roadshow trip to the East Coast of Australia and throughout the USA and Canada. During the days I conducted 58 one-hour “test” sessions with investors and gave a presentation to 250 at the Herald’s Conference. In addition, I made four side-trips (to Melbourne, Houston, New York and Sydney). “Also, starting in the evenings, I spent from 6pm to 2-3am in the morning conducting work on my PC and cell phone in “Perth time”. I pulled one all-nighter getting the board papers out. In all, I travelled to 17 cities and flew 22 airline “legs” in heightened security conditions.”

Once again, Voelte seems determined to prove he is a superman, He goes on to belittle Major as someone who has no Idea how to achieve fulfilment in life.

He even finds it necessary to impress upon Major that he is far wealthier, and he ends the email with this barb: “You either have a lot yet to learn, or you will live a shallow life. Here’s hoping that you experience no further minor irritations in life”

For some reason, Voelte sent the email not only to Major, but also to a number of other Woodside executives, eliciting two responses from senior staff, including the one from Santostefano mentioned earlier.

In Santostefano’s response, he also said some other offshore supervisors were expected to resign due to “the pressures being brought to bear” and commented that “if and when they come, these resignations would not be regrets – they are for the better of all concerned. Onward and upward.”

Santostefano also felt the need to send the Major and Voelte emails and his own comment to his own list of managers, drawing this response from engineering services manager Mary Hackett, who also passed the whole lot on with her comments to yet another set of staff. Hackett’s attached note read:
“You may be interested in the very brutal facts here -we all need to follow Vince’s advice and ensure our high performers are rewarded and we eliminate unhelpful behaviour.”

The departed

September 2003: Chief executive John Akehurst departs. Oil business unit director Keith Spence appointed acting chief executive.
 
February 2004: Don Voelte appointed chief executive. Keith Spence appointed chief operating officer.

February 2004: Company secretary Anthony Niardone departs to emerge as company secretary for Bunnings Property trust.

October 2004: Chief financial officer and former Ashton Mining chief executive Doug Bailey pulls the pin after two years at Woodside – currently a director of St Barbara Mires.

October 2004: David Martin appointed company secretary.

June 2005: Gas marketing guru David Maxwell made redundant following the failure of Darwin to become a gas hub, based on Woodside’s Timor Sea and Browse Basin assets. Now with British Gas in Singapore. November 2005: Michael Chaney join* board as a non-executive director and obtains Charles Goode’s blessing to replace him as chairman when he retires on July 31.

February 2006: Company secretary David Martin departs Woodside through well-oiled revolving door. April 2006: Robert Cole appointed company secretary.

June 2006: North-West Shelf venture director Jack Hamilton departs. Now heading a joint venture of Canada’s InterOil and Merrill Lynch to build a liquefied natural gas plant in Papua New Guinea. Also a director of Geodynamics.

July 2006: Voelte’s employment contract changed to remove fixed five-year term. Termination payout cut from 18 months to 12 months.

Jury 2006: Spence appointed to new role as director, enterprise capability Seen as a downward shift in his power base.

September 2006: Ross Carroll departs after 1S months as chief financial officer. A former vice-president of finance and planning el BHP Billion Petroleum Americas, he is currently chief financial officer at McMahon Holdings. His entry on the McMahon website mentions his time at 3HP Billiton but not at Woodside.

October 2006: Mark Chatterji appointed acting chief financial officer, made permanent in January.

January 2007: Corporate affairs director and farmer ALP national secretary Gary Grey departs with notification period of four working days. Preselected as Labor candidate for Kim Breazley’s seat in federal parliament.

Other senior departures: African business unit manager Duncan Clegg, African Business Unit manager Ian Jackson, company secretary Karen Lange, director corporate services Michael Minosora, development director Dudley Parkinson.

Leaked emails:

  —–Original Message—–
From:  Steve Major [HYPERLINK “mailto:[email protected]
mailto:[email protected]”mailto:steve.ma[email protected]
mailto:[email protected]

Sent:  Sunday, 16 July 2006 11:49 PM
To:  Voelte, Donald D.
Subject:  Enterprise Capability

Don,

Hope you don’t mind a response to your recent e-mail.

As a relative newcomer to Woodside I read the e-mail with interest, in particular the following points and your concerns that we may not have these issues covered in certain areas.

How do we ensure that our organisation has a sufficient number of people with the necessary skills and training to turn our discoveries into solid businesses?

How do we build the capacity of the local workforce wherever we operate, be that in the Pilbara, Libya, Mauritania or the United States?

How does Woodside develop its science and technology capability, and use that capability to overcome the obstacles which stand in the way of developments?

I want us to remain one of Australia’s most admired companies, but to do so we need to make sure we can properly answer the above questions.

My fear is we don’t have these issues covered and it bothers me.

Along with other new recruits, I believe we were recruited largely for our knowledge and experience in working in such areas as the Middle East and our prior experience in recruiting and moulding local staff into effective teams that would remain long after we moved on. Within Developments, Libya, we are currently focussed on the first two points above whilst actively looking at ways of utilising local facilities for developing R&D initiatives that may benefit our business and the Libyan Oil industry as a whole. At the same time keeping in touch with Perth ensures we also have the benefit of up to date technology being utilised in other areas.

Rgds,
Steve
STEVE MAJOR
Sub-Surface Team Leader
Woodside Energy North Africa
Corinthia Bab Africa Hotel,
Commercial Centre Zone C, Level 0
Souk Al Thulatha Al Gadim
Tripoli, LIBYA
Ph:     + 218 21 335 0605-8 ext 216
Mob     + 218 (0) 91 383 2618
E-mail: [email protected]

—————————————————-
From: Voelte, Donald D.
Sent: 23 July 2006 22:15
To: Steve Major
Subject: RE: Enterprise Capability

Steve,

Thank you for your note.  We will incorporate your thoughts.

Regards,
Don
—–Original Message—–
From: Steve Major [mailto:[email protected]
mailto:[email protected]> ]
Sent: Friday, 29 September 2006 7:09 AM
To: Voelte, Donald D.

Subject: Comments from an Ex-employee on Enterprise Capability

Hi Don,

Since I originally sent you a comment regarding Enterprise Capability I have resigned from Woodside so you may wonder why I am bothering to write to you.

Quite simply I believe for things to improve people must voice opinions/concerns so I hope these comments will help you improve your campaign to assemble and retain a capable workforce.

When I joined Woodside I believed that the company was moving forward and it would be a dynamic and interesting place to work.  Working in Perth confirmed this belief but on moving to Tripoli, and as time passed, it was a very different picture. 

After 5 months of frustration simply trying to get a house finished and move my family out to Libya my wife and I realised that Woodside just did not have the support capability to move into the overseas arena – there is little point in going into details but after 15 years working in different countries I was surprised at the inexperience prevalent.  Given the current market place for personal we did not need to have unnecessary hassles so I tendered my resignation and returned to the UK.

To some people this might seem rash.  However, and for your interest, having discussed the situation with several colleagues with similar experiences, the consensus of opinion was that once a point is reached of not requiring a job for financial security the level of intolerance rises dramatically.  Consequently minor irritations are no longer acceptable and even if a position is interesting and challenging a point is reached where the same job could be achieved under better conditions.

Add to this any negative effects on family life, (eg, unacceptable delays in housing, unsafe driving policies) and it is easy to see why the time to move on is reached.
Naturally I am disappointed that it did not work out for me but unfortunately for Woodside I did not need the job for financial reasons so became overly intolerant to the inefficiencies in Libya.

If you or your team would like to discuss any of this further please do not hesitate to contact me.  If not then I guess my warning is that as staff become less and less dependent on the financial aspects of their jobs then greater care has to be taken to retain their interest whilst creating an enjoyable overall work-related environment.

Best Regards,
Steve Major
_____________________________________________

—–Original Message—–

From: Voelte, Donald D.
Sent: Tuesday, 3 October 2006 9:08 AM

To: ‘Steve Major’
Cc: Hession, Michael M.; Ozturgut, Jon C.; ??MD&DirectReports;
Matisons, Reinhardt R.; Hunt, Ray R.

Subject: RE: Comments from an Ex-employee

Steve,

First, thank you for your thoughts.

I have pondered your message over the last few days of a gruelling 19 day Road show trip to the East Coast of Australia and throughout the USA and Canada.  During the days I conducted 58 one hour “test” sessions with investors and gave a presentation to 250 at the Herold’s Conference.

In addition, I made four side-trips: (1) To Melbourne to interview a potential Controller; (2) to Houston for a day to: review our upcoming deepwater GOM Exploration program with our E management team, conduct two quarterly Board meetings, meet with two competitor CEO’s, and meet with the management with J Ray McDermott concerning problems with our Train V project; (3) in New York met with CEO of Techniq concerning the issues at Otway and also entertained the management and spouses of Wesfarmers as home country host; and (4) to Sydney to meet with top Government officials of Australia and China concerning trade issues.  Also, starting in the evenings, I spent from 6pm to 2-3am in the morning conducting work on my PC and cell phone in “Perth time.”  I pulled one all-nighter getting the Board papers out.

In all, I travelled to 17 cities and flew 22 airline “legs” in heightened security conditions.  No fluids caused checked baggage…only two lost luggage conditions in 22 opportunities (I consider that lucky). Two cancelled flights and one night spent in Chicago O’Hare airport due to weather (3 tornadoes on the runway at one point).

Now what was this about your “minor irritations are no longer acceptable …. even if a position is interesting and challenging”

Steve, you made the right choice…..for Woodside, that is.  Your attitude is one I do not want within 100 miles of our Company or our workforce.

At this point, I doubt if you will read further, but since you offered me your thoughts on the meaning of life, I might share with you mine.

You have to be kidding me ….. “once a point is reached of not requiring a job for financial security the level of intolerance rises dramatically”  Like 75% of our employees “need” to work for a living at Woodside??  I’m not sure you know what REAL security is….keeping both the body physically and mind mentally active, challenging the boundaries of your professional skill sets, broadening your life’s experiences and exposures, exploring new depths of people diversity and culture……that is REAL security.  Take it from one that has probably 50-100 times the “financial” security you seek or think you have ….
that does not even rate on fulfilling one’s life experiences.  You either have a lot yet to learn, or you will live a shallow life.

Here’s hoping that you experience no further minor irritations in life.

Don

———————————————————-

 —–Original Message—–

From: Santostefano, Vince V.
Sent: Tuesday, 3 October 2006 10:03 AM

To: Van Butzelaar, Willem W. (WOPWV5); Bourke, Patrick P.F.; Croome,
arvas E.; Ferguson, Ivor I.; Fitzpatrick, Ken K.; Innes, Allen A.;
Jones, Wynne D.W.; McCormick, Paul P.; Rigden, John J.P.; Roberts,
Bernard B.J.; Ryan, John J.G.
Cc: Hackett, Mary M.; Voelte, Donald D.; Laird, Louise L.

Subject: FW: Comments from an Ex-employee

This is really of interest. Please read below then follow with my para:

Our tolerance for technical folks who just do a mediocre job needs toughening up. We need to high grade and be earnest, and active about it. On the positive side, we have many folks who always go the extra mile and who look for and pursue improvement opportunities. These folks are the ones that must be rewarded and groomed and I look to you guys to do that as I don’t come across them in my day to day, but you do – please look after them each day – make them aware that you value what they have done and are doing and that they are the future of Woodside.
Unfortunately, we also have many who have a “cargo cult” mentality – long on entitlements and short on responsibility – make them aware of their dysfunctional attitude when you come across it. We should be quick to praise and equally quick to point out deficient behaviour and performance.

We are far better off without these people – and they are better off without us – it is truly win, win. 

Recently I have heard that we have some offshore supervisors who are considering resignation given the “pressures” being brought to bear – specifically in NWSV of late. If and when they come, these resignations would not be regrets – they are for the better of all concerned. Onward and upward.

———————————————————

—–Original Message—–

From: Hackett, Mary M.
Sent: Wednesday, 4 October 2006 1:08 PM
To: Carr, Adrian A.; Mehta, Utpal U.; Brameld, Michael M.E.; Howard,
Godfrey G.R.C.

Subject: FW: Comments from an Ex-employee You may be interested in the very brutal facts here  – we all need to follow Vince’s advice and ensure our high performers are rewarded and we eliminated unhelpful behaviour.

Regards
Mary Hackett
Engineering Services Manager
Tel  (08) 9348 6701;  Fax (08) 9348  5311 e-mail
[email protected] < mailto:[email protected]

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “BRW Magazine: ‘WOODSIDE AT WAR’ – ARTICLE PLUS RELEVANT LEAKED EMAILS”

Leave a Comment

%d bloggers like this: