Robert Barnes stepped into some big shoes. Frank Komin, the recently retired executive vice president of southern operations for California Resources Corporation (CRC), headed up local activities of the company for about 15 years and, according to Barnes, developed an excellent reputation for the company and a solid relationship with Long Beach and its environs.
“Frank Komin was a prince of a guy. He’s a good friend of mine. I’ve known him for years,” Barnes, CRC’s new executive vice president of operations, told the Business Journal. “Frank’s relationship with the city, with the community – when he was dragging me around introducing me, I was thinking, ‘Oh no, what have I done?’”
This past spring, Robert Barnes was named executive vice president of operations for California Resources Corporation. He oversee’s the company’s northern and southern operations, including activities in Long Beach. (Photograph by the Business Journal’s Larry Duncan)
Barnes took the reins of CRC’s southern region after Komin retired earlier this year, and soon after, the company’s northern and southern operations were combined. Barnes now oversees operations throughout the state for the company that was spun off from Occidental Petroleum in 2014.
In a tough period for petroleum companies, Barnes, a 38-year veteran of the industry, is pragmatic and focused, with an eye for improving efficiencies within the company and continuing the difficult job the company has done of running an oil extraction operation in and around one of the largest urban areas in the world.
“This is the flagship for operating in environmentally sensitive areas and urban areas,” Barnes said. “Even when I was in other areas, in Argentina, in the Permian [Basin of Texas, one of the largest oil-producing regions in the nation], we really wanted them to see Long Beach. We thought it was a great demonstration of how the city, the state, the community and the contract operator, how everything gets together. It’s just been class – what a dedicated bunch here. It demonstrates that it can be done – and it can be done right. You work at it harder.’”
The low price of crude is the biggest concern to Barnes and CRC, as it is to many in the oil industry. As we spoke, Wilmington crude was floating at about $45 per barrel, not a historic low, but low enough to be the restricting factor on the company’s operations, Barnes says.
“We have to live within our means. The checks can’t bounce! That unfortunately requires us to engage in less activity. We’re not going to fund our drilling programs by taking loans,” Barnes said. “That controls our rate of development and our activity levels.
“We’re the largest acreage holder in California. We hold a lot of this in fee – which means we control the surface, we control the minerals, we control our pace. I don’t have an expiring lease that I have to go drill a well. So we’re committed to living within our means.”
While the current price slump is persistent, Barnes said it is not unprecedented. It carries with it not just an economic concern but a human cost as well, he stressed.
“This one has been a little bit longer in duration than some others. But if you look at the gas glut of the 1980s, though, that was pretty brutal,” Barnes noted. “That was pretty long-lived. It’s a commodity business, supply and demand. With the shale boom, there’s a lot of oil on the market. And maybe there wasn’t the economy – the global economy – to go with it.”
Barnes pointed out that the commodity price affects tax revenue and the firm’s employees.
“There’s a lot of suffering that goes with that. We’ve battened down the hatches to get going, but some of our workforce – it’s guys who maybe don’t have the best education, maybe they got in a little bit of trouble as a kid – the oilfield pays very well for them. It’s a place where a guy can have a second chance at making a good living.”
California is a net energy importer, and Barnes said that fact means that the state is failing to capture economic opportunity benefits connected to those oil operations. A combination of market forces and regulation can help the state recapture jobs and tax revenue and even help improve environmental protections outside of the state, he said.
“California uses a lot – a lot – of energy. It’s tough to live in California without a car!” Barnes stated. “We import more than 65% of our petroleum. We import over 90% of our natural gas. We import 30% or more of our electricity. We buy a lot of petroleum from places that do not have the stringent environmental protections that we have here in the state.
“We really do it right in California. Wouldn’t it make sense to develop [petroleum production] in a place where you have a say in how it’s done? Where you get the jobs? You get the taxes? This is something we feel strongly about – meeting California’s demands. It can be done right.”
Technology is a double-edged sword for the industry. With little of the philosophical discussion on energy’s future focusing on petroleum fuels, Barnes points out that oil will play a key role in making sure that transportation remains affordable and accessible to all, and that petroleum will play at least some role as far as anyone can see into the future.
“You and I may be able to afford electric cars and to plug them into green energy sources,” Barnes said, “but what about the [the people] who can’t afford them? What about them? Do we run off and leave them? We need abundant, reliable and affordable power for everybody, not just the elite.
“The Department of Energy says we’re going to have petroleum products for decades to come,” he continued. “I believe that [they will exist] in a partnership. CRC has nine solar projects going right now – we have the land!” Barnes said. “And asphalt, the roads, all the products that come from petroleum.”
There is a saying having to do with the anxieties of living in interesting times. For the oil industry, 2016 definitely qualifies as an interesting time. Barnes said, no matter what, he is committed to making sure that CRC continues to meet its internationally lauded standards of operating as a good neighbor in an environment that couldn’t be much more challenging.
“I’ve been with the company, through acquisitions and things, for 38 years,” he said. “‘I’ve thoroughly enjoyed it. The single thing we are most committed to is a safe operation and working in the best, most environmentally friendly way we can. I mean that in all sincerity. Nothing we do is worth hurting anyone.”