Lead Editor Investigations
asha.javeed@guardian.co.tt
Erik Keskula’s career was laid out to him before it began.
The recently newly minted chief executive of Heritage, whose appointment was effective July 2, 2023, has been mandated to increase oil production from the company’s mature assets, while simultaneously being part of the energy transition, grow the business, prepare it for price cycles, meet environmental commitments, meet the State’s expectations of it as well as be an active and responsive participant in the communities in which it is based.
Keskula, 47, is clear and undaunted by the task.
A graduate from the Colorado School of Mines, he is a geophysicist who spent the last 25 years at the American energy multinational ConocoPhillips, working in varying capacities around the globe before he left the company in 2022.
A married father of two boys, Keskula has Estonian heritage; his father fled Europe in World War II. He grew up in Utah but settled in Alaska with his family.
His father, an engineer, was the one who first floated the idea of Colorado Mines as a university option and Keskula said it sealed his fate in the energy sector. Serendipitously, he met his wife there and his eldest son is now entering his second year at the university.
For Keskula, the move from one of the largest independent, publicly traded, energy companies in the world to a small, state-owned company came with one immediate surprise–within a day of the announcement of his post, a query was made in the Parliament of the salary package he would receive from Heritage.
He admitted to being surprised with the speed with which the information was requested but not the fact that it was requested.
“I was warned that that would likely happen,” he said in an exclusive interview with the Business Guardian along with Heritage’s chairman Michael Quamina two weeks ago.
“I had seen previous CEOs’ packages highlighted in the news, whether they were right or not, I had no perspective. And if you go look at any publicly traded company in the United States and look at the CEO, you can see what their packages are. So from that standpoint, it wasn’t that much of a surprise that it could be made public,” he said.
From a career perspective, Heritage offers Keskula an opportunity for growth under “pressure”.
A self-described “performance-driven” leader, he is cognisant of the role that Heritage plays in T&T’s revenues and “that pressure makes me want to respond and do even better for the Government and for the people of Trinidad.”
Production growth
As it stands, Heritage currently produces about 38,000 barrels of oil per day–both onshore and offshore combined–but there is potential for more given its acreage and assets.
Keskula had surveyed T&T’s terrain and assessed its probable potential for more oil success, before he took on the challenge to increase oil production.
He noted that production optimisation has “really unique and interesting challenges.”
“So really trying to find a way to bring out the best of those assets, even though they’ve been worked on for many years, and in this case, decades, but that suits my experience and expertise really well having done that previously in my career,” he explained.
He observed that at ConocoPhillips, he worked in various parts of the asset lifecycle and had to find ways to increase production in those challenging areas.
He is clear that it’s not just growing production, but increasing the right kind of production.
“Growing production that has higher margins, and really brings in revenue for the Government and the people is something that really motivates me,” he said.
He acknowledges that the company faces issues of asset integrity by virtue of how long its assets have been operational.
That, unfortunately, leads to issues like leakages.
He noted that Heritage has undertaken a robust asset integrity programme.
“But it will take time to address and we’ve got the plans in place, as well as the response teams in place in the event,” he said.
As for a timeframe?
“Corrosion is not something that starts and stops. It’s out there all the time. And so what is important for us to do is make sure that we have the right repair programmes in place to address those issues that we’ve identified, as well as a robust inspection programme to identify new areas. So for me in terms of that safety aspect and the integrity aspect, it is not something that ever really stops. We will need to continue to have programmes to address that,” he said.
Quamina, who sat in on the interview, noted the company has done very well over the past four and a half years, and is really in a position to source the development funds it needs, at least in the short and medium term from internal sources.
“We’re financially in a great place. There are a variety of programmes that we need to support and in the short and medium term, we’ll be able to support those internally. There are also other opportunities to look at joint ventures and other partnerships in order to leverage other resources to bring to bear on those programmes, whether it’s drilling programmes or new opportunities.
“And then, I think as we look longer term, obviously there’s always the opportunity to look at those assets and do we source something from the capital markets or other areas, but that’s not really in the plans. Right now, when we look at the short and medium term, we can source our programs internally as laid out. And that’s just a testament to the resilience that Heritage has,” said Quamina.
“There is nothing increasing production can’t solve,” he added.
Headwinds
Ahead, Keskula observed that general industry consensus is that oil prices are going to be “more volatile going forward, we see more swings and bigger swings.”
“So what we want to be sure is that the barrels that we’re producing are competitive at all those prices. We want to make sure we have a cost structure that makes those barrels competitive at all prices. And so we need to be sure that we’re producing more oil, but as safely as possible but also as cheaply as possible so that we’re maximising the amount of revenue that’s coming into the country and for the people,” he said.
Keskula deferred discussing the margin made on crude but Quamina noted that Heritage had no problem making use of storage facilities and declining to sell crude when prices are too low.
He noted that Heritage is focused on the energy transition and has already identified a few projects as well that take us well on our way to the 30 per cent reduction in methane emissions that heritage has committed to help meet the ministry’s desire to be those targets by 2030.
He said that globally, the timeline of the energy transition changed with the Ukraine war.
“And it’s caused some general reassessment of how quickly we can make the change. I think the general view is, and certainly my view, is that the energy transition is here and it’s here to stay. The timeline is anybody’s guess.
“But what’s important for us is that in terms of creating a resilient and sustainable business, we need to be sure that we are factoring that in so that as we drive those improvements, we’re doing it in a way that aligns with those, those broader objectives. And like I said, it’s not just Trinidad, I think it’s regionally from the Caribbean and what commitments it makes, as well as our counterparts internationally. And I think that’s going to really guide the entire industry,” he said.