When Gov. Bill Walker announced the creation of a new cabinet position — a chief oil and gas adviser — he framed it as a way to improve his administration’s often rocky relationship with the oil and gas industry.
The man he appointed, John Hendrix, has more than 35 years of experience in oil and gas and has been praised by industry officials.
But in an interview, Hendrix told Alaska’s Energy Desk he’s proposing a tough love approach to the state’s oil companies.
Hendrix said he’s been hired to do pretty much one thing: figure out how Alaska can produce more oil.
“There’s no doubt in my mind that there are opportunities…to make more oil with existing infrastructure and existing, producing wells,” he said.
In his newly created role, Hendrix doesn’t have a department to run. Instead, he described his job as finding out what’s standing in the way of oil production — from federal regulations to financing to state policy — and then doing everything he can to remove those barriers.
But, he said, he’s also challenging oil companies to step up. He called it putting “grit in the system.”
“If you have potential and you’re not going after that production potential that’s in the ground, why aren’t you?” he asked.
One example of this approach is the current controversy over Prudhoe Bay. Prudhoe is the state’s largest oil field — and would be the largest source of natural gas, if a pipeline is ever built from the North Slope.
This year, for the first time, the Walker administration requested information from Prudhoe’s leaseholders — BP, ExxonMobil and ConocoPhillips — asking how they plan to market that gas. The companies have so far refused, arguing the request is potentially illegal. In return, the state has rejected the unit’s annual development plan — essentially threatening the companies’ leases if the information isn’t handed over.
Hendrix said the state is well within its rights.
“Let’s go back to grit,” he said, with a laugh. “This is kind of the grit the governor provided to the oil and gas companies. I don’t think they’ve had anybody ask those questions for awhile…so [they were] kind of shell shocked about where the boundaries are, you know, ‘You’re invading my space.’”
But, he said, that’s the whole point.
“This office needs to know, what is the potential of every oil field out there? What are your exploration plays…and why are you not exploring?” he said. “And if you had something you explored, that can be developed, why aren’t you developing it? And I want to know how I can help.”
A Homer High School grad, Hendrix most recently served as the General Manager of Alaska operations for Apache, before it pulled out of the state earlier this year.
Before that, he ran Apache’s operations in Egypt and spent 18 years at BP. His job in each case, he said, was often to enter a field and figure out how to make it live up its potential.
Now, he’s one of three new faces at the top of Governor Walker’s oil and gas team, along with Andy Mack, the new commissioner of Natural Resources, and Keith Meyer, the head of the Alaska Gasline Development Corporation.
As the administration describes it, Meyer is in charge of gas, Mack is focused on wrangling more flexibility out of the federal government — and Hendrix is in charge of oil.
Another gritty issue? Oil and gas tax credits. Walker vetoed about $430 million in payments owed to companies this year. One of Hendrix’s first tasks is reaching out to companies affected by the veto.
He says he supports the governor’s decision – even though Apache received similar credits when it was exploring in the state.
Waldholz: I’m wondering if the John Hendrix who was running Apache a couple years back would have had the same reaction to the governor’s veto?
Hendrix: Oh yeah.
Ultimately, he said, the state can’t spend money it doesn’t have.
Perhaps counterintutively, Hendrix said his real job is building an Alaska that doesn’t rely so heavily on oil. He hopes to use oil and gas as a bridge to that future.
“As a child, and as a young adult, I was always looking up, saying, why aren’t they doing something?” he said. “And now you look back, when you’re 59 years old, and you think, well, maybe it’s time you step forward and help out.”
Walker is hoping Hendrix, and his gritty conversations, can get the state a little closer to that goal.