Societies under professional scrutiny

A reminder first that the views expressed in Crosstalk are the author’s alone. This is important to underline because the topic of the day is the role of geoscience and engineering professional societies of which EAGE is one. Not only that, the Association has been an indulgent publisher of this column since it was launched seven years ago without ever interfering with its content.

Our professional societies are currently under scrutiny as a result of the flurry of merger activity in North America. SPE and AAPG are currently canvassing members about a merger of their two organizations. SEG and AAPG recently agreed terms to run joint annual meetings for the next five years, first of which was in Denver in September. The deal was widely interpreted as the first step in a possible union of the two societies.

For the record EAGE has stood aside from these manoeuvres, but nonetheless faces many of the challenges that are driving these potential consolidations. This is because a combination of the Covid pandemic, restraints on energy company spending, the evolving demands of energy transition and the rise of online zoom-style communication has derailed the established business model on which all societies have relied for decades and on how membership services can be delivered in the future.

The merger activity being advocated in North America looks straight out of the corporate textbook. Claims of cost savings and efficiency are the drivers here in the face of drastically reduced revenues, mainly as a result of Covid restrictions on meetings in person. More streamlined organization, eliminating duplicate events on the same topic, reduced competition, etc are the priorities. Some members may be surprised by how much all our societies are beholden to business imperatives. Yet this is the reality that up to now has provided the opportunity to offer a huge range of activities and interests at a very affordable to members.

The enabler has been the wealth of the oil and gas industry, the extensive service sector and numerous geoscientists and engineers involved who supply substantial membership income. A major source of revenue for the societies has been coming from the commercial sector of the oil business via sponsorship for events, attendance at exhibitions, advertising for publications, support for students, etc. Even before Covid, the signs were evident that the transition era was beginning to impact oil industry spending priorities, particularly on large-scale exploration projects. In addition, geoscience-related companies have never really recovered from the 2013-14 price shock, and the marine seismic business in particular has suffered mightily as demand for surveys has withered away.

The pandemic in some respects has simply accelerated a process that was already in motion. The main societies have been aware for some time that the scale of their past activities was no longer sustainable. Sensible economies have been instituted rather than any radical change, perhaps hoping things would recover sufficiently to resume business more or less as before.

However, an unforeseen consequence of Covid, namely the restrictions on travel and meetings, has changed the commercial landscape. Suddenly the possibilities of online events have emerged. Just how important is it for personnel to attend a workshop or conference in person when an online version is readily available? That is a question that all organizations are going to ask in future.

We will not know the full impact for a while. But, faced with likely long-term reductions in meeting attendance, societies will surely have to develop a different structure for financing events. On the bright side, it may be that paid-for online participation, even if cheaper, may generate higher attendance and hence good returns.

A more complex issue surrounds the ease with which effectively free online meetings can be organized under the umbrella of a society. For example, local chapters can arrange top-class speakers and online forums with the admirable mission of advancing scientific knowledge, conducting the proceedings online and/or posting the results on YouTube. Such meetings can have significant value, are available to anyone who cares to log in, but crucially generate no income to the society in whose name the event is being run.

The online challenge to a sustainable financial model is not one that will readily go away by combining the resources of two or more societies. A more fundamental issue is whether mergers actually achieve their objectives. In the corporate world, the outcomes are not that encouraging with financial analysts generally agreeing that more fail than succeed. That would certainly be the case in the geoscience services sector where countless mergers over the years have rarely, if ever, produced a winner.

A Harvard Business Review article (Clayton M. Christensen, Richard Alton, Curtis Rising, and Andrew Waldeck, 2011) suggests there are two reasons to acquire a company, which executives often confuse. The most common one is to boost your company’s current performance to help you hold on to a premium position, on the one hand, or to cut costs, on the other. This apparently simply doesn’t happen as many CEOs are unrealistic about improvements possible, don’t know how to do the integration and probably paid too much in the first place. The second, less familiar reason to acquire a company is to reinvent your business model and thereby fundamentally redirect your company. The authors warn that almost nobody understands how to identify the best targets to achieve that goal, how much to pay for them, and how or whether to integrate them.

Arguably a merger of societies has different criteria on which to judge success. Yet the joint statement from SPE and AAPG on the intention to explore a merger has a corporate ring about it – ‘AAPG and SPE both recognize that oil and natural gas will continue to be essential to meet the world’s energy needs, and the combined membership will contribute substantially to assuring reliable and affordable future energy supplies. Additionally, the knowledge, skills, and abilities of the new organization will enable its members to accelerate the uptake of new technologies such as digitalization and will also be essential to emerging areas such as carbon capture, utilization, and storage, hydrogen energy, and novel geothermal solutions.’

The statement adds: ‘Since the onset of the Covid pandemic, both organizations have felt the impact of quarantines and social distancing mandates. Combining resources would put the new organization in a better position to continue offering the services expected by members. Synergies would reduce operational overlap and redundancy, thereby increasing efficiency and return on investment for members. Most importantly, it will allow the new organization to look to the future and prepare members for the changes happening in the industry.’

North American societies clearly recognize the need to adapt to the changing composition of their members as the applications of geoscience and engineering transition away from the traditional resources industries. It implies a multi-disciplinary approach. That is something EAGE has embraced for some time as it readies for the transition era. Time will tell if this gives them an edge in the competition between the professional societies. Rivalry will endure merger or no mergers and regardless of any increased, desirable, inter-society co-operation. In this context EAGE for the moment at least also has a branding advantage over the SPE, SEG and AAPG in that its name is not associated with the petroleum industry.

In all the discussion, there seems to be a basic question that has been missed, namely what is the role of a professional society? The main geoscience and engineering societies are not trade unions defending workers’ rights, they are not lobby organizations, they do not have an official place in the education sphere, and do not award qualifications. It is true that publication in society journals and accreditation on some courses have professional career value. Yet the society’s purpose is somewhat ill-defined. It may not amount to more than the gathering of like-minded professionals to discuss and promote mutual interests (science and business), advance knowledge, with at least some eye on the public good. That is what the mission statements seem to suggest.

SEG says it is ‘a global not-for-profit organization with a mission of connecting the world of applied geophysics’. AAPG states that ‘the original purpose (of AAPG), to foster scientific research, to advance the science of geology, to promote technology, and to inspire high professional conduct, still guides the Association today’. SPE aspires ‘to collect, disseminate, and exchange technical knowledge concerning the exploration, development and production of oil and gas resources and related technologies for the public benefit; and to provide opportunities for professionals to enhance their technical and professional competence.’ EAGE seeks ‘to promote the development and application of geosciences and related engineering subjects, to promote innovation and technical progress and to foster the communication, fellowship and cooperation between those working in, studying or otherwise being interested in these fields’.

No one can deny the successful formula that SPE, SEG, AAPG and EAGE have applied in the last decades to provide opportunities for learning, networking and sharing of knowledge benefiting countless industry and academic professionals and their organizations. At the same time it has over time led to increasing commercial competition between the geoscience and engineering societies to support growing portfolios of events, publications, education initiatives, local chapters, special interest groups, etc. Whether that is what members want now, or envisaged when societies were founded, is a moot point. Merger talk should produce some answers.

When European geophysicists parted company with SEG to form the European Association of Exploration Geophysicists (EAEG) in 1951, it is perhaps salutary to consider that Association activities were modest, confined to twice yearly meetings and publication of Geophysical Prospecting, no paid staff and an office facility provided in the Shell building in The Hague.

‘EAGE faces many of the challenges that are driving these potential consolidations.’

‘A more fundamental issue is whether mergers actually achieve their objectives.’