OUR GREAT MINDS

    by Tina Olivero

    Lee Shinkle: The End Of Act One

    Lee Shinkle, our mentor and grandfather of the oil and gas industry has spent the last forty years supporting, encouraging, planning and envisioning the birth of the offshore oil and gas industry in Newfoundland and Labrador.

    A passionate voice with an innate genius to understand “what’s possible”, Lee executed on some of the smartest, most strategic, growth initiatives in the offshore.

    This week, Feb 26, 2019, Lee Shinkle was given the highest honour of all. The honour of his peers with the Noia Outstanding Contribution Award at the NOIA Awards ceremony and luncheon at the Delta Hotel.

    Speaking to a group of about 400 people, Lee delivered a heartwarming and insightful story. A story that would make you laugh, make you cry and most of all, inspire you to carry on to Act 2 of our great industry. Given the drilling programs ahead, who knows …. we might just be the next North Sea!

    Here’s what Lee said at the NOIA awards luncheon:

    “Thank you all for this award. Peer recognition is the best recognition of all. Thank you to NOIA as well for organizing and triumphing recognition of people in all stages of their careers.

    I was told I could talk for as long as I wanted… but, I’ve been on your side of this podium for many years, so I’ll stick to a few highlights of what has been a very wild ride, and I’ll hold some details for a book I’m thinking of writing. I’ll finish with a resume of everything I have learned in the last 40 years.

    I finished college in 1972 with a BA in History and English. Having no prospects and nothing to do my Uncle, Andrew Crosbie, suggested he would hire me at Crosbie Insurance and send Martha and I to London to learn about Marine and Aviation insurance. After a precise, in-depth and critical analysis of the question our decision was “why not”?

    We returned to St. John’s in 1975, with our first daughter Malindi, and I was immediately attracted to the oil industry. In particular, I was captivated by what all that expensive offshore exploration activity could mean for the insurance business.

    In 1978 I was sent to Calgary to set up Crosbie Insurance West and chase Arctic oil exploration insurance business, Dome Petroleum, Panarctic Oil and others. A year after that, in 1979, the Petroleum Incentive Program (PIP) started which was a generous Federal Government scheme to promote Canadian companies exploring for petroleum in harsh environments.

    That same year, Dick Spellacy approached my Uncle about leasing foreign supply vessels, Canadianizing them and then leasing them to an offshore explorer. All that was needed was a customer. Dick came to Calgary, we approached Mobil Oil together, and lo and behold we signed the first vessel charter. I can assure you, a legendary party ensued, and it would become the perfect kick-off to the next maniacal five years.

    Martha and I and our first three children returned home in 1980 and immediately got into the offshore marine insurance business. It wasn’t long before Jan Furst from Nordco came calling looking for volunteers to help revitalize NOIA and to create a growth strategy.

    I agreed to become the Secretary-Treasurer, and in my first full year, our financial report showed income of $3,500 and expenses of $2,500 leaving a surplus of $1,000 to start NOIA’s sovereign wealth fund. Too bad the Government wasn’t following NOIA’s wise example!

    The following three years were filled with excitement and promise. The malt whiskey flowed, and tonnages of smoked salmon were ordered. Local investment manager Tom Foran recently told me that at that time the power of our exploration drilling program could literally move Mobil Oil’s stock price. People would line up at Tom’s office in the morning to give him money to buy Mobil options hoping to make their fortunes!

    This financial frenzy, which led to a lot of heartbreak, should have been warning enough that the bloom might be coming off the rose. However, when the Ocean Ranger sank in February 1982, the dangers of the industry we were involved in really came into sharp focus.

    Not long after, things began to fall apart for the industry. The weather and ice issues manifested, the PIP program ran out, the Federal and Provincial governments went to war over jurisdiction of the resource, and the oil price collapsed. Exploration evaporated, companies closed, trained employees left, and there were plenty of people crying doom and gloom.

    But a steady group of dedicated enthusiasts continued to believe in the future of the industry. I am proud to be numbered amongst them. We believed we needed to keep the momentum going, to keep lobbying politicians, and to keep encouraging the owner companies and Tier 1 contractors.

    Year after year, we would trek off to OTC and Offshore Europe waving the flag and repeating our mantra “Soon… we’ll be there soon”. We could also see that the Americans and Europeans were attracting a lot of attention to their regions with their conferences. So, with essentially no industry to speak of, we had the confidence to start a Conference of our own. And people came!

    Suffice it to say; the true believers were a pretty cocky bunch. We believed we were “so smart” about what was to come. A group of about 10 of us had a Breakfast Club. There are a few here today; Rob Strong, Fraser Edison, Pat Stamp.

    We would meet most Friday’s for breakfast and to exchange gossip but the main event was once a year, near Christmas, we would have a prediction contest as to what would happen in the coming year in the industry, with the prize being the ceremonial beer mug but more importantly bragging rights. There were usually ten categories and the person who got the highest tally, as agreed at the following year’s lunch, got to keep the mug for a year.

    Clearly, this was serious stuff! Given that these guys should have had the best sources of information, you would think it would take 7 or 8 right answers to win the beer mug.

    Not a chance. The whole business of predicting what will happen in the offshore, even one year out, is so uncertain that our winner would be lucky to get 2 or 21/2 out of 10.

    By the late 1980’s I personally was having a crisis of belief in the future. So I retrained as a stockbroker and got a job on Bay Street in Toronto. Proudly announcing this to Martha, she smiled and responded that she hoped I would be happy there and able to send home lots of money since she wasn’t leaving Newfoundland. There was no point arguing… she told me I’d just have to try harder here.

    Regardless of my scepticism, progress was being made. The Federal Government won the ownership battle, decided to share jurisdiction with the Province, and ultimately the Atlantic Accord was signed.
    The negotiations continued with the Hibernia ownership consortium, and the Federal Government continued to sweeten the pot with inducements.
    And the one thing that was is, and forever will be out of our control, the oil price, looked to be recovering.

    Fortune favoured the true believers, the Hibernia development deal was signed, and the first construction contracts were awarded. More legendary parties ensued, and the malt whiskey and smoked salmon returned.

    So, the time was obviously right to once again get fully committed to the offshore. Local entrepreneur Harold Wareham had convinced me to leave the insurance business and head up a contract R&D company called Instrumar. As part of the deal, Steve Henley and I got Harold to back us in an offshore supply company called AMI Offshore. We then artfully convinced my brother Matt to leave his secure government job to chase oil riches with us. So the smart guys were ready to rake it in. But just two weeks after Matt left his job, Gulf pulled out of the Hibernia consortium. Our only client was now on hiatus. The cheque book had left the Province! Smart guys zero, oil industry carries on as usual.

    We all know the story of how the project got put back together. The group of us true believers were front and centre whipping up industrial support across the country and tormenting anyone who would listen about the importance of making it happen.

    So, Hibernia finally did happen. We started to make some money on the construction project.
    At AMI we listened to others about where the future might take us. In particular, Wes Abel, Mobil’s local lead, clearly stated to the industry that the real success would come to those companies that learned that the real economic opportunity was in operations and maintenance. Better a dollar a day forever than $100 once in a while. Our focus shifted to operations.

    I took on the challenge of leading AOC Canada, a joint venture of Aberdeen based AOC and Toronto based Bracknell, set up to pursue the initial Hibernia operations and maintenance contract. A hard battle was fought, but we were victorious in the end. Hurray more legendary parties!

    After the award, I asked Bill Fanning, who was with Hibernia at the time, what our secret sauce was, thinking there must have been something really special about what we did that enabled us to win. Bill told me the competitors were both pretty much the same, but we tried harder!

    Gradually, over the next decade, the local supply sector evolved into what you see today. Lots of mergers and acquisitions, but pretty much the same folks chasing the same contracts as the additional projects got built and the market expanded.

    Crosbie Group bought into AMI and eventually bought the whole company. But to be honest, the real long term success for our family didn’t arrive until the early 1990s when Crosbie Group founded a joint venture with Salamis out of Aberdeen to provide maintenance and deck services. We gained an equity foothold in business we could manage for ourselves, here at home.

    Crosbie Salamis was our chance to realize the dream we had been chasing since the mid-1970s when Andrew Crosbie had the vision to get us all worked up about the possibilities that the offshore industry offered the people of this province. The dream that we were going to be more than strictly the local labour, that we were going to be ongoing contributors to the industry and that we could translate our business success into giving back to our communities. For me, Crosbie Salamis is a leading beacon of the dream that we were all sold at the very beginning.

    Lee Shinkle at NOIA

    What started out initially as an experiment in skills and technology transfer has grown into one of the province’s largest locally owned and operated companies in the industry. We eventually bought out our partner Salamis in a friendly transaction, and now we have completed the circle by partnering up in Guyana in the hopes of being, for our partner in Guyana, what Salamis was to us.

    I’ve been reflecting a lot since learning of this award a few weeks ago. Looking back, through all the ups and downs, we have collectively built an industry with four producing projects, with major expansions and asset life extensions and cash flow expected for the next 25 years. We have a new project in the hopper moving towards sanction. We have the largest combined exploration drilling commitment we have ever seen. We have many new global companies chasing our subsea oil wealth. We are better at managing risks than we have ever been. And our local supply community is knowledgeable, passionate, and poised to take its place on the world stage.

    It sounds to me like Act 1 is over. Act 2 is starting with the next wave of exploration, and it will be up to all of you to bring it to fruition for the benefit of this wonderful place we call home. Look around this room, and you see the next wave of leaders and believers. It’s particularly gratifying that two of my own children, Malindi Shinkle and Jessica Banfield, both of whom are here today at the Exxon table, went straight from college into long term, challenging careers in our industry.

    I have enjoyed this wild ride enormously, but let me be crystal clear. For me, none of it would have been possible without the love, support, and the outright refusal to move to Toronto 30 years ago, of my wife Martha, and our children Malindi, Geoffrey, Jessica, and David. Thank you to all of you, from the bottom of my heart.

    With that, I will finish up by passing on a few short pearls of wisdom that I have learned during Act 1, and that I hope you carry with you into Act 2:

    Firstly: there’s no one in charge.

    Secondly: no one knows what is going to happen next which is why it’s so exciting.

    Thirdly: you have to keep trying harder.

    And lastly: you have to make sure to have lots of legendary parties!

    Good luck, and thank you.”

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