But the Abbeville native and former longtime Chevron executive, who has been through five major downturns in his career, is confident in the long-term health of the industry.
"The world will continue to need oil and gas for the foreseeable future,” he said during his keynote address today at the Louisiana Gulf Coast Oil Exposition in Lafayette. "We’re going to need every molecule we can get our hands on, including renewables and alternatives.”
But oil and gas likely will supply the majority of the world’s energy through at least 2050, he said. Despite the fact that everyone knows the industry is cyclical, many companies still haven’t learned to effectively manage the ups and downs, Luquette said. For example, when times are tough, some companies completely stop recruiting new talent. When prices come back up, those same companies are left scrambling to hire virtually "everybody with a pulse.”
"Regardless of the cycles, we are going to need new talent in this industry,” Luquette said. "[But] we allow this pendulum to swing to the point where it’s very confusing and disruptive to the universities and their students.”
Luquette said moving from Chevron, which operates wells, to Frank’s, a service provider that works for operators, has been "eye-opening.” The recent rapid fall of commodity prices is putting stress on cash flow, which is "driving short-term and irrational behavior” that focuses on price rather than value, he said.
Laying off employees is never easy, neither for the workers who lose their jobs nor their colleagues and friends who remain with the organization. But when it’s necessary to let quality workers go, Luquette suggested trying to keep tabs on those who plan to keep working in the industry so they can be rehired when times improve.
"You have to give the organization time to heal,” he added.
Luquette said slowdowns can be a good time to take stock of the organization and see what can be done to improve efficiency and make sure the company is prepared for the rebound. For example, he said, Frank’s has taken the opportunity to improve cooperation between the domestic and international sides of the company. He said the company also has moved from a "just in case” approach to inventory to a "just in time” philosophy, resulting in $30 million in savings.
"What we can ill afford to do [as an industry] is to waste another down cycle hoping for better times ahead without embracing change,” he said.