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Career Development
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Given my experience in the recruitment and oil and gas industries, people often ask me about career progression. Often, the assumption is that jumping from company to company is the most rewarding and lucrative path. My response has been that this is not usually the case: There are certainly times where a change will progress you further and faster, but too much movement can become a liability on your résumé that will take years to correct.

According to the Global Salary Guide 2015 by Hays Oil and Gas, 25.6% of the 45,000 survey respondents indicated they had worked for their current company for 3–5 years, and 16.3% for 6 years or more. As a rule of thumb, employers like to see signs of commitment and deep skill development, which typically means staying in a job for 5 years or more.

There is no clear-cut path that will guarantee a more successful career or one that pays more. Your worth is really determined by what value you bring to the role.

Contract Worker: Enjoy the Flexibility

Traditionally, contractors command a higher rate per unit hour or project as the employer does not have to pay the same overhead as a full-time worker, and benefits from having greater workforce flexibility. Choosing specific contracts can help you develop your expertise, creating demand for your skill set based on your specialty area. For example, niche expertise can help you demand competitive pay rates, particularly in areas where there are skills shortages. However, before committing to this path, there are a few things to consider to ensure your career progresses in a manner and at a rate that is going to help you achieve your career goals.

If your objective is to become a subject matter expert, then taking many contracts may be the right path for you. Contracts can provide you with the flexibility to choose exactly what you want to work on, including the location and duration. The trick is to ensure you are choosing contracts based not solely on salary, but that you are creating an asset which you can monetize in the future.

“For a younger person, I think contracting is going to expose you to a much broader range of experiences and potentially make you more valuable to future employers,” says Robert Frow, asset project manager, currently on assignment at a global exploration and production company. Frow has more than 40 years’ experience working in the industry and has spent most of his career on contract project assignments. Frow started with a full-time role as a piping designer and has steadily grown a successful career in project management. Whether it is working on a particular project with a new technology or for a target organization, Frow recommends having a plan of knowing what skills and experiences you need to add value to your résumé and to continue to keep your expertise in demand. Depending on your goals, and if the opportunities are available, aim to select contracts that can help you develop your skills alongside changing market needs, employers’ demands, and industry trends and developments.

Of course, this is often easier said than done due to changes in the industry’s skill requirements as well as economic cycles. The one rule that always applies is to leave each assignment with a positive recommendation, as this industry is small and your reputation for delivering on your promises is your key asset. 

Tenure: Be Rewarded for Loyalty

Another option is working full time for a company over a long period. Tenure can carry a certain amount of prestige and potentially open up opportunities for career advancement and financial gain.

Julian (Jay) B. Haskell, president and chief executive officer of Absolute Completion Technologies, has more than 30 years of domestic and international experience. Haskell has built his industry career with more than 25 years’ experience at Schlumberger, where he held numerous management and technical positions. This provided him with a solid base of business management skills that he still uses while contributing to the successful and continued growth of Absolute.

Haskell believes that “working for the large companies frst is the best training environment, and is key to obtaining a solid foundation in the industry.” Although the career path is usually well established, a variety of career options can be found that will assist you in developing a wide range of experiences.

Large companies often provide the opportunity to work on international assignments. This provides exposure to a variety of cultures and logistical challenges. The experience can be valuable in personal development and provide insight in becoming a leader. Haskell recommends evaluating your standing and advancement after 5 years, and if you find yourself not progressing at the pace you had intended to, then contemplate making a change.

Working for a small to mid-size company, Haskell believes, will provide better exposure to more areas of the organization, which diversifies your skills and expertise. He strongly feels that it is very important to work in cross disciplines in order to understand the big picture. However, should you choose to focus on a specific discipline, this could lead you to becoming a subject matter expert.

Increasing tenure can also lead to increasing benefits. Vacation days, share options, and retirement benefits can be tied to how long you have worked with the business, as can bonuses and perks. Training and professional development are often available only to full-time workers.

It is important to note that the grass is not always greener on the other side. A 2012 survey by Future Workplace (PDF) found that it has been more common for Generation Y workers (also known as millennials) to leave a company after a shorter period of time. However, it is important to make sure that you are leaving for the right reasons. Ask yourself whether you have exhausted all the avenues with your current employer. Have a candid conversation with your boss about what your options are based on your career goals and what you have to do to get to where you want to be. Switching jobs can be risky as you could weaken your résumé if you switch too often. The next role might not be the right ft or could make you vulnerable during industry downturns.

The expectation should not be that the perfect role will fall into your lap, as sometimes you have to prove yourself before attaining the job you want. If regular change and variety is important to you, look for opportunities that offer workplace flexibility, project-based work, or organizations that have sites nationally or globally. If you have itchy feet, these types of companies may have more opportunities for you to explore.

Job Hopping: Find Your Niche

There is a growing belief, especially among younger generations, that having experience working for multiple employers is beneficial. Generation Y, in particular, has a reputation of job hopping—joining a company on a permanent basis, only to leave within 1-2 years (according to the Future Workplace survey). The idea is that this can help expedite your salary increments and increase your knowledge base. While this may be true, this may also generate a negative stigma of not being loyal or committed to any one company.

Landing a new job at a different company can mean an instant salary boost, but it is not guaranteed, particularly when you take the additional risk into account. For example, a job with added responsibility or more demanding work usually comes with a higher salary, but lateral moves rarely provide a significant increase except in times of great demand. If looking to make a move, make sure to target positions in a company with the right cultural ft, which will develop your skills, provide a new challenge, and offer an opportunity for learning, as this is more likely to advance your career in the long term.

The benefits of working for multiple organizations are the different perspectives and holistic view you can develop of the industry. This is also a great way to explore different discipline areas before narrowing in on what you want to do long term. Spending time with a variety of teams can also give you an insight into different company cultures and which is best suited to your working style and preferences.

Whichever path you choose, great salary increases are not often automatically handed out. You will have to prove your worth by bringing the right skills, and attitude, to the table. The most important thing you can do to advance your career is to deliver on your promises and make sure that each employer regrets to see you leave. 

John Faraguna is president of Hays Americas, and global managing director of Hays Oil and Gas. Previously, he has served as president of Xansa North America at Steria UK Corporate. Faraguna joined Xansa in November 2002 from Halliburton, where he served as the president of Grand Basin. He has also held several US-based executive positions with Top Tier Software, Baker Hughes, Arthur Andersen Consulting, and Western Atlas. Faraguna holds a BS in geology and geophysics from Yale University, an MS in geology from the University of Houston, and an MBA from Stanford University.

The Way Ahead is generated by SPE young professional members. TWA editors for this article are Harshad Dixit, Alex Hali, Rodrigo Terrazas, and Avi Aggarwal. For more, visit TWA.

The original article can be found here

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EIA forecasts the U.S. will import more petroleum than it exports in 2021 and 2022

Throughout much of its history, the United States has imported more petroleum (which includes crude oil, refined petroleum products, and other liquids) than it has exported. That status changed in 2020. The U.S. Energy Information Administration’s (EIA) February 2021 Short-Term Energy Outlook (STEO) estimates that 2020 marked the first year that the United States exported more petroleum than it imported on an annual basis. However, largely because of declines in domestic crude oil production and corresponding increases in crude oil imports, EIA expects the United States to return to being a net petroleum importer on an annual basis in both 2021 and 2022.

EIA expects that increasing crude oil imports will drive the growth in net petroleum imports in 2021 and 2022 and more than offset changes in refined product net trade. EIA forecasts that net imports of crude oil will increase from its 2020 average of 2.7 million barrels per day (b/d) to 3.7 million b/d in 2021 and 4.4 million b/d in 2022.

Compared with crude oil trade, net exports of refined petroleum products did not change as much during 2020. On an annual average basis, U.S. net petroleum product exports—distillate fuel oil, hydrocarbon gas liquids, and motor gasoline, among others—averaged 3.2 million b/d in 2019 and 3.4 million b/d in 2020. EIA forecasts that net petroleum product exports will average 3.5 million b/d in 2021 and 3.9 million b/d in 2022 as global demand for petroleum products continues to increase from its recent low point in the first half of 2020.

U.S. quarterly crude oil production, net trade, and refinery runs

Source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO), February 2021

EIA expects that the United States will import more crude oil to fill the widening gap between refinery inputs of crude oil and domestic crude oil production in 2021 and 2022. U.S. crude oil production declined by an estimated 0.9 million b/d (8%) to 11.3 million b/d in 2020 because of well curtailment and a drop in drilling activity related to low crude oil prices.

EIA expects the rising price of crude oil, which started in the fourth quarter of 2020, will contribute to more U.S. crude oil production later this year. EIA forecasts monthly domestic crude oil production will reach 11.3 million b/d by the end of 2021 and 11.9 million b/d by the end of 2022. These values are increases from the most recent monthly average of 11.1 million b/d in November 2020 (based on data in EIA’s Petroleum Supply Monthly) but still lower than the previous peak of 12.9 million b/d in November 2019.

February, 18 2021
The Perfect Storm Pushes Crude Oil Prices

In the past week, crude oil prices have surged to levels last seen over a year ago. The global Brent benchmark hit US$63/b, while its American counterpart WTI crested over the US$60/b mark. The more optimistic in the market see these gains as a start of a commodity supercycle stemming from market forces pent-up over the long Covid-19 pandemic. The more cynical see it as a short-term spike from a perfect winter storm and constrained supply. So, which is it?

To get to that point, let’s examine how crude oil prices have evolved since the start of the year. On the consumption side, the market is vacillating between hopeful recovery and jittery reactions as Covid-19 outbreaks and vaccinations lent a start-stop rhythm to consumption trends. Yes, vaccination programmes were developed at lightning speed; and even plenty of bureaucratic hiccoughs have not hampered a steady rollout across the globe. In the UK, more than 20% of adults have received at least one dose of the vaccines, with the USA not too far behind. Israel has vaccinated more than 75% of its population, and most countries should be well into their own programmes by the end of March. That acceleration of vaccinations has underpinned expectations of higher oil demand, with hopes that people will begin to drive again, fly again and buy again. But those hopes have been occasionally interrupted by new Covid-19 clusters detected and, more worryingly, new mutations of the virus.

Against this hopeful demand picture, supply has been managed. Squabbling among the OPEC+ club has prevented a more aggressive approach to managing supply than kingpin Saudi Arabia would like, but OPEC+ has still managed to hold itself together to placate the market that crude spigots will remain restrained. And while the UAE has successfully shifted OPEC+ quota plan for 2021 from quarterly adjustments to monthly, Saudi Arabia stepped into the vacuum to stamp its authority with a voluntary 1 million barrels per day cut. The market was impressed.

That combination of events over January was enough to move Brent prices from the low US$50/b level to the upper US$50/b range. However, US$60/b remained seemingly out of reach. It took a heavy dusting of snow across Texas to achieve that.

Winter weather across the northern hemisphere seemed harsher than usual this year. Europe was hit by two large continent-wide storms, while the American Northeast and Pacific Northwest were buffeted with quite a few snowstorms. Temperatures in East Asia were fairly cold too, which led to strong prices for natural gas and LNG to keep the population warm. But it was a major snowstorm that swept through the southern United States – including Texas – that had the largest effect on prices. Some areas of Texas saw temperatures as low as -18 degrees Celsius, while electricity demand surged to the point where grids failed, leaving 4.3 million people without power. A national emergency was declared, with over 150 million Americans under winter storm warning conditions.

 

For the global oil complex, the effects of the storm were also direct. Some of the largest oil refineries in the world were forced to shut down due to the Arctic conditions, further disrupting power and fuel supplies. All in all, over 3 mmb/d of oil processing capacity had to be idled in the wake of the storm, including Motiva’s Port Arthur, ExxonMobil’s Baytown and Marathon’s Galveston Bay refineries. And even if the sites were still running, they would have to contend to upstream disruptions: estimates suggest that crude oil production in the prolific Permian Basin dropped by over a million barrels per day due to power outages, while several key pipelines connecting Cushing, Oklahoma to the Texas Gulf Coast were also forced to shutter.

That perfect storm was enough to send crude prices above the US$60/b level. But will it last? The damage from the Texan snowstorm has already begun to abate, and even then crude prices did not seem to have the appetite to push higher than US$63/b for Brent and US$60/b for WTI.

Instead, the key development that should determine the future range for crude prices going into the second quarter of 2021 will be in early March, when the OPEC+ club meets once again to decide the level of its supply quotas for April and perhaps beyond. The conundrum facing the various factions within the club is this: at US$60/b, crude oil prices are not low enough to scare all members in voting for unanimous stricter quotas and also not high enough to rescind controlled supply. Instead, prices are at a fragile level where arguments can be made both ways. Russia is already claiming that global oil markets are ‘balanced’, while Saudi Arabia is emphasising the need for caution in public messaging ahead of the meeting. Saudi Arabia’s voluntary supply cut will also expire in March, setting up the stage for yet another fractious meeting. If a snow overrun Texans was a perfect storm to push crude prices to a 13-month high, then the upcoming OPEC+ meeting faces another perfect storm that could negate confidence. Which will it be? The answer lies on the other side of the storm.

Market Outlook:

  • Crude price trading range: Brent – US$58-61/b, WTI – US$60-63/b
  • Better longer-term prospects for fuels demand over 2021 and a severe winter storm in the southern United States that idled many upstream and downstream facilities sent global crude oil prices to their highest levels since January 2021
  • Falling levels at key oil storage locations worldwide are also contributing to the crude rally, with crude inventories in Cushing falling to a six-month low and reports of drained storage tanks in the US Gulf Coast, the Caribbean and East Asia
February, 17 2021
The State of Industry: Q4 2020 Financials – A Fragile Recovery

Much like the year itself, the final quarter of 2020 proved to be full of shocks and surprises… at least in terms of financial results from oil and gas giants. With crude oil prices recovering on the back of a concerted effort by OPEC+ to keep a lid on supply, even at the detriment of their market share, the fourth quarter of 2020 was supposed to be smooth sailing. The tailwind of stronger crude and commodity prices, alongside gradual demand recovery, was expected to have smoothen out the revenue and profit curves for the supermajors.

That didn’t happen.

Instead, losses were declared where they were not expected. And where profits were to be had, they were meagre in volume. And crucially, a deeper dive into the financial results revealed worrying trends in the cash flow of several supermajors, calling into question the ability of these giants to continue on their capital expenditure and dividend plans, and the risks of resorting to debt financing in order to appease investors and yet also continue expanding.

Let’s start with the least surprising result of all. For months, ExxonMobil had been signalling that it would be taking a massive writedown on its upstream assets in Q4 2020, which could lead to a net loss for the quarter and the year. Unlike its peers, ExxonMobil had resisted making writedowns on the value of its crude-producing assets earlier in 2020. At the time, it stated that it had already built caution in the value assessments of those assets, reflecting ‘fair value’; not so long after that bold statement, ExxonMobil has been forced to backtrack and make a US$20.2 billion downward adjustment. Unusually, that meant that non-cash impairments aside, ExxonMobil actually eked out a tiny profit of US$110 million for the quarter on the strength of margins in the chemicals segment, but a full year loss of US$22.4 billion: the first ever annual loss since Exxon and Mobil merged in 1998. This was better than expected by Wall Street analysts, who would also be cheering the formation of ExxonMobil Low Carbon Solutions, in which the group would pump some US$3 billion through 2025 to reduce its greenhouse gas emissions by 20% from 2016 levels. That acknowledgement of a carbon neutral future is still far less ambitious than its European counterparts, but is a clear sign that ExxonMobil is starting to take the climate change element of its business more seriously.

If ExxonMobil managed to surprise in a good way, then its closest American rival did the opposite. Chevron had been outperforming ExxonMobil in quarterly results for a while now, but in Q4 2020 retreated with a net loss of US$665 million. That was narrower than the US$6.6 billion loss declared in Q4 2019, but still a shock since analysts were expecting a narrow profit. Calling 2020 ‘a year like no other’, the headwinds facing Chevron in Q4 2020 were the same facing all majors and supermajors, despite gains in crude prices, refining margins and fuel sales were still soft. Chevron’s cash flow was also a concern – as was ExxonMobil’s – which prompted chatter that the two direct descendants of JD Rockefeller’s Standard Oil were considering a merger. If so, then there is at least alignment on the climate topic: Chevron is also following the trail blazed by European supermajors in embracing a carbon neutral future, with CEO Michael Wirth conceding that Chevron may ‘not be an oil-first company in 2040’.

On the European side of the pond, that same theme of lowered downstream performance dragging down overall performance continued. But unlike the US supermajors, the likes of Shell, BP and Total were somewhat insulated from the Covid-19 blows at the peak of the pandemic as their opportunistic trading divisions capitalised on the wild swings in crude and fuel prices. That factor is now absent, with crude prices taking on a steady upward curve. That’s good for the rest of their businesses, but bad for trading, which thrives on uncertainty and volatility. And so BP reported a Q4 net profit of US$115 million, Shell followed with a Q4 net profit of US$393 million and Total closed out the earning season with industry-beating Q4 net profit of US$1.3 billion, above market expectations.

The softness of the financials hasn’t stopped dividend payouts, but has also been used by Europe’s Big Oil to set the tone for the next few decades of their existence. Total and BP paid a hefty premium to secure rights to build the next generation of UK wind farms; Total joined the Maersk-McKinney Moller Center for Zero Carbon Shipping to develop carbon neutral shipping solutions and splashed out on acquiring 2.2 GW of solar power projects in Texas; BP signed a strategic collaboration agreement with Russia’s Rosneft to develop new low carbon solutions; and aircraft carrier KLM took off with the first flight powered by synthetic kerosene that was developed by Shell through carbon dioxide, water and renewables. That’s a lot of a groundwork laid for the future where these giants can be carbon neutral by 2050.

The message from Q4 seems clear. Big Oil has barely begun its recovery from the Covid-19 maelstrom, and the road to a new normal remains long and painful. But this is also an opportunity to pivot; to set a new destination that is no longer business-as-usual, but embraces zero carbon ambitions. Even the American supermajors are slowly coming around, while the European continues to lead. Will majors in Asia, Latin America and Africa/Middle East follow? Let’s see what that attitude will bring over this new decade.

Market Outlook:

  • Crude price trading range: Brent – US$60-62/b, WTI – US$57-59/b
  • The Brent crude benchmark rose above US$60/b level for the first time in over a year, as the demand outlook for fuels improves with the accelerating rollout of Covid-19 vaccines and tight stockpiles brush off worries of oversupply
  • On the latter, the IEA estimated that global stockpiles of crude and fuels in onshore and floating storage has shrunk by 300 million barrels since OPEC+ first embarked on its deep production controls in May; in China, stockpiles are at their lowest level over a 12-month period, with US crude stockpiles also fell by 1 million barrels
  • Despite a tenuous alliance, OPEC+ has continuously reassured the market that it will work to clear the massive oil surplus created by the pandemic-induced demand slump, signalling that despite its internal differences, a repeat of last March’s surprise price war is not on the cards

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February, 10 2021