Alahdal A. Hussein

Petroleum Engineer / Founder at Oil Industry Insight
Last Updated: February 1, 2017
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Career Development
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As the rally in oil prices continues to drive oil prices toward $60/bbl due to the support from OPEC and non-OPEC oil deal, many people may start to think that the good old days of high oil prices will be back soon. And that means, more spending, higher salaries, more jobs and less suffering. To those people I say, don't be excited, it may get worse before it gets better.

The last two years have been pivotal to the oil and gas industry. Many things were redefined; $50/bbl is the new $100/bbl, USA is the new swing producer in the making and it will play a critical role in keep oil prices low, competition for market share is no longer among conventional oil producers only, unconventional resource producers are now in the game and their presence will continue to grow with time. All these changes tell us something that is, the oil industry is evolving and what is after 2014 will never be the same as what was before 2014.

If the oil industry is changing in such a fast pace, how about you? Are you changing as well, or are you just staying the same and expecting old strategies to bring you better result in such a changing industry. Because if you are doing that, I promise you, you will be out of the oil industry before you even know it.

In this article, I will share with you three skills that you need in order to mitigate the current changes in the oil industry. These skills will help you overcome the challenges arising from the current low oil price reality and whatever bad events that might happen in the future.

1- Adaptability


One of the main reasons that resulted in many companies going out of business and filing for bankruptcy in the last two years is the fact that they could not adapt to the new reality of low oil prices.Whether youare a business owner,an employee, or someone who is planning to join the oil industry, you should understand that adaptability is an important factor for your survival and success in the oil industry. Why adaptability is important in the oil and gas industry? Here are two reasons;

1- The oil and gas industry is a fast-changing industry

The change in the oil industry is not only driven by rapid changes in technology, new types of resources and the new challenges associated with it, but it is also driven by unexpected events and changes in geopolitics which could turn the oil industry up-side-down just like what happened back in 2014. To survive in such an ever-changing industry, you need to be flexible and agile. You need to be able to accept changes, stay clam and confident, adapt, plan and respond fast to these changes.

2- Adaptability is key to survival and success in your career

Adaptability is an important quality that employers in fast-changing industries such as the oil industry seek to have in their employees. Take a look at the jobs' requirements of many oil and gas companies, you will find that adaptability is one of their top requirements. Schlumberger is one example. For other companies, even if it is not written there in their website, they expect you to have it.

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One of the job requirement as shown in Schlumberger's website

The nature of work in the oil industry requires you to be adaptable. You will work in different projects, with different teams and different challenges every time. Adding to these challenges, projects that you will be working on will have tight deadlines which makes it even more important to be able to adapt fast. To become successful in your career and to meet exceptions, you need to be open to new ideas, flexible to work in challenging issues, and you need to be able to cope when things don't go as planned.

2- Managing Change


Change management is the second most important skill after adaptability. Why? Because, for you to adapt, you need to change. In other words, you can't adapt to the changes around you if you don't change. But it seems that change is not easy. This is why we see many people are left behind when they are faced with difficulties and hardships. Most of the time, we all face the same problems and same challenges, so why do some people seem to be unable to change a simple thing in their life, while others seem to sail smoothly through the changes they face in their life?

The answer is very simple. Change itself is not hard, in fact, it is easy. What is hard is accepting the uncertainty associated with change. What makes the change hard is how we view it, how we manage it, and how we cope with its uncertainty. As human, what is most stressful and challenging for us is the uncertainty associated with the change not the change itself. And there is where we waste most of our time.

When a bad event takes place in our life, the cycle of our reactions goes as follows. We first go through the denial stage in which we deny what is happening. Then we enter the second stage which is the anger stage. In this stage our confidence is down and we feel angry because we keep thinking about the negative consequences of the change. After sometime, we enter the exploration stage where we try to explore new direction. Then comes the acceptance stage where we finally accept what happened and seek encouragement to move on and change.

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The Change Curve

Anyone who faces change as a result of bad events, he/she will go through the full curve of change above. The only difference between those who manage to change fast and adapt and those who are left behind is how long it takes them to go through each stage of the change curve. Many of us get stuck in the first or second stage of the change curve for a long time and there is where troubles happen and we become unable to adapt and therefore get left behind and fail.

For example, when the layoff wave took place in the past two years due to the downturn in the oil and gas industry, many of those who were laid off failed to react fast to the change they were facing. They didn't believe it at first, and many of them spent one and a half year waiting for things to get better, but it didn't. It only got worse. Many of those who were laid off didn't take the decision to move on, to learn new skills, to change their career path or even to work in other industries because they didn't believe what was happening. They kept waiting with a hope that things will change fast instead of changing themselves. And many ended up wasting their time and some still do.

How to manage change?

Being able to manage change effectively will prevent you from wasting your time on things you will regret later in life. It will help you to overcome difficult situtaions that you might face in the future. It will also help you to stay ahead of the competition and here is how you can do it:

1- Embrace change


How to embrace the change? Don't waste your time worrying about things that you can't change. Instead, spend that time thinking about the the things you can change and how you want to change them. It is hard to let go of worries, but ask yourself one question. What is the point of getting stressed over thing you can't change? Does your worry change anything? If it does not, then stop it.


2- Plan to change the things you can and do it fast

Once you let go of your worries and stress over things you can't change, then start planning to change the things you can change. Be realistic, and stop worrying about uncertainty. It is only fear in our minds, it does not exist. Plan your change and do it fast.

3- Marketing and branding yourself


The recent changes in the oil industry has resulted in many oil and gas companies cutting their spending to weather the effects of low oil prices. One way to achieve that is by reducing the number of their workforce through layoffs and slowing down recruitment activities. That means, there is a high demand for jobs, but the supply is too low and this in turn created a downturn in recruitment activities and the consequence is a high competition for less jobs. In such an environment, the question is always about how to stand out of the crowd and secure the job you want or keep the one you have and avoid being laid off.

There are many things you can do to stand out of the crowd such as writing irresistible CV and cover-letter, educating yourself and staying up-to-date with the industry events, developments and new technologies, connecting with people in the industry, building relationships, having professional memberships and volunteering in activities and events to gain experience. All these things will add value to you and help you stand out, but what is the point of doing all these things if you can't show them to your potential employers. It is like having a great product and the worst marketing strategy, you end up selling nothing.

What is the point of doing all these things if you don't use them to sell yourself, market your skills and competencies and create a brand for yourself. By marketing and branding here, I don't mean doing that on CV, because no matter how good is your CV, you only send it to few companies and due to the high number of applications as a result of the high rate of unemployment, the chances of your CV getting noticed is too low. What I am talking about here is the online marketing and branding.

For me, online marketing and branding is the best type of branding, because you only have to work hard on it for one time and it will continue to promote you even when you are sleeping. It will even promote you to companies you never knew and others whom you never thought of sending your application over to them. That is the power of online marketing and branding.

How to market and brand yourself?

1- The first steps

The first steps are the initial steps that you should go through in order to develop a strong personal brand. These steps involve defining youroverall aspirations, conducting research, defining your brand attributes, assessing your current state and creating your branding plan.These are the initial steps that you should go through to get you started. Here is agreat article by Lisa Quast on Forbes which will walk you through these steps in more details.

2- Select a platform

Once you are done with the first steps, it is time to find the platform where you will be doing all the branding. To brand yourself, you need a platform, and since you are in the oil industry, you need a platform that is fully dedicated for oil and gas professionals. One of the choices you have is NrgEdge. It is a new oil and gas professional platform, dedicated to oil and gas professionals, and it has many features to help you brand yourself. Other platforms such as LinkedIn, Twitter, and other social media platforms are also a good place to start. In the coming days, I will share an article explaining how to brand yourself in social media based on my personal experience, stay tuned.

3- Continue to Improve

Marketing and branding is not a one time job. Things change and improve, and you too. You will cultivate new skills and gain new experiences. When that happens, you need to update your online profiles. Allocate a time every month to check your online profiles for improvement and updates. As you grow and improve, you will find things to improve.

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Your Weekly Update: 11 - 15 February 2019

Market Watch

Headline crude prices for the week beginning 11 February 2019 – Brent: US$61/b; WTI: US$52/b

  • Oil prices remains entrenched in their trading ranges, with OPEC’s attempt to control global crude supplies mitigated by increasing concerns over the health of the global economy
  • Warnings, including from The Bank of England, point to a global economic slowdown that could be ‘worse and longer-lasting than first thought’; one of the main variables in this forecast are the trade tensions between the US and China, which show no sign of being solved with President Trump saying he is open to delaying the current deadline of March 1 for trade talks
  • This poorer forecast for global oil demand has offset supply issues flaring up within OPEC, with Libya reporting ongoing fighting at the country’s largest oilfield while the current political crisis in Venezuela could see its crude output drop to 700,000 b/d by 2020
  • The looming new American sanctions on Venezuelan crude has already had concrete results, with US refiner Marathon Petroleum moving to replace Venezuelan crude with similar grades from the Middle East and Latin America
  • While Nicolas Maduro holds on to power, Venezuela’s opposition leader Juan Guaido has promised to scrap requirements that PDVSA keep a controlling stake in domestic oil joint ventures and boost oil production through an open economy when his government-in-power takes over
  • Despite OPEC’s attempts to stabilise crude prices, the US House has advanced the so-called NOPEC bill – which could subject the cartel to antitrust action – to a vote, with a similar bill currently being debated in the US Senate
  • The see-saw pattern in the US active rig count continues; after a net loss of 14 rigs last week, the Baker Hughes rig survey reported a gain of 7 new oil rigs and a loss of 3 gas rigs for a net gain of 4 rigs
  • While demand is a concern, global crude supply remains delicate enough to edge prices up, especially with Saudi Arabia going for deeper-than-expected cuts; this should push Brent up towards US$64/b and WTI towards US$55/b in trading this week


Headlines of the week

Upstream

  • Egypt is looking to introduce a new type of oil and gas contract to attract greater upstream investment into the country, aiming to be ‘less bureaucratic and more efficient’ with faster cost-recovery, ahead of a planned Red Sea bid round encompassing over a dozen concession sites
  • Lukoil has commenced on a new phase at the West Qurna-2 field in Iraq, with 57 production wells planned at the Mishrif and Yamama formation that could boost output by 80,000 boe/d to 480,000 boe/d in 2020
  • Aker BP has hit oil and natural gas flows at well 24/9-14 in the Froskelår Main prospect in the Alvheim area of the Norwergian Continental Shelf
  • Things continue to be rocky for crude producers in Canada’s Alberta province; production limits were increased last week after being previously slashed to curb a growing glut on news that crude storage levels dropped, but now face trouble being transported south as pipelines remain at capacity and crude-by-rail shipments face challenging economics

Midstream & Downstream

  • The Caribbean island of Curacao is now speaking with two new candidates to operate the 335 kb/d Isla refinery after its preferred bidder – said to be Saudi Aramco’s American arm Motiva Enterprises – withdrew from consideration to replace the current operatorship under PDVSA
  • America’s Delta Air Lines is now reportedly looking to sell its oil refinery in Pennsylvania outright, after attempts to sell a partial stake in the 185 kb/d plant failed to attract interest, largely due to its limited geographical position

Natural Gas/LNG

  • Total reports that it has made a new ‘significant’ gas condensate discovery offshore South Africa at the Brulpadda prospect in Block 11B/12B in the Outeniqua Basin, with the Brulpadda-deep well also reporting ‘successful’ flows of natural gas condensate
  • Italy’s Eni and Saudi Arabia’s SABIC have signed a new Joint Development Agreement to collaborate on developing technologies for gas-to-liquids and gas-to-chemicals applications
  • The Rovuma LNG project in Mozambique is charging ahead with development, with Eni looking to contract out subsea operations for the Mamba gas project by mid-March and ExxonMobil choosing its contractor for building the complex’s LNG trains by April
February, 15 2019
SHORT-TERM ENERGY OUTLOOK

Forecast Highlights

Global liquid fuels

  • Brent crude oil spot prices averaged $59 per barrel (b) in January, up $2/b from December 2018 but $10/b lower than the average in January of last year. EIA forecasts Brent spot prices will average $61/b in 2019 and $62/b in 2020, compared with an average of $71/b in 2018. EIA expects that West Texas Intermediate (WTI) crude oil prices will average $8/b lower than Brent prices in the first quarter of 2019 before the discount gradually falls to $4/b in the fourth quarter of 2019 and through 2020.
  • EIA estimates that U.S. crude oil production averaged 12.0 million barrels per day (b/d) in January, up 90,000 b/d from December. EIA forecasts U.S. crude oil production to average 12.4 million b/d in 2019 and 13.2 million b/d in 2020, with most of the growth coming from the Permian region of Texas and New Mexico.
  • Global liquid fuels inventories grew by an estimated 0.5 million b/d in 2018, and EIA expects they will grow by 0.4 million b/d in 2019 and by 0.6 million b/d in 2020.
  • U.S. crude oil and petroleum product net imports are estimated to have fallen from an average of 3.8 million b/d in 2017 to an average of 2.4 million b/d in 2018. EIA forecasts that net imports will continue to fall to an average of 0.9 million b/d in 2019 and to an average net export level of 0.3 million b/d in 2020. In the fourth quarter of 2020, EIA forecasts the United States will be a net exporter of crude oil and petroleum products by about 1.1 million b/d.

Natural gas

  • The Henry Hub natural gas spot price averaged $3.13/million British thermal units (MMBtu) in January, down 91 cents/MMBtu from December. Despite a cold snap in late January, average temperatures for the month were milder than normal in much of the country, which contributed to lower prices. EIA expects strong growth in U.S. natural gas production to put downward pressure on prices in 2019. EIA expects Henry Hub natural gas spot prices to average $2.83/MMBtu in 2019, down 32 cents/MMBtu from the 2018 average. NYMEX futures and options contract values for May 2019 delivery traded during the five-day period ending February 7, 2019, suggest a range of $2.15/MMBtu to $3.30/MMBtu encompasses the market expectation for May 2019 Henry Hub natural gas prices at the 95% confidence level.
  • EIA forecasts that dry natural gas production will average 90.2 billion cubic feet per day (Bcf/d) in 2019, up 6.9 Bcf/d from 2018. EIA expects natural gas production will continue to rise in 2020 to an average of 92.1 Bcf/d.

Electricity, coal, renewables, and emissions

  • EIA expects the share of U.S. total utility-scale electricity generation from natural gas-fired power plants to rise from 35% in 2018 to 36% in 2019 and to 37% in 2020. EIA forecasts that the electricity generation share from coal will average 26% in 2019 and 24% in 2020, down from 28% in 2018. The nuclear share of generation was 19% in 2018 and EIA forecasts that it will stay near that level in 2019 and in 2020. The generation share of hydropower is forecast to average slightly less than 7% of total generation in 2019 and 2020, similar to last year. Wind, solar, and other nonhydropower renewables together provided about 10% of electricity generation in 2018. EIA expects them to provide 11% in 2019 and 13% in 2020.
  • EIA expects average U.S. solar generation will rise from 265,000 megawatthours per day (MWh/d) in 2018 to 301,000 MWh/d in 2019 (an increase of 14%) and to 358,000 MWh/d in 2020 (an increase of 19%). These forecasts of solar generation include large-scale facilities as well as small-scale distributed solar generators, primarily on residential and commercial buildings.
  • In 2019, EIA expects wind’s annual share of generation will exceed hydropower’s share for the first time. EIA forecasts that wind generation will rise from 756 MWh/d in 2018 to 859 MWh/d in 2019 (a share of 8%). Wind generation is further projected to rise to 964 MWh/d (a share of 9%) by 2020.
  • EIA estimates that U.S. coal production declined by 21 million short tons (MMst) (3%) in 2018, totaling 754 MMst. EIA expects further declines in coal production of 4% in 2019 and 6% in 2020 because of falling power sector consumption and declines in coal exports. Coal consumed for electricity generation declined by an estimated 4% (27 MMst) in 2018. EIA expects that lower electricity demand, lower natural gas prices, and further retirements of coal-fired capacity will reduce coal consumed for electricity generation by 8% in 2019 and by a further 6% in 2020. Coal exports, which increased by 20% (19 MMst) in 2018, decline by 13% and 8% in 2019 and 2020, respectively, in the forecast.
  • After rising by 2.8% in 2018, EIA forecasts that U.S. energy-related carbon dioxide (CO2) emissions will decline by 1.3% in 2019 and by 0.5% in 2020. The 2018 increase largely reflects increased weather-related natural gas consumption because of additional heating needs during a colder winter and for additional electric generation to support more cooling during a warmer summer than in 2017. EIA expects emissions to decline in 2019 and 2020 because of forecasted temperatures that will return to near normal. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, energy prices, and fuel mix.

U.S. residential electricity price

  • West Texas Intermediate (WTI) crude oil price
  • World liquid fuels production and consumption balance
  • U.S. natural gas prices
  • U.S. residential electricity price
  • West Texas Intermediate (WTI) crude oil price
February, 13 2019
The State of the Industry: A Brightened 2018

2018 was a year that started with crude prices at US$62/b and ended at US$46/b. In between those two points, prices had gently risen up to peak of US$80/b as the oil world worried about the impact of new American sanctions on Iran in September before crashing down in the last two months on a rising tide of American production. What did that mean for the financial health of the industry over the last quarter and last year?

Nothing negative, it appears. With the last of the financial results from supermajors released, the world’s largest oil firms reported strong profits for Q418 and blockbuster profits for the full year 2018. Despite the blip in prices, the efforts of the supermajors – along with the rest of the industry – to keep costs in check after being burnt by the 2015 crash has paid off.

ExxonMobil, for example, may have missed analyst expectations for 4Q18 revenue at US$71.9 billion, but reported a better-than-expected net profit of US$6 billion. The latter was down 28% y-o-y, but the Q417 figure included a one-off benefit related to then-implemented US tax reform. Full year net profit was even better – up 5.7% to US$20.8 billion as upstream production rose to 4.01 mmboe/d – allowing ExxonMobil to come close to reclaiming its title of the world’s most profitable oil company.

But for now, that title is still held by Shell, which managed to eclipse ExxonMobil with full year net profits of US$21.4 billion. That’s the best annual results for the Anglo-Dutch firm since 2014; product of the deep and painful cost-cutting measures implemented after. Shell’s gamble in purchasing the BG Group for US$53 billion – which sparked a spat of asset sales to pare down debt – has paid off, with contributions from LNG trading named as a strong contributor to financial performance. Shell’s upstream output for 2018 came in at 3.78 mmb/d and the company is also looking to follow in the footsteps of ExxonMobil, Chevron and BP in the Permian, where it admits its footprint is currently ‘a bit small’.

Shell’s fellow British firm BP also reported its highest profits since 2014, doubling its net profits for the full year 2018 on a 65% jump in 4Q18 profits. It completes a long recovery for the firm, which has struggled since the Deepwater Horizon disaster in 2010, allowing it to focus on the future – specifically US shale through the recent US$10.5 billion purchase of BHP’s Permian assets. Chevron, too, is focusing on onshore shale, as surging Permian output drove full year net profit up by 60.8% and 4Q18 net profit up by 19.9%. Chevron is also increasingly focusing on vertical integration again – to capture the full value of surging Texas crude by expanding its refining facilities in Texas, just as ExxonMobil is doing in Beaumont. French major Total’s figures may have been less impressive in percentage terms – but that it is coming from a higher 2017 base, when it outperformed its bigger supermajor cousins.

So, despite the year ending with crude prices in the doldrums, 2018 seems to be proof of Big Oil’s ability to better weather price downturns after years of discipline. Some of the control is loosening – major upstream investments have either been sanctioned or planned since 2018 – but there is still enough restraint left over to keep the oil industry in the black when trends turn sour.

Supermajor Net  Profits for 4Q18 and 2018

1. ExxonMobil:

- 4Q18 – Net profit US$6 billion (-28%);

- 2018 – Net profit US$20.8 (+5.7%)

2. Shell:

- 4Q18 – Net profit US$5.69 billion (+32.3%);

- 2018 – Net profit US$21.4 billion (+36%)

3. Chevron:

- 4Q18 – Net profit US$3.73 billion (+19.9%);

- 2018 – Net profit US$14.8 billion (+60.8%)

4. BP:

- 4Q18 – Net profit US$3.48 billion (+65%);

- 2018 - Net profit US$12.7 billion (+105%)

5. Total: 

- 4Q18 – Net profit US$3.88 billion (+16%);

- 2018 - Net profit US$13.6 billion (+28%)

February, 12 2019