Eric

Managing Director / Chief Engineer / Energy Industry Leader
Last Updated: June 9, 2017
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Career Development
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More than five years after a profile article was originally published on RigZone.com(original source) and cDiver.net - and after a recently released interview on Drillers.com(https://drillers.com/eric-roth-interview/), OilVoice.com, and OilPro.com - I still often receive emails from either young professionals or mid-career changers asking for advice on both getting into and succeeding in oil and gas. I am most humbly grateful for this consideration and respond to as many as possible, so in the interest of being able to share this information widely for the use of others, I will try to address it directly in more detail.

Take a moment to think of some of the rarest qualities that one would hope to find in professionals or prospective candidates, in any field or industry. Now take another moment to think of the rarest qualities one could hope to find in professionals within the Oil and Gas industry worldwide. Any ideas? Somewhere within your answers to both of these questions alike would most likely be an individual who is a combination of a sound operational advisor, and a knowledgeable technical engineer.

As most of us know, these two qualities are difficult to find in one individual serving in a supervisory post. As with most industries, unfortunately normally we find those who are either a good operational leader or a sound engineer, not both.

As an example, in my own chosen specialism, Rig Integrity/Operational Assurance and Operational Performance and QHSSE for Drilling & Wells, one has to constantly stretch and develop himself and his competencies, in order to stay relevant and valuable to his clients. For the aspiring professionals in training, or those who have recently began careers in O&G, this is a good opportunity to develop themselves in each area going forward, which enables them to market their services to a specific audience, as someone who understands the operations being conducted. After a certain level, one must be able to eventually provide a particular value which distinguishes yourself from amongst your peers.

Why is this important?

First, a little background…

All aspects of onshore and offshore oil and gas operations – what we broadly term petroleum engineering, and includes the full life cycle of the well, from reservoir and formation evaluation, to drilling and completions, to production operations, to workovers and well service work, to plugging and abandoning – are inherently very technical in nature, requiring analytical methods to be used throughout the well life. This requires continuous monitoring and management of the equipment, procedures, processes, and manpower (which is often comprised of people from many different cultures and nationalities). To compound this, these are without question some of the most hazardous environments in the world to be working in, when you take into account the hands-on nature, moving parts, heavy equipment, high temperatures, high pressures, fluids with chemicals, and many types of stored energies. We have built on our industry knowledge from all the way back to the 1800’s when the first onshore oil wells were drilled using rudimentary tools, to the capabilities we are developing and using today in ultra-deepwater and extreme environments. And yet, we are still exploring in ever deeper wells and water depth, more challenging geology, and more remote locations using, in parallel, both aging and newbuild rig fleets for the well construction – all of this demands a level of understanding and methods high above those which were once sufficient for these operations.

The bonus is that this also makes it one of the most interesting and exciting career fields in the world for young and mid–range professionals (of any specialty) to be a part of. It is high risk/high reward. The technologies we are implementing today to help solve downhole challenges are truly awe inspiring. Because of these, we need experts who are aware of the operating procedures, so that they can effectively assist the engineering teams with mitigating/minimizing the associated hazards created from these type of highly specialized operations. This does not always occur only on a piece of paper written from our desks miles and miles away from the site.

There has been quiet a number of articles written the last couple of years on the coming skill gap with the great crew change ('ahem, I know, not this yet again?!' ;), and in particular the urgent need for more university engineering graduates. However, not always mentioned is the fact that it is not required that one necessarily have an engineering degree to be successful in the oil and gas industry, as long as this individual can demonstrate a certain level of technical aptitude in field applications and has the desire to learn, and a willingness to start in literally any entry level job - regardless of education level or roles done before in other fields (as I had to initially swallow my pride to do, having previously served in elite military forces, as a Marine on special teams protecting dignitaries, presidents, and world leaders, having been on duty in the middle of, and leading teams during actual major international crisis situations, and thereafter in similar "glamorous" jobs in the private sector). "Hmmm", I wondered at the time, "what one of the billionaire CEO's or A-list movie stars I was working for in Hollywood just the previous year before I resigned [really], would think if they realized I was now a deckhand cleaning toilets on a liftboat in the middle of the Gulf of Mexico??!!" - No, I've never regretted that decision.

To complement the above qualities, we also need these same advisors to be emotionally intelligent, highly adaptive, and efficient in the field dealing with personnel from every type of department, and to be able to communicate effectively (through the use of adequate ‘**soft skills’ such as empathy, situational leadership, cultural awareness, and direct communication** among others) with contractors or subcontractors as well as their own teams and communities where the projects are conducted.

Moreover, this capacity for being able to work in a team is important to relay information and get engagement with basic guiding principles, such as international standards set forth by API, BS & HSE (UK), OSHA, NORSOK, IMO ISM, ISO, and any other relevant organizations which put forth approved best practice recommendations, depending on what region we work in and the registered origin of our company. He/she must have the ability to cascade lessons learned from the field, not only locally or regionally, but also from worldwide events, to all levels of the operating organization vertically and laterally, in order to prevent the re-cycling of incidents. Worldwide coverage of accidents such as those at Macondo and Montara, and many others less known, are only the final result in a series of escalating smaller events which ultimately caused the final well integrity failure. As is the question many times when we look at our goals, personal and professional, we now come to the point of asking ourselves:

That’s where we want to go… so how do we get there?

The candid answer is that there is no road map; you'll be required to blaze your own trail. There are, however, some gentle suggestions which may help you get started....

The first obvious step is to decide, firmly, that this is the chosen area we would like to dedicate our professional lives to, and stick to it. The reason is because becoming a fully competent professional, especially in an industry as demanding and technically challenging as ours, requires self-motivation and an ever present desire for knowledge. You will be learning the trade for the rest of your life; its not a part time side hobby, it has to be a passion. One way to shorten the learning cycle is to ask for advice from the previous more experienced generation who are nearing retirement age, who have been in the business for many, many years - pick their brain, listen to their stories, and their own lessons. And as other writers have previously mentioned… make no mistake, there are and will be hardships, such as extended time away from home, long hours, steep learning curves, failures, and yes, sometimes harsh, uncomfortable conditions.

The second, is to choose a specialization area for the focus of our interests. This may require new crew members to take any available entry role and work up through several areas, deciding eventually which specialty he/she prefers. For example, either upstream or downstream; onshore or offshore; drilling rigs or production platforms; domestic or international. This allows us to focus our energies (important in any area of life, we find as we get older); the technologies we use are changing and improving at a healthy pace, and we have to be willing to update our notions of what we believe to be best practices in safety and operations as novel ideas are being generated and put into use. And we have to continue to ask new difficult questions, regardless of, and sometimes in the face of what has always been done before.

The third, as alluded to above, continually develop yourself on matters that are applicable to your chosen area. If you are already employed in a position in your desired type of role, do not simply wait for and depend on your current employer to devote the time and resources to send you to development courses or seminars. Be willing and ready to bear your own costs on your own time (think longer term investment, not sunk costs!), as this might be the only way to build the knowledge base you want. Read white papers, technical publications, and books focused on your job family, seek membership in groups and international organizations such as the Society of Petroleum Engineers (spe.org) and/or the International Association of Drilling Contractors (iadc.org), which offer information and advice on issues critical to our industry. The information is out there and it is abundant - all we have to do is use the initiative to seek it out.

[In your eager pursuit of the above, it is important to remember this: there are two types of integrity... one having to do with industry (operational, asset, mechanical, etc), and the other which is PERSONAL INTEGRITY. At the very least, uphold and be an "expert" in this second one - DO the right thing by people, and treat others kindly, even if and when others do not; DO NOT sacrifice your personal integrity in the pursuit of the dollar or individual short term gain. This business is cyclical, and you have to be willing to weather the storms, the low times, to survive in it. Be willing to graciously give and assist without expecting something in return, and serve as a positive example others can aspire to follow. Your reputation and legacy is what will remain after the job and material benefit are long gone.]

This is the Ultimate Need

To summarize, the value of a cross functional operations advisor or specialist (whether in drilling, intervention, production, servicing, marine, or other) within our industry - who has the competence and emotional intelligence (and again, with personal integrity) to not only be an effective field leader capable of communicating across all demographic groups, but who also possesses the technical knowledge to assist senior management and key personnel with engineering challenges that present themselves during, and are unique to, oil and gas operational phases (rather than someone simply with regulatory knowledge for example), - will be invaluable to contractors and operators alike in the near term and future, as we continue to expand to these more challenging environments. As the skills gap grows more acute and the need greater, it is a good time to become an oil and gas professional. Truly, all the best - because your success is our success as an industry!

See you in the patch.

@ericrothrsp

SenergyConsultants.com

RigIntegrity.com

linkedin.com/in/ericrothrsp

*Note, an alternate version of this blog was originally published as an article (under my name as author) in an ASSE O&G Technical Publication in 2013. I've updated and amended to address the subject more broadly.*

Career Development Professional Development Career Management Upstream Oil & Gas Oil & Gas Upstream Drilling & Completions Wells Project Management
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The Competition For The LNG Crown

The year 2020 was exceptional in many ways, to say the least. All of which, lockdowns and meltdowns, managed to overshadow a changing of the guard in the LNG world. After leapfrogging Indonesia as the world’s largest LNG producer in 2006, Qatar was surpassed by Australia in 2020 when the final figures for 2019 came in. That this happened was no surprise; it was always a foregone conclusion given Australia’s massive LNG projects developed over the last decade. Were it not for the severe delays in completion, Australia would have taken the crown much earlier; in fact, by capacity, Australia already sailed past Qatar in 2018.

But Australia should not rest on its laurels. The last of the LNG mega-projects in Western Australia, Shell’s giant floating Prelude and Inpex’s sprawling Ichthys onshore complex, have been completed. Additional phases will provide incremental new capacity, but no new mega-projects are on the horizon, for now. Meanwhile, after several years of carefully managing its vast capacity, Qatar is now embarking on its own LNG infrastructure investment spree that should see it reclaim its LNG exporter crown in 2030.

Key to this is the vast North Field, the single largest non-associated gas field in the world. Straddling the maritime border between tiny Qatar and its giant neighbour Iran to the north, Qatar Petroleum has taken the final investment decision to develop the North Field East Project (NFE) this month. With a total price tag of US$28.75 billion, development will kick off in 2021 and is expected to start production in late 2025. Completion of the NFE will raise Qatar’s LNG production capacity from a current 77 million tons per annum to 110 mmtpa. This is easily higher than Australia’s current installed capacity of 88 mmtpa, but the difficulty in anticipating future utilisation rates means that Qatar might not retake pole position immediately. But it certainly will by 2030, when the second phase of the project – the North Field South (NFS) – is slated to start production. This would raise Qatar’s installed capacity to 126 mmtpa, cementing its lead further still, with Qatar Petroleum also stating that it is ‘evaluating further LNG capacity expansions’ beyond that ceiling. If it does, then it should be more big leaps, since this tiny country tends to do things in giant steps, rather than small jumps.

Will there be enough buyers for LNG at the time, though? With all the conversation about sustainability and carbon neutrality, does natural gas still have a role to play? Predicting the future is always difficult, but the short answer, based on current trends, it is a simple yes. 

Supermajors such as Shell, BP and Total have set carbon neutral targets for their operations by 2050. Under the Paris Agreement, many countries are also aiming to reduce their carbon emissions significantly as well; even the USA, under the new Biden administration, has rejoined the accord. But carbon neutral does not mean zero carbon. It means that the net carbon emissions of a company or of a country is zero. Emissions from one part of the pie can be offset by other parts of the pie, with the challenge being to excise the most polluting portions to make the overall goal of balancing emissions around the target easier. That, in energy terms, means moving away from dirtier power sources such as coal and oil, towards renewables such as solar and wind, as well as offsets such as carbon capture technology or carbon trading/pricing. Natural gas and LNG sit right in the middle of that spectrum: cleaner than conventional coal and oil, but still ubiquitous enough to be commercially viable.

So even in a carbon neutral world, there is a role for LNG to play. And crucially, demand is expected to continue rising. If ‘peak oil’ is now expected to be somewhere in the 2020s, then ‘peak gas’ is much further, post-2040s. In 2010, only 23 countries had access to LNG import facilities, led by Japan. In 2019, 43 countries now import LNG and that number will continue to rise as increased supply liquidity, cheaper pricing and infrastructural improvements take place. China will overtake Japan as the world’s largest LNG importer soon, while India just installed another 5 mmtpa import terminal in Hazira. More densely populated countries are hopping on the LNG bandwagon soon, the Philippines (108 million people), Vietnam (96 million people), to ensure a growing demand base for the fuel. Qatar’s central position in the world, sitting just between Europe and Asia, is a perfect base to service this growing demand.

There is competition, of course. Russia is increasingly moving to LNG as well, alongside its dominant position in piped natural gas. And there is the USA. By 2025, the USA should have 107 mmtpa of LNG capacity from currently sanctioned projects. That will be enough to make the USA the second-largest LNG exporter in the world, overtaking Australia. With a higher potential ceiling, the USA could also overtake Qatar eventually, since its capacity is driven by private enterprise rather than the controlled, centralised approach by Qatar Petroleum. The appearance of US LNG on the market has been a gamechanger; with lower costs, American LNG is highly competitive, having gone as far as Poland and China in a few short years. But while the average US LNG breakeven cost is estimated at around US$6.50-7.50/mmBtu, Qatar’s is even lower at US$4/mmBtu. Advantage: Qatar.

But there is still room for everyone in this growing LNG market. By 2030, global LNG demand is expected to grow to 580 million tons per annum, from a current 360 mmtpa. More LNG from Qatar is not just an opportunity, it is a necessity. Traditional LNG producers such as Malaysia and Indonesia are seeing waning volumes due to field maturity, but there is plenty of new capacity planned: in the USA, in Canada, in Egypt, in Israel, in Mozambique, and, of course, in Qatar. In that sense, it really doesn’t matter which country holds the crown of the world’s largest exporter, because LNG demand is a rising tide, and a rising tide lifts all 😊

Market Outlook:

  • Crude price trading range: Brent – US$64-66/b, WTI – US$60-63/b
  • Despite the thaw after Texas saw a devastating big freeze, the slow ramp-up in restoring US Gulf Coast oil production and refining has supported crude oil prices, with Brent moving above the US$65/b level and WTI now in the low US$60/b level
  • Some Wall Street analysts, including Goldman Sachs, are predicting that oil prices could climb above US$70/b level based on current fundamentals, as the short-term spike gives ways to accelerating consumption trends
  • However, much will depend on OPEC+’s approach to managing supply in Q2, with a meeting set for early March; Saudi Arabia is once again urging caution, but there are many other members of the club champing at the bit to increase output and capitalise on the rising price environment


March, 01 2021
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