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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Venezuelan crude oil production falls to lowest level since January 2003

monthly venezueal crude oil production

Source: U.S. Energy Information Administration, Short-Term Energy Outlook

In April 2019, Venezuela's crude oil production averaged 830,000 barrels per day (b/d), down from 1.2 million b/d at the beginning of the year, according to EIA’s May 2019 Short-Term Energy Outlook. This average is the lowest level since January 2003, when a nationwide strike and civil unrest largely brought the operations of Venezuela's state oil company, Petróleos de Venezuela, S.A. (PdVSA), to a halt. Widespread power outages, mismanagement of the country's oil industry, and U.S. sanctions directed at Venezuela's energy sector and PdVSA have all contributed to the recent declines.

monthly venezuela crude oil rig count

Source: U.S. Energy Information Administration, based on Baker Hughes

Venezuela’s oil production has decreased significantly over the last three years. Production declines accelerated in 2018, decreasing by an average of 33,000 b/d each month in 2018, and the rate of decline increased to an average of over 135,000 b/d per month in the first quarter of 2019. The number of active oil rigs—an indicator of future oil production—also fell from nearly 70 rigs in the first quarter of 2016 to 24 rigs in the first quarter of 2019. The declines in Venezuelan crude oil production will have limited effects on the United States, as U.S. imports of Venezuelan crude oil have decreased over the last several years. EIA estimates that U.S. crude oil imports from Venezuela in 2018 averaged 505,000 b/d and were the lowest since 1989.

EIA expects Venezuela's crude oil production to continue decreasing in 2019, and declines may accelerate as sanctions-related deadlines pass. These deadlines include provisions that third-party entities using the U.S. financial system stop transactions with PdVSA by April 28 and that U.S. companies, including oil service companies, involved in the oil sector must cease operations in Venezuela by July 27. Venezuela's chronic shortage of workers across the industry and the departure of U.S. oilfield service companies, among other factors, will contribute to a further decrease in production.

Additionally, U.S. sanctions, as outlined in the January 25, 2019 Executive Order 13857, immediately banned U.S. exports of petroleum products—including unfinished oils that are blended with Venezuela's heavy crude oil for processing—to Venezuela. The Executive Order also required payments for PdVSA-owned petroleum and petroleum products to be placed into an escrow account inaccessible by the company. Preliminary weekly estimates indicate a significant decline in U.S. crude oil imports from Venezuela in February and March, as without direct access to cash payments, PdVSA had little reason to export crude oil to the United States.

India, China, and some European countries continued to receive Venezuela's crude oil, according to data published by ClipperData Inc. Venezuela is likely keeping some crude oil cargoes intended for exports in floating storageuntil it finds buyers for the cargoes.

monthly venezuela crude oil exports by destinatoin

Source: U.S. Energy Information Administration, Short-Term Energy Outlook, and Clipper Data Inc.

A series of ongoing nationwide power outages in Venezuela that began on March 7 cut electricity to the country's oil-producing areas, likely damaging the reservoirs and associated infrastructure. In the Orinoco Oil Belt area, Venezuela produces extra-heavy crude oil that requires dilution with condensate or other light oils before the oil is sent by pipeline to domestic refineries or export terminals. Venezuela’s upgraders, complex processing units that upgrade the extra-heavy crude oil to help facilitate transport, were shut down in March during the power outages.

If Venezuelan crude or upgraded oil cannot flow as a result of a lack of power to the pumping infrastructure, heavier molecules sink and form a tar-like layer in the pipelines that can hinder the flow from resuming even after the power outages are resolved. However, according to tanker tracking data, Venezuela's main export terminal at Puerto José was apparently able to load crude oil onto vessels between power outages, possibly indicating that the loaded crude oil was taken from onshore storage. For this reason, EIA estimates that Venezuela's production fell at a faster rate than its exports.

EIA forecasts that Venezuela's crude oil production will continue to fall through at least the end of 2020, reflecting further declines in crude oil production capacity. Although EIA does not publish forecasts for individual OPEC countries, it does publish total OPEC crude oil and other liquids production. Further disruptions to Venezuela's production beyond what EIA currently assumes would change this forecast.

May, 21 2019
Your Weekly Update: 13 - 17 May 2019

Market Watch

Headline crude prices for the week beginning 13 May 2019 – Brent: US$70/b; WTI: US$61/b

  • Crude oil prices are holding their ground, despite the markets showing nervousness over the escalating trade dispute between the USA and China, as well as brewing tensions in the Middle East over the Iranian situation
  • China retaliated against President Trump’s decision to raise tariffs from 10% to 25% on US$200 billion worth of Chinese imports by raising its own tariffs; crucially, China has also slapped taxes on US LNG imports at a time when American export LNG projects banking on Chinese demand are coming online
  • In the Middle East, Saudi Arabia reported that two of its oil tankers were attacked in the Persian Gulf, with the ‘sabotage attack’ near the UAE speculated to be related to Iran; with the US increasing its military presence in the area, the risk of military action has escalated
  • The non-extension of US waiver on Iranian crude is biting hard on Iran, with its leaders calling it ‘unprecedented pressure’, setting the stage for a contentious OPEC meeting in Vienna
  • In a move that is sure to be opposed by Iran, Saudi Arabia has said it is willing to meet ‘all orders’ from former Iranian buyers through June at least; Saudi Aramco is also responding to requests by Asian buyers to provide extra oil
  • The see-saw trend in US drilling activity continues; after a huge gain two weeks ago, the active US rig count declined for a second consecutive rig, with the loss of two oil rigs bringing the total site count to 988, below the equivalent number of 1,045 last year
  • There is considerably more upside to crude prices at the moment, with jitters over the health of the global economy and a delicate situation in the Middle East likely to keep Brent higher at US$71-73/b and WTI at US$62-64/b


Headlines of the week

Upstream

  • Occidental Petroleum and Warren Buffet have triumphed, as Chevron bowed out of a bidding war for Anadarko Petroleum; Occidental will now acquire Anadarko for US$57 billion, up significantly from Chevron’s US$33 billion bid
  • The deal means that Occidental’s agreement to sell Anadarko’s African assets to Total for US$8.8 billion will also go through, covering the Hassi Berkine, Ourhoud and El Merk fields in Algeria, the Jubilee and TEN fields in Ghana, the Area 1 LNG project in Mozambiuqe and E&P licences in South Africa
  • BP has sanctioned the Thunder Horse South Expansion Phase 2 deepwater project in the US Gulf of Mexico, which is expected to add 50,000 boe/d of production at the Thunder Horse platform beginning 2021
  • Africa is proving to be very fruitful for Eni, as it announced a new gas and condensate discovery offshore Ghana; the CTP-Block 4 in the Akoma prospect is estimated to hold some 550-650 bcf of gas and 18-20 mmbl of condensate
  • In an atypical development, South Africa has signed a deal for the B2 oil block in South Sudan, as part of efforts to boost output there to 350,000 b/d
  • Shell expects to drill its first deepwater well in Mexico by December 2019 after walking away with nine Mexican deepwater blocks last year

Midstream & Downstream

  • China’s domestic crude imports surged to a record 10.64 mmb/d in April, as refiners stocked up on an Iranian crude bonanza due to uncertainty over US policy, which has been confirmed as crude waivers were not renewed
  • Having had to close the Druzhba pipeline and Ust-Luga port for contaminated crude, Russia says it will fully restore compliant crude by end May shipments, including cargoes to Poland and the Czech Republic
  • Mexico’s attempt to open up its refining sector has seemingly failed, with Pemex taking over the new 340 kb/d refinery as private players balked at the US$8 billion price tag and 3-year construction deadline
  • Ahead of India’s move to Euro VI fuels in April 2020, CPCL is partially shutting down its 210 kb/d Manali refinery for a desulfurisation revamp
  • China’s Hengli Petrochemical is reportedly now stocking up on Saudi Arabian crude imports as it prepares to ramp up production at its new 400 kb/d Dalian refinery alongside its 175 kb/d site in Brunei
  • South Korea’s Lotte Chemical Corp expects its ethane cracker in Louisiana to start up by end May, adding 1 mtpa of ethylene capacity to its portfolio
  • Due to water shortage, India’s MRPL will be operating its 300 kb/d refinery in Katipalla at 50% as drought causes a severe water shortage in the area

Natural Gas/LNG

  • Partners in the US$30 billion Rovuma LNG project in Mozambique now expect to sanction FID by July, even after a recent devastating cyclone
  • Also in Mozambioque, Anadarko is set to announce FID on its Mozambique LNG project on June 18, calling it a ‘historic day’
  • After talks of a joint LNG export complex to develop gas resources in Tanzania, Shell and Equinor now appear to be planning separate projects
  • Gazprom has abandoned plans to build an LNG plant in West Siberia to compete with Novatek, focusing instead on an LNG complex is Ust-Luga
  • First LNG has begun to flow at Sempra Energy’s 13.5 mtpa Cameron LNG project in Louisiana, with exports expected to begin by Q319
May, 17 2019
Shell Eclipses ExxonMobil Once Again

The world’s largest oil & gas companies have generally reported a mixed set of results in Q1 2019. Industry turmoil over new US sanctions on Venezuela, production woes in Canada and the ebb-and-flow between OPEC+’s supply deal and rising American production have created a shaky environment at the start of the year, with more ongoing as the oil world grapples with the removal of waivers on Iranian crude and Iran’s retaliation.

The results were particularly disappointing for ExxonMobil and Chevron, the two US supermajors. Both firms cited weak downstream performance as a drag on their financial performance, with ExxonMobil posting its first loss in its refining business since 2009. Chevron, too, reported a 65% drop in the refining and chemicals profit. Weak refining margins, particularly on gasoline, were blamed for the underperformance, exacerbating a set of weaker upstream numbers impaired by lower crude pricing even though production climbed. ExxonMobil was hit particularly hard, as its net profit fell below Chevron’s for the first time in nine years. Both supermajors did highlight growing output in the American Permian Basin as a future highlight, with ExxonMobil saying it was on track to produce 1 million barrels per day in the Permian by 2024. The Permian is also the focus of Chevron, which agreed to a US$33 billion takeover of Anadarko Petroleum (and its Permian Basin assets), only for the deal to be derailed by a rival bid from Occidental Petroleum with the backing of billionaire investor guru Warren Buffet. Chevron has now decided to opt out of the deal – a development that would put paid to Chevron’s ambitions to match or exceed ExxonMobil in shale.

Performance was better across the pond. Much better, in fact, for Royal Dutch Shell, which provided a positive end to a variable earnings season. Net profit for the Anglo-Dutch firm may have been down 2% y-o-y to US$5.3 billion, but that was still well ahead of even the highest analyst estimates of US$4.52 billion. Weaker refining margins and lower crude prices were cited as a slight drag on performance, but Shell’s acquisition of BG Group is paying dividends as strong natural gas performance contributed to the strong profits. Unlike ExxonMobil and Chevron, Shell has only dipped its toes in the Permian, preferring to maintain a strong global portfolio mixed between oil, gas and shale assets.

For the other European supermajors, BP and Total largely matched earning estimates. BP’s net profits of US$2.36 billion hit the target of analyst estimates. The addition of BHP Group’s US shale oil assets contributed to increased performance, while BP’s downstream performance was surprisingly resilient as its in-house supply and trading arm showed a strong performance – a business division that ExxonMobil lacks. France’s Total also hit the mark of expectations, with US$2.8 billion in net profit as lower crude prices offset the group’s record oil and gas output. Total’s upstream performance has been particularly notable – with start-ups in Angola, Brazil, the UK and Norway – with growth expected at 9% for the year.

All in all, the volatile environment over the first quarter of 2019 has seen some shift among the supermajors. Shell has eclipsed ExxonMobil once again – in both revenue and earnings – while Chevron’s failed bid for Anadarko won’t vault it up the rankings. Almost ten years after the Deepwater Horizon oil spill, BP is now reclaiming its place after being overtaken by Total over the past few years. With Q219 looking to be quite volatile as well, brace yourselves for an interesting earnings season.

Supermajor Financials: Q1 2019

  • ExxonMobil – Revenue (US$63.6 million, down 6.7% y-o-y), Net profit (US$2.35 billion, down 49.5% y-o-y)
  • Shell - Revenue (US$85.66 billion, down 5.9% y-o-y), Net profit (US$5.3 billion, down 2% y-o-y)
  • Chevron – Revenue (US$35.19 billion, down 5% y-o-y), Net profit (US$2.65 billion, down 27.2% y-o-y)
  • BP - Revenue (US$67.4 billion, down 2.51% y-o-y), Net profit (US$2.36 billion, down 9.2% y-o-y)
  • Total - Revenue (US$51.2billion, up 3.2% y-o-y), Net profit (US$2.8 billion, down 4.0% y-o-y)
May, 15 2019